The holy land craze

Real-estate prices are skyrocketing as buyers from abroad zero in onIsrael's increasingly lucrative real-estate market

Under the shadow of cranes, steel beams and gleaming reflective glass, a forest of high-rise buildings seems to be taking over the Tel Aviv horizon - part of a nationwide building boom that Israelis and Diaspora Jews are buying into. "The first time I was here was in 1983, and Tel Aviv has gone through a huge transformation from then to now," said Howard Glatzer, who runs a real estate fund that invests in New York City properties. "As a Jew from New York who is very accustomed to seeing high-rises everywhere, I think it's fantastic, it shows the vitality of Israel, and that's great." Glatzer took in the sight of shimmering new towers and construction during a tour of Jaffa, the southern part of Tel Aviv, with a group of other New York real estate developers who were visiting two weeks ago as part of the 90th anniversary mission of the UJA-Federation of New York. With increasing disposable income and a desire to live either part-time or eventually full-time in Israel, Jews from abroad - especially the United States, England and France - are finding a home in the Jewish state's real estate landscape. In 2002, foreign buyers invested $192 million in Israeli real estate. Just four years later the number had soared to $1.43 billion, according to the Bank of Israel. "Israel is becoming one of the players in commercial and real estate markets," said Hillel Suna, general manager of the Jerusalem branch of the Bank of Jerusalem, one of the country's largest mortgage banks for foreign residents. "There are two main groups here - individual investors buying several apartments and the big money people on the commercial side looking at Israel as a potential real estate commercial center." Even Donald Trump wants in: He has plans to build a 70-story residential and office tower in the Tel Aviv suburb of Ramat Gan. Leading international architects Philippe Stack and Richard Meier both have high-rise projects under construction in Tel Aviv. "It reminds me of China," said Andy Singer, whose company, the Singer and Bassuk Organization, finances major Manhattan and other US building projects. "The big joke in China is that the national bird is the crane. I think in many ways that is probably true of Tel Aviv and Jerusalem." "I think it's a sign that people who have money to invest have the courage, enthusiasm and high regard for Israel and its ability to get past the continuing troubles with the Palestinians. These are assets you cannot move," said Singer, who was on the UJA-Federation mission. Those buying in Jerusalem tend to be religious Jews, while those in Tel Aviv and surrounding areas usually are more secular. The French, who tend to seek out property as close as possible to the sea, have flocked especially to beachside cities like Netanya, Ashdod and Ashkelon. Shana Novick, a New Yorker who bought a two-bedroom apartment with her husband on the edge of Jerusalem's Katmon neighborhood, said she is thrilled about having a second home in Israel. The Novicks rent it out to American rabbinical students and try to spend summers here themselves. "We never bought a summer house in the States, and now we joke it's our country house. It just takes a long time to get there." But with many of the American Jews who buy in Israel coming only for holidays, their apartments often stand empty, creating a ghost-town feel in some projects and areas. Foreign sales accounted for about 25 percent of recent purchases in central Jerusalem neighborhoods such as Rehavia and Katamon, and in the Jewish quarter of the Old City, said Davyd Tal, who owns the Jerusalem Homes agency and specializes in foreign clients. "The sellers are usually Israeli and not religious, and they are moving out of Jerusalem," Tal said. "Jerusalem is losing its secular population, which is going to suburbs such as Modi'in and Mevasseret Zion. Young, secular couples cannot afford to buy in Jerusalem anymore. They are basically being priced out." Beyond reasons of Zionism or family ties to Israel, European buyers are seen to be driven by fears of rising anti-Semitism at home, observers say. English Jews have more buying power right now because the pound is rising against the dollar. But they're also being prodded by fear, Suna notes. "There is a general feeling of discomfort, with the signs of the beginning of anti-Semitism," he said. Uri Amitzur, an architect and developer who specializes in restoring historic buildings, showed members of the New York mission around. He said Jaffa, a mixed Arab-Jewish area with older buildings, was drawing foreign interest because of its proximity to the sea and prices that were lower relatively than in other parts of Tel Aviv. Amitzur recently sold a large, restored building to a French buyer. Buildings from the early 20th century fill Jaffa's narrow streets, while closer to central Tel Aviv, Bauhaus buildings from the 1930s are in demand. "Prices are soaring into the sky," Amitzur said. "But people understand that although it's a large investment to buy a restored building, it's considered a luxury address and looks incredible." On leafy Rothschild Boulevard, one of the first streets built in Tel Aviv, Bauhaus buildings and sleek new high-rises have become premium real estate. Properties there have risen in value by 40% in the past two years. A luxury apartment in a new high-rise on Rothschild Boulevard reportedly is going for $1.7 million. Apartments in renovated Bauhaus or other buildings marked for preservation sell for $4,000 to $5,000 per square meter. Prices can be even more expensive in prime areas of Jerusalem, such as neighborhoods in the city center or within walking distance of the Western Wall. Investors and sellers are getting huge sums, said Tal, the Jerusalem real estate broker. "They are asking any price, and getting it," he said. Lyle Plocher, a Phoenix-based real estate broker, became so intrigued with the idea of helping buyers purchase property in Israel that he created a Web site that allows people to buy even from afar. The site, Buy Property in Israel,, provides tips and information to potential buyers abroad and connects them with real estate agents in Israel. Among the help options offered is information on the buying process, including mortgages and various costs and commissions. Plocher has been encouraged by the number of visitors to the site. "It's something that's the desire in most people's Jewish hearts - to own property in Israel," he said.