The allure of Jerusalem

Jerusalem beckons because it's the focal point of Judaism spiritually and practically, which is the reason why so many Jews want to make it their home.

room 311 (photo credit: Courtesy)
room 311
(photo credit: Courtesy)
Jerusalem is a holy city, which explains in part why it is so much in demand. It is also a beautiful and renowned city that is holy to the world’s three major monotheistic religions. In the past 60 years it has grown to be the largest city in Israel with a population of 770,000.
This edition of Real Estate is being published on the eve of Succot. In ancient times during the Israelite and Judean periods, this was the time when the faithful went to Jerusalem to pray in the Temple.
Today, a few thousand years later, the faithful still go to Jerusalem from the four corners of the world. For some, it is an opportunity to explore the possibilities of settling in the Holy Land in general and Jerusalem in particular.
Jerusalem beckons because it is the focal point of Judaism both spiritually and practically, which is the reason why so many Jews the world over want to make it their home.
So what does Jerusalem offer newcomers? Jerusalem is not one city but three. It is one urban entity, but there are three different communities and they do not mix. There is the Jerusalem of the ultra Orthodox, Jerusalem of the secular community, and Jerusalem of the Arab population.
Within secular Jerusalem there are differences, but these are not cultural or communal -- they are financial. There are expensive areas and less expensive areas. The ultra Orthodox do not want to live in a secular neighborhood; there is no mobility between these two communities.
In the secular neighborhood it is all a question of money. If you can afford a house on the expensive King David Street and you want to live there, you buy an apartment, move in and that is the end of the matter.
The most expensive part of Jerusalem is an area of one or two square miles, with its epicenter at the King David Hotel. It is very much in demand by overseas buyers with very deep pockets mainly because of its proximity to the Old City and all that it signifies. Prices range from $10,000 to $20,000 per square meter. In this area there is only a sprinkling of local buyers because they have been outpriced.
Demand for these apartments has declined in the wake of the economic global downturn, but with the improving economic situation, demand is rising once more. Nevertheless, despite the fall in demand, prices have held steady because there have been no substantial housing starts in these areas.
Out of a total population of 770,000 in Jerusalem, some 200,000 are ultra Orthodox and another 200,000 are Arabs.
The secular modern is the third segment, mainly comprised of mainstream Israelis.
These also include newcomers who are not overly affluent. This middle Israel or mainstream element of the population numbers 350,000 to 400,000. They inhabit some 70 percent of the capital’s area.
The real estate market for this segment of the population has behaved very much like the real estate market in the Tel Aviv metropolitan area but with certain differences. Like the Tel Aviv metropolitan area, there is an acute shortage of land for building purposes. Demand has outpaced supply, thus prices have risen.
In Jerusalem, the problem of insufficient supply is aggravated by geographical issues. In Tel Aviv, those who cannot afford the hefty prices in the middle-class neighborhoods can migrate to any of the satellite towns to the north, south or east of the city. Jerusalem has no such safety valve, so pressures are somewhat higher and the upward pressure on prices is slightly more marked. The current middle-class alternatives are Motza and Mevaseret.
The cultural differences in Jerusalem are somewhat paralleled by the geographical differences. Because of political circumstances, Jerusalem is surrounded by self-contained quarters such as Gilo, Ramot and Pisgat Ze’ev.
Although they are part of the municipal area of Jerusalem, they have their own educational, cultural and commercial infrastructure. Consequently, the price mechanism operates somewhat differently. Prices in these areas are less than in the Jerusalem pre-1967 area.
According to real estate broker Alyssa Friedland of RE/MAX Vision, the real estate market in Jerusalem is alive and kicking.
“In the central and desirable neighborhoods like Rehavia, Baka and the German Colony, prices have remained stable despite the current housing demonstrations and protects.
Most of the protests were focused on providing housing for young families and the pressure on the government to ease new construction permits and allow more land to be zoned and approved for new housing. Since land is scarce in central Jerusalem, most of the available lots to build are in the peripheral areas of the city, such as Armon Hanatziv, Arnona, Pisgat Ze’ev, Gilo and Har Homa,” she says. “These peripheral areas have experienced a moderate drop in prices, since many of the potential buyers in these areas are sitting on the fence, waiting to see whether the changes will affect the housing prices.”
Friedland further states, “Foreign buyers are still in the market, and we are seeing more French and Australian buyers in addition to the Americans and the British.
Prior to the global economic crisis, they were purchasing the larger properties for over $1.500.000. Today the trend is towards buying smaller three- to fourroom properties in the million-dollar price range and under. Foreign investors are also plentiful, making up about 40% of the foreign buyer market. They are buying underpriced properties (in the $300,000 to $600,000 range) that have good rental income, high anticipated appreciation value, and can be easily sold when the investor wants to liquidate. With the strong economy and stable political situation, many foreign buyers are taking advantage of the opportunity to get into the Israeli real estate market,” she says.
Looking into the future, she says that the forecast looks promising for real estate in Jerusalem and in Israel as a whole.
“Barring any unforeseen political unrest or terror attacks, real estate in Israel will remain a profitable investment. With the stability of the Israeli economy, a high demand versus supply in the housing market and scarce land availability, there is no doubt that the real estate market will continue to thrive.”
One of the advantages of living in Jerusalem is that it is a truly beautiful city.
It is a mountain city, which gives it crisp, cool mountain air and lovely scenery.
Thanks to the British Mandatory governor of Jerusalem in the 1920s, the urban planning was excellent. Furthermore, there was a by-law making it obligatory to use white Jerusalem stone for building.
Consequently, all buildings constructed in the first half of the 20th century were made of Jerusalem stone. That by-law has since been moderated. New houses are not necessarily made of Jerusalem stone, but the façade still has to be clad in stone.
Jerusalem is a historical city. There are many fine historic structures built in the second half of the 19th century and the 1920 and 1930s. Some of these are being renovated and transformed into luxury apartments.
One example is a 150-year-old building that will be restored by the Faire Fund as a high-end residential project. The building, which formerly served as a library, was built in 1882 and has a fin de siècle architectural flavor. It has stone external walls more than 50 centimeters thick, giant windows with wooden shutters and balconies with decorative iron railings.
The three-story building is 780 square meters in size, with 157 sq. m. of terraces and balconies and has a small garden.
The renovated building, located next to a new eight-story building, is part of a luxury compound built by the Faire Fund called Mishkenot Hadar.
The capital abounds with such projects --luxury apartment buildings built to blend in with the city’s historical architectural look.