In 1951, new and burgeoning Tel Aviv was unified with old and dilapidated Jaffa. For five decades, the 4,000-year-old port town struggled in the shadow of its robust municipal patron. Behind the picture-postcard Jaffa that tourists see is a squalid working-class backwater rife with crime, poverty and racial tensions. Yet Jaffa is being touted as the place to live by 2010. "I can see tremendous change since I moved in two and a half years ago," says computer programmer and budding novelist Shaul Volkov, who lives in a mixed Jewish-Arab neighborhood near the Army Radio headquarters in Jaffa. "About 20 new buildings have gone up in this area, and a whole bunch of new people have moved in, including lots of young people renting cheap apartments. The mood has changed in the streets. The police presence is felt much more nowadays - there used to be a couple of drug pushers on my street, but that seems to have stopped." The area is also popular among upwardly mobile immigrants from the Former Soviet Union, notes Volkov. "Russian yuppies don't have a lot of money - especially the artistic types. They say that Jaffa reminds them of a European city. They love the architecture. It's a special place to live in - I can see five churches and three mosques from my balcony and wake up to church bells and muezzins calling to prayer." In terms of price, many of his neighbors' rented apartments are already comparable with central Tel Aviv, says Volkov. The real estate market in Jaffa is entering a surge, having collapsed after local Arab citizens rioted following the eruption of the second intifada in October 2001. "The local market began to wake up three years ago with an increase in sales between Jaffa residents, both Jews and Arabs," explains Arie Sheffer of the Jaffa-based Mediterranean Real Estate Agency. "Major developers started investing about a year and a half ago, and six months ago the buyers starting coming. Most are Tel Avivians, but overseas residents are also increasingly buying properties as an investment. One family recently bought an apartment for $700,000 that they will only spend about two weeks in every year." Sheffer reports a recent surge in interest in both high- and low-end properties for sale or rent. "There are some good deals around and still bargains to be found. There are lots of opportunities in the heart of Jaffa," says Sheffer. But he adds that competition for choice locations is heating up, so now may not be the time for prospective buyers or renters to procrastinate. Property prices in Jaffa run the gamut, he explains, "from singles buying around the Noga theater and the flea market for as little as $100,000 to some of the most prestigious residences in the country. Many couples with children are moving in - mostly Tel Avivians seeking quality of life close to work, including a large number of designers and similarly artistic people. There are also several prestigious retirement projects in Jaffa." Property developers like to compare Jaffa with Tel Aviv's renovated Neveh Tzedek neighborhood, where property prices skyrocketed a decade ago. "House prices are comparable to those in Neveh Tzedek before it was developed," says Arik Zablodovitz, marketing manager of the Jaffa Quarter, a condominium-style development under construction alongside Jaffa's famously scruffy flea market. One of several ongoing construction projects in the area, the Jaffa Quarter will eventually incorporate some 300 apartments of various sizes in eight buildings (with underground parking) surrounding a private landscaped courtyard. The first tenants have already moved into their modern new homes and watch the ongoing construction from their balconies. Within three years, says Zablodovitz, the 12-dunam (three-acre) project will be complete. "The buyers are mainly young singles and couples whose children have grown up. Surprisingly, about 35 percent of the purchasers so far are from Jerusalem." The present municipal policy is reportedly to reduce the size (and price) of apartments in the new complexes to as little as 65 square meters, with single yuppies as the target buyers. Volkov echoes an oft-heard complaint. "A lot of the new compounds are closed to the public." Like Neveh Tzedek before it, Jaffa is undergoing a process of gentrification as an established population encroaches into rundown, high potential urban areas, forcing longtime residents to relocate. In the most conspicuous instances, million-dollar homes stand alongside slums. The exclusive Andromeda Residential Project near the old port and nearby villas housing hi-tech professionals are clear examples of this gentrification, which is having a knock-on effect. Sheffer says that the ongoing infrastructure upgrade throughout Jaffa and south Tel Aviv (ordained by Mayor Ron Huldai) is making a difference. Jaffa boasts a gleaming new academic college. The old Opera House now houses the successful Gesher theater group. Gesher's former home, an abandoned portside warehouse, now hosts Mayumana, a music and dance company specializing in percussion. A neglected thoroughfare replete with half-deserted buildings and boarded-up stores, Rehov Yehuda Hamit is destined to become a local version of Tel Aviv's trendy Rehov Sheinkin. Infrastructure renovation work is reportedly due to commence in June. "The street still looks like downtown Beirut," says Volkov, "but that's what Nahalat Binyamin looked like 15 years ago. The lower part of Rehov Rabbi Hanina by the flea market still looks scary, but some of the buildings are now being renovated. I hear that apartment prices there are starting at $300,000." As modern Tel Aviv incrementally absorbs the traditional Arab city of Jaffa, the lines have become blurred. New upscale housing projects for affluent Jews boast "authentic" Oriental design motifs such as arches, lattice work, ornamental banisters and antique-looking tiling. Yet some Jaffa neighborhoods where many of the city's Arab residents live still lack paved access roads and occasionally suffer from overflowing sewage. About one-third of Jaffa's 60,000 residents are Arabs, many of them living in the Ajami neighborhood, which hugs the coastline south of the Old City. Affluent Jews are now moving into Ajami - but a generation ago, impoverished Jews were moving out. Some 50,000 low-income Jewish immigrants settled in Jaffa residences abandoned by Arab homeowners who fled during the 1948 War of Independence. Many of these Jews left for Bat Yam, Rishon Lezion or Holon during the more affluent Seventies, leaving their financially weaker Arab neighbors behind. Meanwhile, real estate developers began marketing valuable beachside properties near Jaffa port, and well-to-do Jews started to move in, creating a relatively insular community as the surrounding areas fell into neglect. Rising prices and the housing crunch in Jaffa have already pushed many Arab families to adjacent Bat Yam, where their children attend Jewish schools but rarely fully integrate socially. Interracial tensions exist beneath the surface, observes Volkov. "The Arabs are not happy, and their resentment is probably growing. They're not being squeezed out - they're being squeezed in. They have nowhere else to go. A lot of them feel like they don't have much to lose. On the other hand, their property values are rising." "There's an internal population shift within Arab Jaffa,|" notes Sheffer. "Families are selling run-down properties in Ajami and buying apartments around Sderot Jerusalem for their children." "I don't see any political tensions between Jews and Arabs, rather social tensions," says Sheffer, 43, who has lived in Jaffa for almost 20 years. Sheffer, a gregarious man, is a well-known local figure due to his many years volunteering at Magen David Adom in the Jaffa and south Tel Aviv region. "Many of the Arab residents are from a weaker socioeconomic group, and there have always been problems of crime and drugs. The social gaps in Jaffa are enormous, and apparent to all. But we're good, respectful neighbors," says the father of three girls. The Sheffer family lives in a renovated house with a bougainvillea-adorned patio in picturesque Rehov Hashachaf in the Maronite neighborhood just south of the port. "My girls dance with Muslim and Christian Arab girls at the local community center. This is true coexistence. We live alongside each other in harmony. Jews have to know how to treat Arabs with honor and respect, and not appear condescending." To foreigners and out-of-towners, Jaffa is picturesque, exotic, ancient and artsy. Beyond its long history, Jaffa is best known for its fish restaurants, the clock tower, the flea market, Abulafia's 24-hour bakery, art galleries and ethnic nightclubs. It is also romantic, with winding stone alleys overlooking the sea, hidden away from the hustle and bustle of Tel Aviv. Nobel laureate S. Y. Agnon, one of the most prolific and celebrated Hebrew authors of the 20th century, described Jaffa as "the darling of the waters, where the waves of the Great Sea kiss her shores, a blue sky is her daily cover, she brims with every kind of people, Jews and Ishmaelites and Christians, busy at trade and labor, at shipping and forwarding." As the construction and renovation work continues, (compulsory) archeological excavations have turned up some fascinating artifacts, including one of Napoleon's cannons found buried under the flea market. Still incomplete road works in the area under the clock tower (built by the Turkish Sultan Abed-el-Hamid II in 1906) revealed remains of Roman buildings, which were resealed for future exploration. The Israel Lands Administration and the Tel Aviv-Jaffa municipality plan further development around Jaffa's harbor. The town's (in)famous police station near the clock tower will soon be replaced by a boutique hotel. Jaffa's combined population still has a long way to go before it pulls itself out of its socioeconomic rut. But it appears to be on the right track.