Behind the Headlines: Israeli Real Estate Market Starts to Feel Positive Effects of Peace

The real estate industry, like most other sectors of the Israeli economy, is feeling the effects of the peace process, according to industry insiders.

During the past year, Israel’s real estate market has benefited from the optimism generated by peace agreements with the Palestine Liberation Organization and Jordan. Foreign investment in commercial real estate is booming, and realtors attribute at least part of this upward trend to the peace process.

Yet while momentum at the negotiating table has translated into profits in the business sphere, the private housing market is more ambivalent.

Despite daily headlines proclaiming that the government has secretly offered compensation to some settlers in the Gaza Strip and the Golan Heights — reports that the government has firmly denied — few settlers appear to be preparing to leave.

Whereas local real estate agents say they anticipate a time when many residents of the territories will seek property within Israel’s pre-1967 borders, they report that very few settlers have made inquiries to date.

Furthermore, the question of when, or even if, Israel will relinquish control over the territories has added a measure of uncertainty to the country’s real estate market — something many homeowners and potential buyers find unnerving.

Still, even with this uncertainty, real estate agents predict that, at least in the long term, the peace process will be good for business.

In a recent interview with the Jerusalem Post, Haim Kaufman, chairman of the Israel Real Estate Association, predicted that “foreign investment in real estate, including investment by Israelis who have been living abroad, will increase as the influence of the peace process takes firmer hold.”

INVESTORS SEE ISRAEL AS COMMERCE CENTER

Evidently, realtors here are already witnessing this trend. Albert Rimi, of Kenyan Realtors in Tel Aviv, said that “the peace process has already made a difference in the commercial market.

During the past year, Rimi said,”commercial property sales have gone up 20 percent, and prices have jumped at least 20 percent. Many properties that were dead (undeveloped) have been sold to overseas firms in the area between Tel Aviv and Jerusalem.”

“We have definitely seen more business inquiries since the start of the peace process,” said David Blumberg, of Anglo-Saxon Realty in Herzliya. “Midsized companies, especially from the United States, are purchasing more offices, shops and factories.”

To take advantage of this investment, the Herzliya Pituach Industrial Zone, one of the largest industrial parks in the country, plans to build 2.2 million square feet of high-tech office space over the next five years, Blumberg said.

Both Blumberg and Rimi report that a growing number of Diaspora Jews, including Israelis living abroad, are feeling out Israel’s residential real estate market.

We are getting quite a few inquiries, especially from Israelis,” said Blumberg, who added that “right after the earthquake in California, Israelis living there began to show a real interest in coming back.”

“There is definitely a feeling of optimism about Israel, and Jews from abroad are looking to buy,” Rimi agreed. “What’s new is the fact that they seem to be looking at apartments that will not only serve as investments, but also as their homes sometime in the future.

“Until recently, purchases by Diaspora Jews had been confined almost exclusively to Tel Aviv, Netanya and Jerusalem. Now they’re looking in other parts of the country as well,” Rimi said.

Unfortunately, this upbeat mood has not spread to Israelis at home — at least not yet.

With territorial compromise a distinet possibility, most prospective buyers are wary about buying beyond the pre-1967 borders, said Karen Goldman of Jerusalem’s Narkiss Agency. This fact, along with the limited supply of homes within the Green Line, is raising inflated prices even higher.

“The situation is very unclear, and people are feeling the uncertainty,” Goldman said. “It’s hard to know what the future will bring, and whether the settlers will move to property within the Green Line.”

MAY HAVE TO SETTLE FOR SMALLER APARTMENTS

If they do, she predicted, “they may not have enough money to buy the type of home they had in the territories. Property there is much cheaper and people who have beautiful, large homes may have to settle for much smaller apartments, perhaps outside of the city.

“This, of course, will push up the price of less expensive apartments. Really, everything depends on whether the government provides the settlers with compensation.”

According to most realtors, very few residents of the territories are actively looking to move.

“I’ve had only a handful of settlers come into the office,” said Blumberg, “but in truth, it’s hard to know who lives in the territories and who doesn’t. If a settler is preparing to leave, he doesn’t necessarily want others to know.”

While the majority of realtors also say that the real estate market in the territories has become virtually stagnant over the past year, and note that the Rabin government halted all new housing starts when it came into power, there have been some exceptions.

Miriam Armon, owner of Miriam Realty in the West Bank town of Efrat, said that “a lot of people” moved to Efrat this year. Although some people moved into houses bought prior to the start of peace negotiations, she said, “many bought homes just a few months ago.

“People are drawn to Efrat by the education and are looking for a quiet life near Jerusalem. The prices are good — just $120,000 for a three-bedroom apartment with a garden — and we’re just 15 to 17 minutes to the city by car.”

Asked if her clients worry that further steps in the peace process could endanger their homes, she said, “There isn’t a single apartment available for rent in Efrat. Personally, I’m not worried.”

NEXT STORY