shoshana kordova

By Shoshana Kordova

David’s Village, located just outside the Old City walls, is a particularly striking example of the desolate air that can settle on a neighborhood whose residents are frequently in another part of the world. (Shoshana Kordova)

JERUSALEM - Most diaspora Jews may not be ready to make aliyah, but an increasing number from the United States, France and England have figured out a way to live at least part of the year in Israel - by owning a second home there.

In a trend that has become particularly noticeable in the last six months but first began gaining steam around mid-2003, non-Israelis have been fueling an upswing in the sector of the Israeli real estate market that supplies what foreigners want: new or recently renovated apartments in desirable neighborhoods, mostly in Jerusalem. Many of the buyers are religious, and quite a few are intent on snagging a luxury apartment.

Foreign property purchases jumped in 2003, pulling up an investment level that hadn’t seen much positive motion approximately since the 1995 assassination of then-prime minister Yitzhak Rabin, which essentially marked the end of the Oslo period.

For example, foreign property purchases - most of them residential - hit $464 million in 2003 and $600 million in the first nine months of 2004.

Stuart Hershkowitz, deputy general manager of the Bank of Jerusalem, one of Israel’s largest mortgage banks, said the amount of mortgages he deals with doubled between the first and second halves of 2003, adding that even the Oslo period can’t compare to the current real estate boom.

“There hasn’t been an era like this,” said Hershkowitz, who also heads the bank’s international division. “I think it’s the beginning of a trend. I think it’ll just continue to grow.”

“A lot of Jews around the world are looking for a clear affinity with Israel,” he said. “And this is a way of making aliyah without making aliyah.”

Seeking that connection

Real estate agents and buyers cite financial, security, spiritual and family considerations as reasons that Jews abroad purchase second homes in Israel.

Buyers emphasize a desire to connect with Israel, with some seeing the Holy Land as a kind of meeting ground for children and grandchildren scattered across the U.S. and Israel. Many of the Americans buying property here, particularly luxury homes, are from the New York area and generally visit Israel during Jewish holidays and the summer, brokers said.

On the financial side, housing prices in Israel are still relatively low, and Americans may be spurred to invest here because a weak dollar means they can’t get as much for their money in a second home somewhere else. On the other hand, the many French Jews buying in Israel likely are pushed by the strong euro and anti-Semitism at home.

And then there are the slightly contradictory messages of international terrorism. On one hand, buyers may see the recent decrease in Palestinian terror attacks here as a sign that it’s time to invest in Israel again, although it remains to be seen whether Palestinian Authority President Yasser Arafat’s recent death heralds the inauguration of a new era, as some have predicted. At the same time, terror attacks around the world since 9-11 may have contributed to making Israel seem about as safe as anywhere else.

Whatever the reason, the growth thus far has been so extensive that real estate agents say they are forced to turn away some foreigners because the demand for new or renovated apartments in central Jerusalem exceeds the supply.

“There aren’t a lot of properties,” said Isaac Levy, deputy CEO in charge of marketing and development for Ambassador Real Estate. “The high demand and low availability mean that good properties are sometimes sold within days.”

Levy said foreign property purchases now constitute about 40 percent of his sales, a significant rise since two years ago, when they comprised between 8 percent and 10 percent.

Jews abroad looking to buy in Jerusalem generally want to be in walking distance of the Old City, the center of town, the major hotels and synagogues popular with English speakers, such as the Great Synagogue, brokers said. This leaves only a few neighborhoods that freign buyers consider desirable, including Rechavia, Talbiye, the German Colony and Baka. In those areas, brokers said, prices have risen by about 10 percent to 30 percent in the last year.

Because so many of those looking to buy in Jerusalem are religious, they also generally want a balcony or garden where they can put their sukkah and a Shabbat elevator if they’re above the second or third floor, real estate agents said.

Jeffrey and Caren Goldenberg of Southfield like the location of their four-bedroom Rechavia apartment, which they share with Caren’s mother and three siblings, because they can visit and host friends staying in the many hotels nearby as well as walk to the Old City. “It’s nice to be in the middle of everything,” said Caren.

The Goldenbergs usually stay at the apartment for Pesach, Shavuot and Sukkot and in the summer, although with so many relatives using it, the apartment is occupied much of the time. And when Jeffrey’s parents, who live in California and also have an apartment in Rechavia, are in town, the families are suddenly only a few blocks apart instead of thousands of miles.

Caren’s family likes being able to do non-touristy activities, like going to the grocery store.

“It’s so different being in Israel in your own apartment rather than a hotel,” she said. “You don’t feel like a guest; you feel like you live there.”

The majority of foreigners are buying in Jerusalem, but Europeans and some Americans, mostly the less religious, also have been buying in cities such as Herzliya, Netanya and Tel Aviv, where they gravitate toward the beachfront properties.

Some Americans, though, buy outside Jerusalem because they are more interested in being near children already living in Israel than being able to walk to the Western Wall.

Myra and Abe Selesny of Southfield decided three years ago to buy an as-yet unbuilt house in Beit Shemesh, between Jerusalem and Tel Aviv. The location would place them within easy access of three of their five children and 14 of their grandchildren, who live in Beit Shemesh, Modi’in and Efrat.

“It was a dream of ours to own a home or an apartment in Israel,” said Selesny. “If we were going to come, we wanted to be near the kids.”

But the Selesnys never had the chance to enjoy their Israeli home together: Myra’s husband died of liver cancer shortly after they bought the property, and she has been renting out the four-bedroom townhouse since it has been built. Nonetheless, said Selesny, “I still have that dream of coming.”

Demand outstrips supply

Within Jerusalem, the cost of apartments in Rechavia has gone up recently but the rise in foreign property purchases has yet to have a major effect on the real estate market as a whole. Neighborhoods not easily accessible to the center of town or the restaurants and cafes of Emek Refaim Street in the German Colony are largely untouched by the localized boom, brokers said.

A nice but not necessarily luxurious home in one of the in-demand Jerusalem neighborhoods costs about $100,000 a room, said Alyssa Friedland, broker-owner of RE/MAX Capital and RE/MAX Vision, both in Jerusalem. Thus, a three-bedroom apartment will cost about $400,000 because the living room is counted as a separate room.

Of course, many variables can bring the price up. For instance, a renovated and fully furnished four-bedroom, three-bathroom apartment on the first floor of a 30-year-old building in Talbiye that overlooks the Old City is selling for about $600,000, said Tzipora Ne’eman, a real estate agent with RE/MAX Vision. The apartment is equipped with central air conditioning and heating, an alarm system and a washing machine and dryer. One wall of the living room is covered in stone facing, and the kitchen has separate ovens, sinks and microwaves for meat and dairy. There are no balconies for sukkahs, but the building, which has its own synagogue, sets up a large communal sukkah in its parking lot.

Ne’eman, 59, spends a lot of time emailing prospective clients who live abroad, describing properties and sending digital photos. Sometimes, she said, Americans will hear that an apartment is available and hop on a plane a day or two later to see it before it gets snatched up.

“The truth is we don’t have enough to show them,” said Ne’eman. “There are just so many people all wanting the same thing.”

Across the street from the building Ne’eman is showing, there is a new upscale apartment building still under construction called the Talbiye Residence, where a square foot costs between $740 and $930 - about double what it costs on the other side of the road. Buyers can choose the size of their apartment, which comes with electric floor heating, underground parking and access to four Shabbat elevators.

In the David’s Village luxury complex located just outside the Old City walls, near Jaffa Gate, the owners of a three-bedroom home who bought three years ago for $1 million are now asking for $1.4 million, said Levy from Ambassador Real Estate. A penthouse at the complex, which is noted for its terraced apartments and its domes and arches, recently sold for $2.8 million.

At nearby David’s Royal Residence, which is connected to the David Citadel Hotel, owners have use of hotel services such as housekeeping and the spa. A one-bedroom apartment there sold for $975,000, said Levy. Another new housing project, he said, is slated to go up shortly in the same area, whose proximity to both the Old City and the center of town makes it an attraction for foreigners.

“During the intifada, people were scared to buy here, people didn’t want to live here,” said Rivka Schlesinger, a partner in Capital Property Consultants, which sells high-end Jerusalem properties. After the bombings slowed down earlier this year,”all that pent-up demand” came loose, she said, and “people started pouring in.” Well-built homes in quiet areas, with a balcony or garden and a nice view can sell for up to $6 million, she said.

Almost all the foreign owners of luxury homes leave their property empty when they’re not around to enjoy it, rather than rent them out, brokers said. David’s Village is a particularly striking example of the desolate air that can settle on a neighborhood whose residents are frequently in another part of the world. On a recent afternoon, three children playing and speaking English were the only noticeable company for the complex’s security guard stationed nearby.

Renting to tourists

Some foreign buyers do rent out their property for short-term use while they’re in the U.S., as a way of offsetting their costs.

Atlantans Shai and Judy Robkin lived in Jerusalem for eight years and ran a bookstore-cafe. When they decided to buy an apartment in Israel in 2000 - the year the intifada began and 16 years after their return to the States - they planned to rent it out to tourists.

“We knew that the only way to make this financially viable was to rent it out for a decent percentage of the year,” Shai said. They travel to Israel at least once a year.

Their three-bedroom, two-bathroom apartment is located just south of Baka, in a new building close to Emek Refaim Street and the Tayelet (promenade) in Talpiot. The Robkins have prepared their apartment for renters by carefully labeling the meat and dairy dishes and preparing a notebook filled with instructions on how to use household items like the water heater and air conditioner.

Sometimes they rent their apartment to friends, like Chuck and Leslie Lowenstein of Atlanta. In December, the rented apartment acted as a base while they searched for a place of their own.

An apartment in Israel, said the Lowensteins, may be the one place they will be able to spend time with their 10 grandchildren. The family is pretty spread out - some in Israel full time and others in California and Baltimore. In the U.S., said Chuck, “we have to travel anyway to see our grandchildren.” A home in Israel makes sense, he said, because “the one place they’re all coming is here.”

The couple’s attachment to Israel has grown over the years, they agreed.

As for buying a home in Israel, “It’s just something,” said Leslie, “you should do if you can.”