Waves of Jerusalem real estate being bought by foreign investors

In a significant trend sweeping through Israel, organized groups of foreign investors have been rapidly acquiring small apartments in key cities, with the most notable example being the Midtown Jerusalem project by Israel Canada. According to data from the Israel Tax Authority, a striking 75 two-room apartments have been purchased in Jerusalem since the onset of the recent conflict, dwarfing numbers in other cities.

The Midtown Jerusalem project alone has seen 150 apartments sold in the past year, with 53 two-room units sold in waves, a notable pattern. The purchases occurred on specific dates, such as three on September 20, eight on October 17, 12 on October 18, and an additional eight on October 24 and 25. The significance lies in the clear indication of an organized entity driving these acquisitions.

A second project at 12 Sarei Israel Street in Romema, though more modest in scale, also witnessed 14 two-room apartments being sold on the same day in August. The pattern of batch purchases further underscores the involvement of organized groups. In total, these two projects alone account for NIS 200 million in transactions, strongly suggesting the influence of one or two organized bodies behind these strategic real estate deals.

Questions about the impact on the local property market

These foreign acquisitions raise questions about their potential impact on the local property market, housing availability, and pricing dynamics. Real estate experts are closely monitoring these developments, considering the potential implications for the local property market and the broader economy.

“Back at the onset of COVID-19, our prediction defied the conventional wisdom held by banks, as Israeli real estate prices not only held steady but rose. The key drivers behind this unexpected surge were the crucial role Israel plays as a sanctuary for the global Jewish community and the emotional commitment associated with investing in the country,” explained Yaniv Gabbay, Co-Owner of Gabai Real Estate Group, a Jerusalem-based real estate brokerage with over 15 years of experience catering to both local and international clients.

“Paradoxically, the ongoing war and the global rise in antisemitism have fueled an even greater interest in acquiring properties in the nation’s capital,” they added. “Contrary to expectations, we have not witnessed a decline in property prices since the commencement of the war. Homes are still selling, and the real estate market in Jerusalem continues to exhibit resilience.”

These sentiments were echoed by Moshe Kolton, a real estate advisor in the Jerusalem-based Oren Cohen group, which primarily serves Americans, Canadians, and other anglos. He explained that at the outbreak of the war, there was an initial freeze in the market, but it thawed very quickly.

“In the first days of the war, we were sitting around playing sudoku, we had so much spare time,” he admitted. “But a few days later, we started to get more and more phone calls — mostly from Canada, though it’s also picked up a lot in the United States. Looking at the transactions and the deals that we’re making now, I’ve made more in the last three months than I did in the last three years.”

He elaborated that the real estate in Jerusalem is driven by emotional factors, with many buyers seeking properties in the city for sentimental reasons. While other markets, like Tel Aviv and the rest of Israel, have experienced a decline, Jerusalem remains resilient due to its unique neighborhoods, such as the German Colony and City Center, which are highly sought after. Despite challenges affecting other regions, Jerusalem continues to see strong demand and a shortage of supply, leading to rising property prices.

“People understand what's going on in the market, and they feel the antisemitism in the world,” he said. “And they understand that the safest place in the future is here.”