Posted on 08/23/2005 2:55:40 PM PDT by NZerFromHK
"Purchases by foreign residents have taken off beyond anybody's wildest dreams," said Stuart Hershkowitz, head of the Bank of Jerusalem's international department.
"It's a real revolution. In the past, I dealt with a million-dollar purchase every couple of months. Now, it's almost on a weekly basis."
Foreign residents started a wave of property purchases about 18 months ago, as Palestinian violence began toning down, he said. Interest rates were low, but rising rates have yet to put a dent in the buying frenzy, "so it's not a purely economic phenomenon," he said. "Very few people are buying because they think it's a great investment."
Generally, the rule is to look for a 4 percent to 5% return on investment, but return on investment barely reaches 3% to 4% here, Hershkowitz said.
Speculation has been largely in Modi'in, because "people think that prices there will go up."
In the first half of the year, the Bank of Jerusalem handled more than NIS 100 million in mortgages to foreign residents, up at least 30% to 40% from a couple years ago, Hershkowitz said.
Foreigners are also purchasing bigger and more expensive apartments than in the past, he added, noting that currently the trend is to buy around 200 square meters for close to $5,000 per square meter, up from 100 to 150 square meters for about $4,000 a year ago.
Residents of North America, France and the UK are particularly active in the local housing market, he said.
The main reason for the wave is the buyers' desire to connect with Israel. "Almost all are not living here, and vast majority do not rent them out, even if they come to Israel only a few days out of the year," he said. "They want to have a place here. Period. You can't imagine how many people have told me, 'I have a dream to own a place in Israel.'"
"All segments of French Jewry are buying. Everybody," Hershkowitz said, noting that their purchases are particularly concentrated in smaller and less expensive apartments in Ashdod, Netanya and other cities. The middle and lower classes are well represented among French homebuyers, he said.
This is in contrast to the pattern dominant among North American and British Jews, in which primarily the upper-middle class and wealthy are buying a second home in Israel.
The British Jewish community is the fastest growing segment among foreign homebuyers, but those coming from the US are still the biggest group, buying the most expensive dwellings, Hershkowitz said.
Nonetheless, those interested in purchasing properties are from all over the world, he said, indicating a pile of letters and printed e-mails sent by potential homebuyers. Return addresses ranged from Encino, California and Yulis, Texas, to Allahabad, India.
"It's a worldwide Jewish phenomenon," he said.
"Foreign resident purchases have been very centralized – limited to specific neighborhoods, not even cities," Hershkowitz said. No foreign residents are buying in Jerusalem's Kiryat Hayovel neighborhood nor are they investing in Beersheba, "not even in Haifa," he added.
Instead, they are buying in Baka, Rehavia, the Geman Colony, Katamon, and Talbiyeh in Jerusalem – and to some extent in Herzliya Pituah and Caesarea. English-speaking haredim are specifically drawn to Jerusalem's Ramat Eshkol and Sha'arei Hessed neighborhoods. "Sha'arei Hessed is the hottest neighborhood in Jerusalem for wealthy haredi Anglos," Hershkowitz said.
Netanya's Sderot Nitza is attracting British Jewish vacationers who are building their own community, "not one French or American" resident hs purchased along the boulevard.
Middle-class American Jews are buying primarily in Beit Shemesh and Modi'in, or small apartments in Rehavia or Katamon, where 60 to 80 square meters can be bought for less than $400,000, to be close to family members that have immigrated. "With financing, it's not an impossible task," Hershkowitz said.
Until now, this has remained a "very localized phenomenon," he stressed, noting that only a few thousand purchases have been made in the recent wave, "not tens of thousands."
In those few blocks in Jerusalem and along the coast, however, the Anglo-French wave has raised prices substantially, "in contrast to the rest of Israel, where prices have been down significantly over the last few years. While prices today are not on the rise in Israel as a whole, they are certainly on the rise in those neighborhoods where foreign residents are buying – up 10% to 15% in the last year alone," he said.
I.B.I. Group data, released recently, confirm that in Jerusalem prices rose 10.8% between the first half of 2002 and the second half of 2004. In contrast, prices fell 12.8% in the Northern, 9.8% in the South, and 9.1% in the center of the country. Only in the Sharon, did prices rise, by 2.7%.
Prices in Jerusalem's top neighborhoods and the coastal hot spots are likely to keep rising, as demand increases for what remains a very limited resource, Hershkowitz said. "There's only one Rehavia."
Hershkowitz is confident that this is not a bubble. "It will last for a very long time," he predicted. "The trend is just beginning. It's still in its early stages."
From a Biblical standpoint, this could be God's working and paving the way for Ezekiel 22. Next stop - watch over what Putin, Iran, Sudan, and Libya are doing.
I think you pegged it. This is due to the growing islamization of the UK and France. Folks want to have a place to go to before it gets any worse.
Seems like a few people remember the lessons of European history.
"Folks want to have a place to go to before it gets any worse."
I have been told, by acquaintances that do business in South America, that not exactly a small amount of the run-up in South Florida condos is being driven by a similar phenomenon. Chavez has many with the means to do so, buying themselves a safe place to flee, if and when the need should arise. This is not just Venezuelans, either.
It seems there is an undercurrent of displacement fear, running through a number of communities in the world today. On one level, Israel is surprising as a destination, due to all the negative reportage and apparent terrorism. But, on another level, it's not surprising at all... there are deep emotional and religious motivations at work. In particular, if I were Jewish and a resident of France, I'd be forming an exit strategy myself.
This is REALLY interesting. Sometimes I think people do things and they don't realize they are part of a move of God. They just feel like doing something "they want to do" and it turns out its part of a plan. Times are very interesting. I am still watching for rebuilding the temple to become mainstream thought and then we know time is short.
Not stated in this article is the fact that many Isrealis have invested in real estate in Cyprus.
"They just feel like doing something "they want to do" and it turns out its part of a plan"
The wisdom of crowds. A time to reap, a time to sow.
"Yep, the Venezuelans and Colombians have made Key Biscayne and Weston into upper-class suburbs of Caracas and Bogota. They pay in cash too"
Voting with their feet. Not a minor undertaking, or an easy decision. Makes you wonder what's going on sometimes, doesn't it? We're still sheltered to a large degree here in the US. I hope I never see the day, that I feel compelled to pull up stakes and leave out of fear.
I remember there is an Argentinian film a few years ago about a police detective in a fictional recently democratized country formerly under military rule and how he caught a politically-motivated assassin group. The character had to deal with the constant threat of the military retaking over the nation and in the early part of the film his supervisor asked him "Why do you want to stay hereand join the police? Everyone with half a brain is already in Miami."
Although it is the scriptwriters' imagination, but it seems this thought is real and widespread in South America.
That movie was "El Bonarese." That's Argentine slang for the police. Good flick.
BFLR = Bump for later reading.
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