Jerusalem Real Estate….Where What ,and When ?
Jerusalem is a city of unique and distinct populations and housing needs. In Jerusalem populations vary more than any other city in Israel. Ultra religious neighborhoods such as Ma’ah Sha’arim ,Romema, Har nof, Givat Shaul, and Ramat Shlomo, cater to a lower income population with large families. Peripheral neighborhoods such as Ramot, Ramat Eshkol, Armon Hanatziv, Har Homa, Gilo, and Kiryat Yovel attract a mix of mordern orthodox and secular families. The more central neighborhoods, such as Rehavia, Talbieh, German Colony, Baka , Old Katamon, Nachlaot have become very pricey and cater more to the foreign buyer or wealthier Israeli families . These areas tend attract more of a modern orthodox community .
When buying in Jerusalem , one should take into account a few factors.
Neighborhood and budget
Below is a guideline of average prices in various neighborhoods fr a 4 room ( 3 bedroom) / 2 bath property :
- Rehavia/ Talbieh – 3,200,000- 3,600,000 NIS
- Baka/ German Colony – 3,000,000- 3,400,000
- Old Katamon- 2,800,000 – 3,400,000 NIS
- Nachlaot – 2,400,000 – 3,200,000 NIS
- Shuk/City center – 1,900,000- 2,400,000 NIS
- Katamonim- 1,700,000- 1,900,000 NIS
- Arnona- 2,200,000- 2,500,000 NIS
- Armon Hanatziv- 1,800,000- 2,200,000 NIS
- Kiryat Yovel – 1,750,000- 2,200,000 NIS
- French Hill – 1,900,000- 2,400,000 NIS
- Ramat Eshkol- 2,200,000- 2,500,000 NIS
- Gilo/Har Homa – 1,800,000- 2,300,000 NIS
Buyers should take into consideration that prices increase if the property has a balcony or garden,and if there is an elevator in the building as opposed to a “walk up” building . Proximity to the city center and walking distance to the Kotel also increase the property price . For example , a 1 bedroom , 2 bath ( 60 sqm) in the prestigious David’s village near the Old City walls, with a sukkah balcony, elevator, parking and a storage room is listed at 3,300,000 NIS . For the same price, one can purchase a 4 room ( 3 bedroom, 2 bath) with balcony , but without parking or storage room, in Baka or German colony .
What type of property to purchase:
If one is considering an investment property, it is best to buy a few smaller apartments rather than one larger one. Smaller units rent easier and faster. Neighborhoods to consider are ones catering to a population of students or young families, that cant yet afford to purchase their own home. The preferred areas for this are French Hill ( near Heb Unv) , Kiryat Yovel ( near Givat Ram and Hadassah Ein Kerem) , Nachlaot near shuk area, and city center . These areas are also less expensive ,and rentals are in higher demand, so the return on investment ( ROI) is greater. ( anywhere from 3.8-4.2%)
If one is purchasing a family home, it is important to consider schools and synagogues in the neighborhood , religious diversity, public transportation , age range of the population in the neighborhood. The price will vary depending on the neighborhood ,as noted in the list above.
When to buy ?
In Jerusalem there are definitely seasons when more inventory is on the market and when there is less. Usually properties come on he market around April-May , when people start considering a move to a new neighborhood or investors decide to liquidate as the school year winds down and they need to renew leases with current tenants. This affords buyers with a larger selection of properties to choose from, so its a good time to start looking at properties. By the same token , new properties that come on the market tend to start at prices above market value since they are new on the market and not in a rush. Once a property has been n the market for over 60-90 days, the sellers usually start to consider price reductions. With the help of a professionals realtor, a buying can gain information regarding seller motivation and true market value of a particular property. This can help in timing a negotiating a purchase to a buyer’s best advantage .
Other opportunities new to the market for both investors and home buyers are Tama/ Urban renewal projects. Many investors have bought rundown apartments in apartment complexes that are slated to undergo urban renewal. Many older couples who do not want to remain throughout the building process ( which could take anywhere from 3-5 yrs or more) ,and have no need for the increased space offered by the developer. When these opportunities become available both investors and young couple who have the time and patience to wait out the building process ( and can receive rental income to cover a mortgage in the process) are very happy to purchase these apartments .
Due to their current condition, many of these properties sell for under market value. Due to the increase size of the property after the construction is completed ,and the addition of an elevator , balcony , etc, the appreciation on the investment and resale value in 3-5 years an amount to as much as 30-50% of the current value of the property .
The Urban renewal project was enacted in order to account for the massive housing shortage in the country, and hopefully create more supply , reduce demand ,and eventually lower housing prices. The government and the city have been much more receptive in recent years to allow building companies to obtain permits for both “Pinui Binui ” ( Urban Renewal ) and “Tama 38 ” projects .
Builders have turned to protect renewal as a way to build and sell more apartments, since plots of vacant land in Jerusalem are so scarce. Project renewal is divided into a few categories. ” Pinui Binui ” is a form of urban renewal in which old buildings are demolished and the owners are evacuated (the owners are compensated with rental income for the period of the construction) This allows older , unsafe buildings to be reinforced buildings built in accordance with stricter and up-to-date building standard. The builder receives additional buildings rights and tax incentives ,and the owners receive additional security rooms, balconies and sometimes storage rooms and parking spaces. Although the Knesset enacted the “Evacuation and Construction Act of 1965 Rehabilitation Areas,” in order to renovate old low-quality neighborhoods built during the 1950s, restrictions and criteria were a bureaucracy nightmare. In the late 1990s, the Ministry of Construction and Housing began a policy of urban renewal, under which the Ministry of Construction and Housing in an effort to improve dilapidated neighborhoods in various cities and allow poor populations to improve their living conditions, have therefor eased the restrictions enough to encourage builders to take on such projects.
Tama 38 is very similar, however the owners do not need to move out of their apartments, while the additional construction is being completed (elevators , refurbishing building facades, and additional floors above the current structure) Owners remain living in their property throughout the entire building and refurbishing process. Although this is not pleasant ,living in a construction zone for a few years, the free incentives are sometimes worth the inconvenience. Those who dont wnat to remain, end up renting out their apartments and moving to another rental temporarily. Incentives to the owners include additional balcony, secure room, earthquake reinforcement, elevator, enhancement to the facade of the building and lobby area , and sometimes a parking space as well.
Many areas in Jerusalem have completed Tama renovations and many more are currently undergoing the process. During the process, builders can pre-sell the upper penthouses that they have been granted ( even before final construction is complete). Last month a penthouse ( 5 rooms with large balcony) in Germany colony, that was added to an existing structure ( as part of the Tama 38 project) , was sold by RE/MAX Vision for 9,200,000 NIS ( approx 65,000 nis per sqm) . On the lower end of the spectrum, upper apartments in areas such as Katamonim, Kiryat Yovel and South Baka have been sold for 35,000 – 50,000 NIS per sqm .Property owners in those projects who increase the size and quality of their apartments saw the value of their apartments increase as much as 30%-50%.
Interest rates are also very reasonable averaging 4%-4.25% for a fixed rate loan, and 3.5% or less for variable ( linked ) shekel loans ( 10-25 yrs). Arrangements can also be made to pay the mortgage with dollars, sterling , euros, or any other currency. Mortgage brokers are available to assist in getting the best possible rates and terms.
For money transfer, there are quite a few companies that specialize in transferring funds from abroad and charge much less than Israeli banks on the exchange rates and transfer fees.
This article was written by Alyssa Friedland, Broker /Owner of the RE/MAX Vision Real Estate office in Jerusalem with over 20 years of experience in Real Estate. She offers free consultation to all New Olim and potential buyers.
For more information: 02-673-4111 or 054-668-4111 or www.remaxjerusalem.com