The Jerusalem Luxury Real Estate Market- stronger than ever despite Corona

  • 7 months ago
  • blog
  • 1

by Alyssa Friedland

In many major cities around the world, the closer one lives to the city center, the more expensive the real estate value.  However, in many cities there are also pockets of luxury listings in the peripheral neighborhoods and suburbs where prices could reach as high or higher values depending on the quality of life in the specific neighborhood.  The Jerusalem luxury market however, is an anomaly and a phenomenon that is hard to comprehend.  The average single family homes in the 4 major neighborhoods central to the city center or the Old City, are some of the most expensive real estate in the city and in some cases, the country.  Unlike Tel Aviv where proximity to the ocean and ocean views determine real estate values, in Jerusalem the value increases according to proximity to the Old City and walking distance to the Kotel (the Western Wall).   Views to the walls of the Old City or the Dome of the Rock also command premium real estate prices.  The price differential between a property in Talbieh, Mamilla, German Colony, Old Katamon or Baka, to peripheral areas, can range as much as 30%-40%.  The lure and spirituality of proximity to the Kotel matters significantly with religious buyers, and with many foreign buyers who consider themselves Zionists yet aren’t particularly religious.

In the past (pre-pandemic), buyers had commonly been foreign vacation home buyers who wanted to spend holidays and summers in Israel.  With the pandemic and its accompanying travel restrictions, many high-end homes that were owned by these vacation buyers went on the market.  Owners of these apartments and homes started to re-evaluate what to do with their properties, preferring to either sell their homes or find long-term renters.  As aliyah increased from North America and England during the pandemic, these properties became attractive possibilities for the newcomers.  Expectations were high and the luxury market satisfied those expectations.  Many prospective buyers were looking for high quality, centrally located properties with outside spaces, either gardens or large balconies.  Nefesh B’nefesh has recorded a 90-100% increase in Olim over the last year.  Most of that increase had to do with 2 major factors during the pandemic.  One was the ease of mobility regarding jobs.  Many companies realized with the pandemic lockdowns, that employees could work effectively and efficiently from remote locations utilizing technology.  Meetings on Zoom became the new way of conducting business and keeping appointments with clients.  Customer service and online purchasing allowed employees the flexibility of working from home wherever they were in the world. This flexibility allowed many people, who were afraid of finding meaningful work in Israel because of the language barrier, retraining needs, etc., to keep their current jobs in North America or England, and still live their dream in Israel.  Being able to keep high foreign incomes also allowed them to qualify for mortgages on their new homes in Israel, and thereby purchase above their expectations.  The second factor is that mortgage rates are currently at an all-time low, ( 2%-3.5% for fixed rate for 10 to 30 year loans ).  These low rates became a temptation for many buyers, and many bought homes outright instead of starting out in a rental.  The RE/MAX network in Israel reported all-time highs in number of transactions closed, as well as high-end properties sold within the last 12 months.  Despite the pandemic, the real estate market in Israel was even more active than in previous years to-date.   Another factor that played a very large part in the ability of foreign buyers to purchase these luxury properties, was the advent of new technology in the real estate industry such as  ‘virtual tours’.  Virtual tours became a valuable tool after the pandemic began, and allowed buyers the ability to literally “walk through ” a property virtually, without ever setting foot in the home.  Inspections, legal due diligence and financing  were all able to be done remotely.  Due to the pandemic,  Powers of Attorney are obtained via certification/notary services (Apostilles) that would come to clients homes, as opposed to having to appear at the Israeli consulate, so that the sale could take place much more efficiently, and without delays waiting for appointments at the consulate.  Money is wired and buyers are able to know that they had a home to come to as soon as they walked off the plane.

Sales in the Jerusalem luxury market were fairly plentiful in the past year.  The home of a well known architect  in Talbieh, was sold at a record high of NIS 13,000,000.  The home featured magnificent arched windows and 4-5 meter ceilings throughout.  The property had 7 rooms,  5 bedrooms, a study and a home office.  There were 4 full bathrooms, a two-car garage and landscaped garden of approx 370 sqm surrounding the home.  There was a custom gourmet kosher kitchen, a large sukkah terrace, underfloor heating system and a  security system.  The home was sold after approx 9 months of extensive marketing. It was sold to a religious family from New York, in a co-op transaction between Trust Real Estate and RE/MAX Vision .

A penthouse was sold on Emil Zola street  for  NIS 9,200,000.  Located in a newly developed project, the double-wide penthouse (approx  200 sqm) was all on one level with magnificent views of  German Colony.  The owner was a developer who added the penthouse as part of a TAMA project.  The property was sold to a religious family from the United States. RE/MAX Vision tranacted the deal and procured the buyer. The deal took over two months to complete.

In Mamilla a penthouse was sold for 9,500,000 NIS , 6 rooms , 274 sqm with a roof garden attached . Currently under contract is a 270 sqm Old Arab pentcottage in Baka with original mosaic floors at a closing price of  NIS 12,375,000.  This property was  a co-op sale between RE/MAX Vision and Tafnit Real Estate. Although there are approximately  4000 properties currently on the market for sale in Jerusalem , only 40 of them are in the ” luxury listing” catagory  ( priced over NIS 10,000,000 ) accounting for only 1% of the properties for sale in the Jerusalem  . It is obvious that demand far exceeds supply in the luxury market. Last year there were approximately 3,000 properties that were sold in Jerusalem, with  5-7% of them in the luxury catagory.  There will always be a luxury clientele of buyers looking for special homes.  The more we see a rise in aliyah, the more demand there will be for the high-end homes, which will continue to generate an increase in prices and property values in the desirable neighborhoods of Jerusalem.   This segment of buyers are extremely selective and discerning when it comes to purchasing their homes.  Some buyers will take anywhere from 6 months to 2 years to evaluate and select the home of their dreams, but in the end, it was definitely worth the wait.

The writer , Alyssa Friedland , was the former owner of RE/MAX Vision ,and is now a luxury listing specialist for the office, which is located at Emek Refaim 54. She can be reached at
054-668-4111 and is always happy to provide free consultations regarding housing issues.

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Fullscreen capture 08-Dec-20 110617 PM - Alyssa Friedland

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