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Jerusalem Real Estate: Intrigue and Irony

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Talbieh is a charming, centrally located, upscale Jerusalem neighborhood. It originally comprised large private houses owned by wealthy Christian Arab families, most of whom lived in neighboring countries and spent their vacations in Jerusalem.

After the establishment of the State of Israel, many of these architecturally distinctive homes got chopped up into small apartments and were populated by displaced families and immigrant families. By the 1960s, these formerly majestic buildings became run down, due to the heavy wear and tear that they endured, and many of these structures were abandoned.

Around the same time, many new buildings were built. Demand for these modern properties was strong and the apartments sold for top dollar. Countless projects were built on church land and no one seemed too concerned, as the 2051 lease expiration date was considered very far into the future.

Church Land

Over 130,000 dunam (32,500 acres) of land in central Jerusalem neighborhoods are owned by the Greek Orthodox Church. In 1952, the nascent Israeli government and the Greek Catholic Church executed a 99-year lease with one 25-year lease renewal option. Thousands of apartments were built on church land, in addition to many famous Jerusalem buildings, such as the Knesset and the Great Synagogue.

In 2011, a group of private Jewish businessmen signed an agreement with the church to lease the land for 160 years, commencing when the original lease expires in 2051.

Fast forward to 2017, and the initial church lease expiration date is starting to loom large, as it is only 34 years away. Most industry observers expect that in 2051 a lease renewal fee will be levied on the apartment owners to cover the lease extension cost, but no one knows how significant that levy will be. This lack of clarity is wreaking havoc on market pricing, and units on church land are currently selling at minimally 30 percent below similar apartments on private land.

Rejuvenation

Starting in the 1970s, it became fashionable to purchase and renovate the previously neglected older houses. One such property is Chovevei Tzion 7, a magnificent house that was built in the 1920s by a Christian Arab family headed by attorney and power broker Elias Mognom. The family was extremely well connected, and hosted such dignitaries as the British Mandate governor and Jordan’s King Abdullah. During the War of Independence, the Mognom family abandoned the property, which was then divided into several smaller units and, over time, fell into disrepair.

Almost all of these previously undesirable older buildings are situated on privately owned land and are now highly sought after; as a result, prices for these properties continue to rise. Refocusing on Chovevei Tzion 7, in the early 2000s, an overseas family purchased all of the apartments in the building, and lovingly and painstakingly restored the property to its original grandeur. Two floors were added to this rare free-standing villa, which is now an extraordinary 8,400-sf estate comprising nine bedrooms, nine bathrooms, a rooftop pool, beautiful grounds and expansive family space. The property is one of the most cherished private homes in Jerusalem and is for sale with an asking price that reflects its magnificence.

Trend

We are observing similar scenarios in other sections of Jerusalem. For example, in Baka, many older Arab buildings laid fallow for many years. During that time period, new properties situated on church land were built on Ben Azai and Dan Streets, and were at the forefront of the community’s gentrification. Just like in Talbieh, these apartments are selling significantly below market due to the unresolved church-land issue, while many of the formerly neglected older buildings have been meticulously restored and are in great demand.

2017-03-09

Gedaliah Borvick is the founder of My Israel Home (www.myisraelhome.com), a real estate agency focused on helping people from abroad buy and sell homes in Israel. To sign up for his monthly market updates, contact him at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

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