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Buying an apartment in Jerusalem

market-placeThe Jerusalem Real Estate market is fast paced and exciting.   Jerusalem, in many circles, is known as the real estate capital of Israel because of the relatively high volume of sales and its attraction to buyers from all over the world.

Jerusalem is made up of over 130 different neighborhoods.  Those neighborhoods closest to the City Center and the Old City, are the ones most attractive to foreign buyers and therefore considerably more expensive.

Purchases in Jerusalem range from single apartments to large buildings and hotels.  Most foreign buyers purchase “vacation” homes in Jerusalem.  These apartments are left vacant most of the year and have caused much strife amongwh local residents who claim that Jerusalem is turning into a “ghost town”.

There are also many investors who have profited from the high rental demand.  The rental market breaks down to long and short term rentals.

Long term renters include professionals on sabbatical, new Olim getting a feel for the neighborhoods before they purchase, foreign diplomats and members of foreign organizations, wealthy students etc.  In the central neighborhoods rent is inexpensive compared to the high real estate prices which make for a relatively low return on investment.  Those buying apartments for a long term return usually do not receive more than a 4% return per year.

The short-term rental market is considerably more lucrative.  Large families looking to spend their vacations or holidays in Jerusalem have typically had to spend a small fortune putting up their entire family in expensive hotels.  Now many are finding the option to rent a single apartment much more viable for a number of reasons.  The costs are considerably lower, there is more privacy, and you feel less like a tourist.  From the investors perspective this is a great way to make well over the traditional 4% return.  Of course with more return comes more hassle.  Finding tenants with such frequency, servicing an apartment with that amount of turn-over, serving the clients, and paying all of the expenses are just part of your responsibilities as a short term rental apartment owner.  Most owners prefer to have an independent company manage this for them.

Prices in the various neighborhoods vary.  They depend on a variety of factors i.e. location, floor, interior and exterior space including space to put a Succah,  type of building, parking, amount of tenants, type of land registration (see our article on Church Land) and level of renovation.