Real Estate

Unless you are in the business, either buying or selling, real estate news doesn’t attract much attention. Nonetheless, Times of Israel political correspondent Tal Schneider says it’s very newsworthy.

Ms. Schneider told how Israeli Arabs lured by cheap prices are buying homes in the West Bank. She cited the case of Khaled who lives in Umm al-Fahm, a bustling Arab Israeli town in the north of Israel.

During the week, Khaled lives in Umm al-Fahm where he works as an excavation contractor. Soon, he, his wife and their six children will be going off on weekends to Nablus in the West Bank.

“I have an apartment, with a north-facing view, on the seventh floor of an 11-story building. The view is wonderful and the neighbourhood is great. There are restaurants, playgrounds” says Khaled, (a pseudonym), of his under-construction new holiday apartment in Nablus. “It’s walking distance to hookah cafes, coffee shops and restaurants. For us, it’s a vacation place.”

“While purchasing property in areas controlled by the Palestinian Authority is not illegal, having his name published in connection with the trend could cause him problems in both Israel and the PA.

But in private, Khaled, talks openly about his property purchase.” Says Tal Schneider.

I want to add a margin note about Umm al-Fahm: The name indicates that charcoal burners occupied this site at some time during the Middle Ages. Back then it was a small village surrounded by wooded hills. With no thought given to reforestation the charcoal burning came to an end and the village struggled on as a mixed farming and grazing hamlet   in 1596 it appeared in the Ottoman tax registers with a population of 24 households, all Muslim. In 1883, the Palestine Exploration Fund's (PEF) Survey of Western Palestine described Umm al-Fahm as having around 500 inhabitants, of which some 80 people were Christians. The place was well-built of stone, and the villagers were described as being very rich in cattle, goats and horses. It was the most important place in the area besides Jenin. The term “very rich” used by the PEF means by comparison to other places in the region. 

Captured by Iraqi Arab League forces in the 1948 Arab–Israeli War, Umm al-Fahm was ceded to Israel along with 14 other villages in the Wadi Ara area in exchange for territory south of Hebron. 

Wadi Ara has drawn a lot of political attention among some Israeli politicians, notably Avigdor Lieberman of the Yisrael Beiteinu party who proposed transferring the area to the sovereignty and administration of the Palestinian Authority for a future Palestinian state. In return the Palestinian Authority would transfer specific large Israeli settlement "blocs" within the West Bank east of the Green Line to Israel. According to politicians who support this land-swap, Israel would ensure and secure itself as a primarily Jewish state. However, many Israeli politicians disagree and believe it would only decrease Israel's Arab population by a mere 10%, while most Israeli Arabs object to trading Israeli citizenship for Palestinian citizenship.

In November 2015 the radical northern branch of the Islamic Movement centred in Umm al-Fahm was banned by the Israeli Security Cabinet, led by then Prime Minister Benjamin Netanyahu. The outlawing of the Northern Branch was based on evidence gathered by the Israel Police and the Israeli secret police, Shin Bet, which allegedly showed that the movement had close connections with Hamas and the Muslim Brotherhood. The organisation’s suspected ties with Hamas were a major catalyst for the decision; the northern branch received funding from Hamas-affiliated groups, and collaborated with Hamas in its institutional activities.

However, Shin Bet chief Yoram Cohen, objected to the Cabinet's decision to outlaw the Northern Branch. According to him, there was no evidence linking it to terror attacks and the decision would be seen as a declaration of war on Israel's Muslim community and an assault on the political rights of its Palestinian minority. Banning the movement would, according to Cohen, do "more harm than good". It would make it more difficult to monitor Northern Branch members/supporters and could cause unrest among Arab citizens in Israel and among West Bank Palestinians. For this reason, the Shin Bet, in opposition to the Israel Police, opposed the ban.

Support for the Northern Branch numbers in the tens of thousands, although it is impossible to know the exact number because the definition of “support” is unclear. Because of the Northern Branch’s extensive social service provisions, it is often difficult to discern between support, sympathy, and the use of services that the state fails to provide. For example, this problem became clear when, as part of the crackdown, the authorities shut down the Jaffa Association for Charity, a charity to which the Israeli welfare services had referred needy families.

Furthermore, much of the Northern Movement’s popularity rests on the charismatic character of Sheikh Ra’ed Salah. It’s difficult to know what is best, to ban him or to bless him, though he can’t be ignored to the point where he will fade into oblivion.

Sheikh Raed Salah, who was imprisoned for inciting terrorism, was released from prison in December last year after completing his sentence.

Residents of Umm al-Fahm gathered at the entrance of the city to greet him carrying flags of the Islamic Movement in Israel.

It’s pertinent to mention the rising popularity of the pragmatic Southern Branch of the Islamic movement led by Mansour Abbas in the current national unity coalition government. 

Back to the main text and Tal Schneider’s piece in the Times of Israel

She claims that a quite a few Arab Israelis, are buying houses or apartments in the 40% of the West Bank where the PA exercises control over most civilian matters.”

Among the most popular areas are Jericho Gate, a new planned neighbourhood on the outskirts of Jericho; Rawabi, the first planned Palestinian city in the West Bank, just north of Ramallah; Tul Karem and Jenin, home to campuses of the American University, where almost half of the student body is Israeli (Israeli Arabs); and Rafidia in Nablus, where Khaled bought his home from a Palestinian contractor when it was under construction.

Khaled paid the equivalent of $95,000 for the 200 square-metre home and then put another $77,000 into upgrading it with custom cabinets, flooring, woodwork and more, as well as hiring a local interior designer, for a final price of $171,000.

The price is a fraction of what most Israelis pay for a new apartment, even in the country’s peripheral hinterlands.

Khaled also bought three dunams (0.75 acres) of agricultural land near al Funduq, a village west of Nablus.

“I bought it for the olives,” he says. “I just enjoy going there, working during the olive harvest and later eating the ‘cured’ olives.”

By Khaled’s estimation, around one in five Israeli Arabs has land or a home in the West Bank.

“Everyone is buying,” he says. His daughter’s teacher and a pharmacist friend of his bought vacation homes in Rawabi. “They go there on weekends and holidays. Everyone around me is buying real estate.”

Thabet Abu Rass, a co-CEO of the Abraham Initiatives shared society organisation and a political geographer, told Tal Schneider that he had invested some of his savings in buying an apartment in the Nablus area.

“There are hundreds of Israeli Arabs investing there, due to a housing crisis in Israel,” he said. “I know less about the extent of the phenomenon in Jericho or Rawabi, but I am aware that there are a lot of transactions there as well.”

One project attracting much attention from Arab Israelis is Jericho Gate (already mentioned). It’s a planned neighbourhood of smart-looking single-family homes and duplexes set along winding, landscaped streets on the south-eastern side of Jericho, with a view toward the Dead Sea.

The project is replete with park space and plans call for cultural centres, commercial space and mixed-use developments.

“In the past, Arab Israelis invested in properties in Turkey, but the return on investment was not worth it anymore. We have Ramallah and the West Bank an hour away. You can go on vacation every week; it’s the Palestinian people, so there is mutual trust, solidarity. Why go to Turkey and worry about crooks out there?” One estate agent told Tal Schneider

Khalil Haju, a Haifa real estate agent, says he has also noticed Arab Israelis putting money in the Jericho project, as well as in Rawabi, though he estimates that only about 5 percent of Israeli buyers purchase the homes as vacation units.

“It’s mainly for families, but Arab Israelis buy them as rentals or an investment, and they don’t intend to actually go there to live,” he says.

“There are a lot of students in Jenin and Nablus, and there’s a custom of buying and renting out apartments there,” he says.

According to Tal Schneider the governor of Jenin, confirmed that Israelis were snapping up property in the city, but noted that he did not have any concrete information on the extent of the phenomenon.

“Apparently, nobody has concrete data on Arab Israelis buying homes in PA-controlled areas of the West Bank. While the tax authority has general data on Israeli investment income generated abroad, it does not specify which of these are real estate investments, said Tax Authority spokesman Avital Lahav.”

On the Palestinian side, laws are in place to keep Israelis of any stripe from buying Palestinian land. To get around the rules, Arab Israelis only buy part of a property — up to 49% — or buy an apartment or condo in a development project, which Palestinian authorities are sometimes willing to overlook.

Moreover, the purchase can be made through a foreign corporation that acts as a middleman, further obfuscating the true extent of the phenomenon, and not all Israelis report their foreign investments to the Tax Authority.

The Bank of Israel keeps overall statistics on Israeli investments abroad, but does not have enough information on a granular level to allow for any meaningful analysis of the trend.

Schneider mentioned another real estate agent who told her that purchases are also made through shell entities registered to Palestinians, to blur the Israeli ownership.

“In principle, it is more difficult to acquire full ownership of land, as opposed to an apartment,” he told her.

“The people buying apartments often obtain a long-term leasehold with the contract registered on the property.” he added.

Housing costs in Israel have soared over the last 15 years.  In Tel Aviv a three-bedroom apartment costs at least $1.25 million. Nearby in the working-class Bat Yam, a similar-sized apartment, even second hand, goes for around $557,000 and in far-flung Kiryat Shmona, on the Lebanese border, new three-bedroom apartments generally go for nearly $283,000. Going up to 200 square metres there would bring the price to around $630,000.

Tracking housing prices in Arab-majority towns in Israel is more difficult, because ownership often transfers within families. In Nazareth, however, three-bedroom units average around $346,000 — cheap by Tel Aviv standards, but downright exorbitant compared to Nablus or Jenin.

“In the West Bank you can buy a 250 square-metre apartment for $63,000, but prices in Ramallah and Bethlehem can get relatively high. A 120-square-metre apartment in Ramallah can cost $126,000. In Rawabi, just a few minutes from Ramallah, a 120-square-metre apartment costs approximately $94,000.”

An ad for a project there advertises a new 171-square-metre home with three bedrooms overlooking a landscape of hills and valleys for $165,000.

Even compared to homes in the Buyer’s Price programme (Israel’s first-time homeowner subsidised housing lottery), prices are still three to four times what they are in Palestinian cities,” she added.

“Nevertheless, prices in Jericho Gate and other luxury projects can run much higher” said Haju, a Haifa real estate agent, who estimates that a single-family home in Jericho Gate averages around $786,000, but for that you get a yard, a pool and 300 square metres of living space.

One of the estate agents quoted by Schneider claims that one factor driving the phenomenon is the lack of bank mortgages available in Arab communities, where mafia-controlled loan sharks have taken over the lending business.

“Most Israeli Arabs have a very hard time getting financing from banks in Israel,” he says. “I think most buyers are simple people who have worked all their lives, saved, and don’t want to lose money by investing in a bank savings account. Investing in businesses during the COVID pandemic has not been an attractive option, so they invest their money in real estate in the PA and assume that it will bring a nice return.”

Purchasing homes in the PA rests on the assumption that the security situation will remain calm enough to make a vacation home in Jericho tenable or keep a real estate investment from crashing.

Despite the money pouring in, jitters are still high that the situation could change at any moment.

I think people are still afraid of a deterioration in the security situation and may even be afraid of losing their investment. But still, there is a certain percentage that continues to invest. They feel that the economic relations between Israel and the West Bank are good, that there is good production in the West Bank, and that there is mutual trade and economic cooperation. And so, there is also prosperity and an increase in real estate purchases there.”  

 

I’m inclined to share some of his optimism.

 

Have a good weekend.

 

Beni,                                                               10^th of February, 2022.