During the week, Khaled lives in Umm al-Fahm, a bustling Arab Israeli town, where he works as an excavation contractor. Soon, he, his wife and their six kids ages 3-13 will begin decamping on weekends to the West Bank city of Nablus, where they are joining a tide of Israelis buying second homes across the Green Line.
“I have an apartment, with a north-facing view, on the seventh floor of an 11-story building. The view is gorgeous, the neighborhood and the streets are great,” says Khaled, a pseudonym, of his under-construction new digs in the western part of the Palestinian city.
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, who is an acquaintance, makes no bones about discussing his property purchase. And he is not alone.
In conversation with a large number of Arab citizens of Israel, a strong anecdotal trend emerges of purchases of houses or apartments in the 40% of the West Bank where most Palestinians live and where the PA exercises control over most civilian matters. (The other 60% is made up of areas under full or partial Israeli control, comprising the Jewish settlements and corridors between them. The trend of Jewish Israelis buying homes in those parts of the West Bank — albeit for wildly different reasons — has been well documented since 1967.)
Among the most popular areas are Jericho Gate, a new planned neighborhood on the outskirts of the Jordan Valley city; Rawabi, the first planned Palestinian city in the West Bank, just north of Ramallah; Tulkarm and Jenin, home to campuses of the American University, where almost half of the student body is Israeli; and Rafidia in Nablus, where Khaled bought his home from a Palestinian contractor when it was just a concrete shell.
The view is gorgeous, the neighborhood is great… There are restaurants, playgrounds
“There are restaurants, playgrounds. The building is high on the city’s western hills, giving it the most beautiful view in Nablus,” Khaled says.
“It’s walking distance to hookah cafes, coffee shops and restaurants. For us, it’s a vacation place. I plan to take the kids to the Nablus market, to the candy stores.”
Khaled paid NIS 300,000 ($95,000) for the 200 square-meter home (2,150 square feet), and then put another NIS 245,000 ($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 NIS 545,000 ($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 on the olive harvest, eating olives.”
Everybody is doing it
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.”
Seven years ago, Joint List MK Osama Saadi bought an apartment in Nablus for his daughter, who was in medical school there, “instead of spending our savings on rentals.” This was his third home, after he had previously purchased one in Jericho. His daughter has since moved away for a medical residency in Jerusalem, but he keeps both properties, fully furnished.
“The plan was to go regularly for vacations in Jericho or Nablus, but since I was elected to the Knesset in 2019, with four consecutive election campaigns, I haven’t had time to go,” he says.
Thabet Abu Rass, a co-CEO of the Abraham Initiatives shared society organization and a political geographer, told The Times of Israel that he had invested some of his savings in buying an apartment in the Nablus area.
“There are hundreds of Arabs investing there, due to a housing crisis in Israel,” he says. “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, a planned neighborhood of smart-looking single-family homes and duplexes set along winding, landscaped streets on the southeastern edge of Jericho, with a view toward the Dead Sea.
The project is replete with park space and plans call for cultural centers, commercial space and mixed-use developments.
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Posted by Jericho Gate on Wednesday, September 9, 2020
“Some Israelis buy homes there to rent out, as investments. And there are those who buy it for a vacation home,” says Sami Ali, a former political consultant for the Joint List who currently advises Palestinian companies that market houses and apartments to buyers within Israel.
“I personally know two people who bought houses for themselves there.”
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
“In the past, Arab Israelis invested in properties in Turkey, but the return on investment was not worth it anymore,” Ali says. “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?”
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.
Saadi notes that Jenin, another university town, is also a popular place to invest, though he prefers Nablus’s charms.
“There are a lot of students in Jenin and Nablus, and there’s a custom of buying and renting out apartments there,” he says.
Akram Ragov, 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.
Buying under the radar
As it turns out, 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, 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 granular enough information to allow for any meaningful analysis of the trend.
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, which Palestinian authorities are sometimes willing to overlook as it is not considered the same as direct ownership of a single-family home on a plot of land.
“In recent years, the Palestinian Authority has tightened the conditions for Israelis to purchase property,” says Saadi, the Joint List MK. But he notes that in Rawabi, exceptions were made. “They allowed Israelis to buy apartments, since it does not grant a title to the land,” he says.
Ali, the real estate marketer, notes 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 says.
Those who buy apartments, he says, “do so via a long-term leasehold with the contract registered on the property.”
Both he and Thabet, the Abraham Initiatives co-CEO, say that the trend has mostly flown under the radar, with little about it in the Israeli or Palestinian press, though many talk about it and Facebook is replete with ads for Palestinian homes targeting Israeli buyers.
“Both in the Hebrew media and in the Arabic media, there are no mentions of these trends,” Ali says.
Three bedrooms and a view for NIS 525,000
While those buying apartments speak about the family-friendly neighborhoods and shiny new apartments on tree-lined streets, an even bigger draw for most buyers is the attractive price, people say.
Housing costs in Israel have soared over the last 15 years, earning Tel Aviv, where a three-bedroom apartment costs NIS 4 million ($1.25 million) at a minimum, the title of world’s most expensive city.
In working-class suburb Bat Yam, a similar-sized apartment, even secondhand, goes for around NIS 1.8 million ($557,000) and in far-flung Kiryat Shmona, on the Lebanese border, new three-bedroom apartments generally go for nearly NIS 900,000 ($283,000). Going up to 200 square meters there would bring the price to around NIS 2 million ($630,000).
Tracking housing prices in Arab-majority towns is more difficult, because ownership often transfers within families. In Nazareth, however, three-bedroom units average around NIS 1.1 million ($346,000) — cheap by Tel Aviv standards, but downright exorbitant compared to Nablus or Jenin.
But in the West Bank, “you can buy a 250 square-meter apartment (2,690 square feet) for NIS 200,000 ($63,000),” Saadi says. “This is not a huge financial investment.”
According to Ali, prices in Ramallah and Bethlehem can get relatively high. A 120-square-meter apartment (1,260 square feet) in Ramallah can run NIS 400,000 ($126,000).
“But in the center of the West Bank, Jenin, Tulkarem and villages in this area, you can buy a dunam (quarter-acre) of agricultural land for NIS 50,000 ($16,000),” he says.
In Rawabi, just a few minutes from Ramallah, a 120-square-meter apartment costs only around NIS 300,000 ($94,000).
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An ad for a project there advertises a new 171-square-meter (1,840 square-foot) home with three bedrooms overlooking a landscape of hills and valleys for $165,000 (NIS 525,000).
“Even compared to homes in the Buyer’s Price program [Israel’s first-time homeowner subsidized housing lottery], prices are still three to four times what they are in Palestinian cities,” Ali says.
Prices in Jericho Gate and other luxury projects can run much higher; Haju, the Haifa real estate agent, estimates that a single-family home in Jericho Gate averages around NIS 2.5 million ($786,000), but for that you get a yard, a pool and 300 square meters (3,200 square feet) of living space.
“Compared to ritzy Caesarea, where it would cost at least NIS 6 million, it’s relatively cheap,” he points out. Even in faraway Eilat, a single-family home with a pool can run for NIS 5 million to NIS 7 million ($1.6 million to $2.2 million).
Ali, who says the trend has picked up in recent years, notes 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 they do not want to throw the money in savings in the bank. 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.”
These deals might not last
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.
People are still afraid of a deterioration in the security situation and of the reality under occupation and may even be afraid of losing their investment
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 of the reality under occupation and may even be afraid of losing their investment. But still, there is a certain percentage that continues to invest,” Ali says. “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.”
For Saadi, 2002’s Operation Defensive Shield, in which Israeli soldiers invaded several Palestinian cities in response to a suicide bombing, turning some neighborhoods into war zones and causing “vast destruction,” is a reminder of how bad things can get in the West Bank.
“I don’t think the investments are being driven by an expectation for calm,” he says. “It’s simply that the prices are so low.”