US developer pays over $200 million for slice of central Jerusalem
Greek Orthodox Church sells land that includes homes, hotels, and undeveloped plots to luxury US real estate firm
A New York-based luxury real estate company bought a major parcel of land in central Jerusalem owned by the Greek Orthodox Patriarchate for NIS 750 million ($216 million), the parties announced this week.
The purchase was the first in Israel for Extell Development, founded and headed by Jewish-American businessman Gary Barnett, who also owns Extell Ltd., which has issued bonds on the Israeli stock exchange over the last eight years.
The land, which covers some 520 dunams (520,000 square meters) in central areas in the capital, is currently leased by Jewish National Fund-Keren Kayemet LeYisrael until 2051 with an extension option for a further rental period, in line with standard leasehold terms in Israel.
The plots include large swaths of the upscale neighborhood of Talbieh, in central Jerusalem, as well as the neighborhood of Nayot, extending into large parts of the Valley of the Cross, a rare tract of undeveloped land in the center of the capital revered as the place where – according to Christian tradition – the wood was taken to make the crucifix for Jesus. It also includes much of the Israel Museum and well-known hotels such as the Inbal and the Dan Panorama
In 2011, the church sold rights to these areas of Jerusalem to an investor group called Nayot Komemiyut for $20 million. KKL holds three leases to this land signed with the Greek Orthodox Church in 1951 and 1952, each for 99 years. KKL subleases this land to more than 1,000 Jerusalemites whose homes are situated on this land and who have been affected by the sale. The organization can build on this land, but nobody else can.
The problem for people living on this former church land is that while they own their apartments, and have leases to the land, they do not own the land and therefore face potential limbo when the leases run out.
The 2011 sale gave Nayot Komemiyut the right to negotiate to extend the leases with KKL once they run out in about 30 years.
The land in question was also at the center of a complicated legal battle in recent years. In late 2021, a Jerusalem court ordered the Greek Orthodox Patriarchate to pay KKL-JNF $13 million, plus NIS 250,000 ($80,000) in costs, to compensate for the theft of $20 million over 20 years ago by two fraudsters who were subsequently convicted of embezzling the church. The ruling was made despite the fact that the patriarchate was also tricked at the time.
In a statement announcing the sale, Barnett said this project “will boost the development of central Jerusalem. We are going to treat the tenants with the same respect and fairness as we are doing in all of our projects. This is a win-win-win-win situation for the State of Israel, for the city of Jerusalem, for Extell, and for the residents.”
Extell was founded in 1989 in New York to focus on premier markets, and its current portfolio includes more than 2.5 million square meters (25 million square feet) of space across past and future developments.
Its holdings include The Rushmoor, the Park Hyatt and W Hotel on Times Square in New York, together with what it claims is the world’s tallest home, a triplex penthouse across the 129th, 130th, and 131st floors of the Central Park Tower which includes seven bedrooms, 11 bathrooms, two full kitchens, a grand salon that spans nearly 3,000 square feet, a private ballroom, and a nearly 280 square meters (1,400 square feet) private terrace with views of the city’s landmarks and rivers.
The Greek Orthodox Patriarchate is the second biggest owner of real estate in Israel, after the Israeli government, having bought land from the Ottoman rulers in the 19th century. It is the largest and wealthiest church in the Holy Land, commanding massive real estate holdings dating back hundreds of years.
The church has faced controversy in the past for its sale of land in Arab parts of Jerusalem’s Old City to Jewish groups seeking to increase the Jewish presence in these areas in place of longstanding Palestinian tenancies. In 2005 the then Patriarch was forced to resign because of the Church’s land sales, transfers upheld by Israel’s Supreme Court last summer.
