The recent wave of real estate purchases in Israel by diaspora Jews is nothing new. Much has been written about the investors from Jewish communities in the US, UK, France, Australia, Belgium, Canada, South Africa, the Netherlands, and other countries across the globe, who in recent years have rediscovered the relatively low prices in the holy land, and exploited prices that would scarcely buy a two-roomed apartment in London to pick up luxury properties on the Tel Aviv shoreline, or in one of Jerusalem's upmarket neighborhoods.
But it turns out that behind the decision of many Jews still lies Zionism - the desire for a connection with Israel, almost to redeem land, where rezoning cannot be expected for years. It's true that experience shows that Zionism and financial interests often go hand in hand. Ask the Gerer Rebbe (leader of the Ger Hasidic sect) who in the 1950s acquired plots on the coast north of Herzilya, which in time became the site for the exclusive Arsuf neighborhood, or the group of South African Jews calling themselves "Africa Israel" who more than 70 years ago bought a tract of swampland south of Petah Tikva, which later became the Savyon neighborhood. But the original intentions are still made up more by sentiment, and less of economic considerations. If along the way, the buyers from the Diaspora make a profit, that's fine, but in these purchases it's not the main thing.
Israel, at the beginning of the 21st century, is witnessing the resurgence of a trend from the distant past - the buying of agricultural land in outlying regions. Prices of such land are substantially lower than building land, so purchases like these are usually large. The aim is to buy up stretches of land that will be rezoned in the future. In any event, the passage of time, coupled with the latest decisions on agricultural land rights, and the levies and taxes that buyers have to pay for such an upgrade, make any such deal virtually devoid of any economic benefit. Lawyers from the realty sector who are familiar with the trend and who act for foreigners involved in real estate deals, told "Globes" what sort of properties Diaspora Jews are now shopping for. Price, so it would seem, is not the only factor at play.
On the trail of Ben Gurion
Adv. Amitai Erlich, and Adv. Amir Goldman, of law firm Goldman, Erlich, Gaver, Edelstein & Co, say, "This trend has existed throughout the history of the state, but it is now becoming more widespread. We're currently acting for Jews from several countries in Europe who hold extensive land reserves in central Israel and in the outlying regions. They or their parents originally bought this land out of pure Zionist motivation, and the desire to build a life for themselves in the land of Israel. They seek, principally, to secure and preserve the next generation's bond with Israel, and they know that purchasing an asset as a long-term investment is a fitting way to forge bonds like these."
According to Erlich and Goldman, parents often explicitly state this goal, usually in wills or other documents, which set out the instructions for handling the land in Israel after their death. Some documents have terms that indicate the buyer's intention to hold onto the land, by inserting clauses prohibiting the sale of the land for a given number of years or until permission to build on it is granted. "A few years ago, a London family bought dozens of dunams of agricultural land in northern Israel. The father of the family stated explicitly in his will that the land should not be sold until such time as building approval was forthcoming. Recently, a foreign resident from Eastern Europe bought dozens of dunams of land through us in the Rehovot region. Another family from the US opted to invest in southern Israel, in the Negev. In that case, it was stated explicitly that the inspiration for the choice of region was David Ben Gurion."
Adv. Eldad Nevo says he has encountered this from a slightly different angle. "Land is being purchased in regions where it could take years to get it rezoned for building. Take for example, the area between Cliff Beach, Tel Aviv's most northern beach, and the Herzliya Marina. The people most active in this market are Jews from France. The fact that these landowners are not liable for tax on the land (there used to be a purchase tax liability) is an incentive for them to buy there, since aside from the initial investment, they do not incur any further expenditure on the ownership. Still, for them this is a form of a will that requires their heirs to maintain a bond with Israel."
Land as a barmitzvah present
Adv. Oded Israeli, who specializes in compulsory land purchases, says his firm recently handed the sale of a 100-dunam agricultural holding in Pardes Hana Karkur, whose owner conceived a unique method of marketing it. He has offered Jews abroad the opportunity to buy lots of up to a dunam at $30,000 per dunam, as barmitzvah present for their children or grandchildren, with the aim of strengthening Diaspora Jewry's ties with Israel (and make tidy profit into the bargain). He even hired a marketing company to advertise the sale on the Internet and market it exclusively to Jewish organizations worldwide.
Adv. Ilan Charcon, chairman of the Property, Contracts and Real Estate Committee at the Israel Bar Association, says he has come across many Jews who are interested in land, for example in Jerusalem's old city and in Safed, solely because of its sanctity, and don't seek any financial gain. "In some of the deals, I got the impression that the buyers did not see it as a profit making real estate move, but were acting purely out of Zionist motivation. In addition, there has also been a trend towards investment in the Galilee region. The land up there is relatively cheap and is set in beautiful, pastoral surroundings. It doesn't matter to the buyers that the land will lie there unwanted for years. They do it as an investment for future generations," he says.
Charcon assumes that for these Jews, buying land is a way of compensating themselves for not living in Israel, and they do it for the next generation, which will have no link whatsoever to the holy land without it.
Realty Executives Israel CEO Yohanan As agrees with the lawyers. "The deals over the last six months have been principally with French Jews, who most definitely aren't real estate investors. Those that have stayed in France are also buying apartments at high prices in Ashdod, Netanya and Bat Yam, as a safe haven. 70% of these apartments are then closed up and no one lives in them. In a number of deals in recent weeks, French buyers paid a price higher than the property's real value (because of, for instance, competition from another buyer), without arguing. In real estate terms, this is a bad buy, but if the situation overseas deteriorates they'll have somewhere to go. The more anti-Semitism and tension there is in the West, the greater the interest in properties, not land," stressed As.
Published by Globes [online], Israel business news - www.globes.co.il - on October 7, 2007
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