Jerusalem is growing dark. Jews who love this city are destroying it, destroying it with money, destroying it by…buying apartments.
In my neighborhood of Baka (known to one ambitious sign maker as Geulim), on our quaint main street, is one of the monstrous “luxury” developments that are sprouting up throughout the city. I’ve noticed the signs and the construction in Katamon, in the German Colony, and near the shuk. The advertising for these developments is geared toward foreigners. Not just any foreigners, mind you – specifically, the rich ones.
My wife and I wandered into the Baka development one day about seven months ago. We did this in spite of the luxury focus of the advertising. We learned that, though the apartments were completed about a year earlier, nearly half of them were unsold. “Ah ha,” we thought, “An opportunity for a bargain.”
Nope. The prices for the units were in the range of 60,000 shekels per square meter. For comparison, the “normal” cost per square meter in Baka (known to one well-meaning mayoral candidate as Geulim) is up to 30,000 shekels per square meter.
Only someone with money to burn would spend double the going rate to purchase a modern apartment in a city in which architectural modernity is not valued. Even with the community room and the gym, it’s just not worth it.
Apparently, there aren’t many buyers. At night, half of the apartments are dark because they haven’t been purchased yet. The other half are also dark, because their owners don’t live here – they live in the US, England, and France. There are several city blocks that are dark all of the time. They are empty and forlorn, “Mourning without their children”, to paraphrase the Tisha B’Av prayer.
If those luxury apartments were populated, the contribution to the local economy would be significant. The residents would buy coffee and mangos from the neighborhood shops. Instead, absentee ownership makes those apartments an economic blank, and the prices of those apartments artificially drive up the price of real estate. And why would a developer build apartments for the 30,000/square meter market, when they can dream of getting twice that much by adding “Luxury” to their marketing materials? Only if the market for luxury apartments dried up would this damaging trend end.
I’m loathe to tell my wealthy brothers and sisters who live overseas not to buy real estate in Israel. It’s a good investment, and many fine people plan to retire here, or to spend significant time here after they retire. Owning an apartment in Israel also bonds diaspora Jews to this funky country.
Nonetheless – do not buy real estate in Israel.
If you choose to ignore my sage advice, check out these luxury recommendations:
1. I can’t believe that I’m the guy who has to tell you this, but be smarter. Some of you got rich by being smart, and some of you inherited a fortune and made it bigger by being smart. So don’t spend twice as much for real estate as it’s worth. You can get a place with more charm for less money, even if you have to renovate it top to bottom. I understand that sometimes the wealthy don’t like to mention a bargain, but prefer the bragging rights that come with the high price for “Luxury”. In that case, you can buy our luxury apartment for 110,000 shekels/square meter, plus 40,000 shekels/square meter for the luxury garden, and a surcharge of 300,000 shekels for each of the four luxury air directions. You’ll be the envy of Warren Buffett.
2. Spend significantly more time here. We’d be happy to see you, as will the fruit shop, the coffee shop, and the pizza guy. If you can’t come, send your children, your grandchildren, your rabbi, the au pair, the gardener, and the butler.
3. If you’re not here most of the year, rent out your place to a deserving young couple, or a family of working people. Keep the rent low. They’ll move out for a week at Pesach and a week at Sukkot so that you can stay in the apartment, and they can air out the cigar smoke after you leave. Meanwhile, they can stay with her parents, who I’m told are lovely people, though no one would want to stay with them for more than a week.
Please, if you can’t do this right, don’t do it at all. This isn’t a high-stakes real estate game, but a place to live. Invest in Detroit, instead.
If you love this city, live in this city, and keep the lights on and the economy rolling.