The work associated with building the capital’s green line has just recently commenced; however, an inspection by land appraiser, Nechama Bogin reveals that there are already significant price rises in the neighborhoods situated along the route. What happened to the prices of the city’s apartments following the operation of the red line and what impact is expected from the transfer of the U.S. Embassy to Jerusalem? A situation report in honor of Jerusalem Day
By Billy Frankel
The prices of apartments in central Jerusalem have risen by 15% since the beginning of the construction work on the light rail’s green line. This was indicated by an analysis conducted by land appraiser and advocate Nechama Bogin. In honor of Jerusalem Day that is commemorated today (Sunday).
The evaluation, based on the statistics provided by the Tax Authority, examined which Jerusalem neighborhoods benefited from property betterment, following the development of infrastructure, with an emphasis on the green line that was recently laid. The evaluation was conducted with the assistance of Moriah Jerusalem Development Company, which is executing the infrastructure work for the laying of the tracks for this light rail route.
The plan to construct the green line was approved in March of last year, and the work commenced in January of this year. The line’s route will connect the Gilo neighborhood in the south to the neighborhood of French Hill in the north, and cross the red line at the entrance to the city at the Binyanei Ha’uma station.
The evaluation’s findings indicate a significant increase in prices in some of the neighborhoods along the route during the past nine months, from the approval of the plan until the beginning of the construction. Consequently, in the city center, apartment prices have risen from NIS 1.945 million on average to NIS 2.238 million. Considerable price rises have also been reported in French Hill and Givat Mordechai, at a rate of 5.7% to 5.4% respectively.
Price Increases Along the Red Line
For the sake of comparison, Bogin also examined the impact of the operation of the light rail’s red line on the prices of apartments along this route. This line began operation in 2011, between Pisgat Zeev in the north, through Jaffa Street in the city center, to Har Herzl. According to the findings, during the five years since the approval of the plan in 2006 until the line commenced operation, apartment prices in the neighborhoods along the route increased at a rate ranging from 22% to 85%. The Kiryat Yovel and Neveh Yaakov neighborhoods saw price increases of more than 80% during this period, at a time when the average price increase in apartment prices in the capital was 71%, during those years.
THE LIGHT RAIL’S IMPACT ON APARTMENT PRICES IN JERUSALEM
THE RED LINE
|Neighborhood||Average apartment prices at the beginning of the track laying 2006||Average apartment prices at the opening of the line 2011||Difference in prices between 2006 and 2011||Average apartment prices a year from the opening of the line 2012||Difference in prices between 2006 and 2012|
|City Center||NIS 1.07 million||NIS 1.3 million||21.6%|
(NIS 232 thousand)
|NIS 1.6 million||22.8%|
(NIS 299 thous.)
|Bayit VaGan||NIS 1.245 million||NIS 1.68 million||35%|
(NIS 435 thousand)
|NIS 1.9 million||17%|
(NIS 285 thous.)
|Ein Karem||NIS 796 thousand||NIS 1.268 million||59.2%|
(NIS 472 thousand)
|NIS 1.45 million||14.5%|
(NIS 185 thous.)
|Pisgat Zeev||NIS 667 thousand||NIS 1.036 million||55.3%|
(NIS 396 thousand)
|NIS 1.13 million||9.4%|
(NIS 97 thous.)
|Kiryat Hayovel||NIS 503 thousand||NIS 933 thousand||85.5%|
(NIS 430 thousand)
|NIS 1.01 million||8.25%|
(NIS 77 thous.)
|Neve Yaakov||NIS 534 thousand||NIS 961 thousand||80%|
(NIS 427 thousand)
|NIS 974 thousand||1.35%|
|Beit Hakerem||NIS 1.07 million||NIS 1.4 million||32.4%|
(NIS 483 thousand)
|NIS 1.42 million||0.2%|
(NIS 3 thous.)
*Statistics: Nechama Bogin
THE GREEN LINE
|Neighborhood||Average apartment prices with an approved municipal zoning plan||Average apartment prices at the beginning of the track laying 2006||Difference in apartment prices between 2017 and 2018|
|City Center||NIS 1.945 million||NIS 2.238 million||15%|
(NIS 293 thousand)
|French Hill||NIS 1.46 million||NIS 1.55 million||5.7%|
(NIS 85 thousand)
|Givat Mordechai||NIS 1.61 million||NIS 1.7 million||5.4%|
(NIS 87 thousand)
|Pisgat Zeev||NIS 1.4 million||NIS 1.468 million||4.8%|
(NIS 68 thousand)
|Mount Scopus||NIS 1.72 million||NIS 1.775 million||3.2%|
(NIS 55 thousand)
|Har Nof||NIS 2.468 million||NIS 2.54 million||3%|
(NIS 74 thousand)
|Talpiot||NIS 2.35 million||NIS 2.396 million||1.8%|
(NIS 44 thousand)
*Statistics: Nechama Bogin
During the past year, from the moment the line was put into operation, significant price increases were recorded in some of the neighborhoods along the route. Most of the increases were witnessed in the city center, where the average apartment price rose to approximately NIS 1.6 million between 2011 and 2012, an increase of almost 23%. In Bayit VaGan and Ein Karem, increases were reported of 17% and 14.5% respectively, while in Pisgat Zeev, Kiryat Hayovel and Beit Hakerem, the price increase reached up to 10%.
Bogin is of the opinion that even if the opening of the red line was not the only factor in the price increases seen in the neighborhoods along its route, it served as a catalyst due to the massive upgrading of the infrastructure that was conducted as part of the work. For example, she pointed to the massive and lengthy renovation executed on Jaffa Street in the city center, which included a reduction in traffic congestion.
She added that in light of the findings, a similar impact on the prices of properties along the green line is expected. “Since the municipality is constructing additional projects along the line, such as the upgrade of streets and replacement of infrastructure, this may also have an impact on the area,” says Bogin. “The prices of the properties along the line are likely to increase by 7%-8% over the average.”
Promoting Urban Renewal as well
An additional future line planned for the capital is the blue line, and an additional delay in its construction occurred this morning. The delay followed the Jerusalem District Planning and Construction Committee’s postponement of the discussion regarding authorization of its route, resulting from pressure exerted to consider alternatives to the light rail route on Emek Refaim.
Attorney Doron Neuwirth, CEO of Moriah Jerusalem Development Company notes that the projects promoted by the company citywide are expected to bring about a strategic change in its urban planning. This will change the city’s negative immigration trend and attract a stronger popular to the older neighborhoods.
“In recent years, the company has been promoting the development of the city’s light rail tracks, to ease traffic congestion and turn Jerusalem into a modern city in terms of infrastructure,” he says. “The operation of the light rail is more significant than just improving accessibility to the many neighborhoods it will pass through. The infrastructure’s preparatory work also includes upgrading the appearance of the streets and entrances to homes, replacing sidewalks, roads and electricity.”
According to Neuwirth, these steps are expected to expedite Evacuation-Construction projects (Pinuy Binuy). “We are essentially renewing the appearance of the area,” he explains. “Additionally, in places designated for urban renewal, we are working to reduce parking allotments and expand public transit lanes. This will very quickly lead to the growth of commerce and an increase in demand for housing and employment in the city, while creating a vibrant urban tapestry.”
Get Ready for the Diplomats’ Move
Apartment prices in Jerusalem have been in a downward trend during the past months, with the Israel Bureau of Statistics reporting a decrease of 7.5% between October 2017 and February 2018. Nevertheless, Bogin notes that the launch of the US Embassy tomorrow (Monday) in the Arnona (Talpiot) neighborhood in the southern section of the city, is expected to have an impact on real estate in the area.
It is likely that we are about to witness a resurgence in the neighborhood, with an increase in demand for additional apartments for sale and rent for the diplomats and the American staff,” she says. “There is already a high demand in the region, where diplomats are moving into a small number of streets and are looking primarily for hi-spec furnished apartments.”
Bogin adds that this attractive neighborhood has been untouched by the price drops of recent months. Prices of new apartments are estimated at NIS 2.8 million for 4 rooms and NIS 3.5 million for 5 rooms. Rents start at NIS 5,000 a month for a 4-room apartment.
Statistics from the Tax Authority based on actual real estate deals indicate that since the beginning of 2016, the price of an average apartment in the neighborhood has increased by 18%, a steeper increase than in the rest of the city,” she notes.
However, there are possible negative implications of the relocation of the Embassy to the neighborhood. “This neighborhood is considered to be quiet and pastoral, with no parking problems; and it benefits from quality of life and proximity to employment and entertainment areas,” explains Bogin. “The relocation of the Embassy may lead to heavy traffic in the neighborhood and attract less desirable movement in terms of the existing residents.”
Jacky Mukmel, CEO of the CBRE Israel real estate consulting firm, is of the opinion that the relocation may also impact rent prices, in light of the expected move of many of the embassy’s employees to the city. As for the prices of the apartments for sale, he reasons that they will not be impacted in the short term, but adds that “in the long term, after the completion of the US Embassy in Jerusalem and all of its departments and after other world embassies will follow suit, the prices of apartments in the city are expected to rise, because this will foster international legitimacy.”