Groups of Diaspora Jews have begun eyeing real estate projects in Jerusalem. The prospective buyers, mostly from the United States, contact developers on visits to Israel and continue negotiations from overseas.

Yoram Schechter and Shlomo Eliahu own the luxury Jerusalem of Gold project on Akiva Street in the capital, and are currently in touch with several American Jews who are interested in a group purchase of apartments. Prices for the apartments range from $6,000 per square meter for regular apartments to $12,000 per square meter for penthouses.

Africa Israel is currently in touch with several American groups. Two of them are considering buying the last plots of land in the joint project between Africa Israel and Elrov in Jerusalem's Mamila neighborhood. The deal is valued at $40 million for the land on which 78 apartments will be built, with a cost of $513,000 per apartment just for the land. Sources close to the negotiations say this is indeed a good price and payments will be made in cash, making it worthwhile for the Israeli companies to sell the land rather than build on it and market the apartments.

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Apartments in Mamila are selling now for as much as $8,000 per square meter, with the most luxurious apartments nabbing more than $10,000 per square meter. These prices reflect a doubling of real estate values in the past three years.

Local realtors relate that the Mamila project was at standstill a few years ago, due to the high prices - up to $6,000-$7,000 per square meter - being asked by the four partners at that time (Africa Israel, Elrov, A. Dori and Kaldash.) Only after the partners split the task of marketing the project did prices fall to around $4,000 per square meter, and apartments began selling faster. In 2005, Elrov and Africa Israel bought out Kaldash and A. Dori's share of the project, and prices began to soar.

Africa Israel is negotiating another project - the "pub zone" near the Russian compound in downtown Jerusalem - with a group of Diaspora Jews. Earlier this year, Africa Israel purchased this area from Areldan for $23 million.

The company has plans to build 120 apartments in two 9-story residential towers, with a developed area of 20,000 square meters. When Africa Israel purchased the land, company executives had hoped to sell the apartments for a total of $85 million ($4,250 per square meter.) Current negotiations are for much higher prices, of up to $7,000 per square meter.

Beyond Jerusalem

Groups of Diaspora Jews are also looking beyond Jerusalem for investment ideas. One group of ultra-Orthodox Jews, for example, is seeking to purchase 40 apartments in Kiryat Sefer.

"Many real estate deals in Jerusalem are triggered by a synagogue member telling a fellow congregant he has just bought an apartment in Jerusalem, prompting the listener to hop on a plane to buy one too," explains Stuart Hershkowitz, who heads the Bank of Jerusalem's International Division. "Quite often several people from the same Jewish community or synagogue come to buy properties in Jerusalem a short time apart. The forming of a group is an attempt to bring everyone at the same time and to buy apartments in the same place."

Hershkowitz says there have been similar attempts in past, but most have not been successful. "This is a long, complicated process, in which everyone says yes at the outset, but along the way people start to drop out, until the deal falls through," he explains.

One of the main causes of disagreements between members of a group of buyers is the interior technical specifications of the apartments. For this reason, Africa Israel is trying to bypass this problem by selling undeveloped land in Mamila, which will allow the members of the group to plan apartments on their own, according to their specifications.

Representatives of the group negotiating the deal over the buildings in the pub zone are holding talks on the technical specifications of the apartments, so that they will be built to the group members' satisfaction.