Terror in Paris Brings French to Israeli Real Estate Market

Property companies see new wave of immigration amid fears of rising European anti-Semitism.

Nimrod Glickman

The back-to-back terror attacks in France last week put the world on edge – not least, Israeli building contractors and their marketing staffs.

The events, especially Friday’s attack on a kosher supermarket in Paris that left four dead, is likely to set off another exodus of Europeans, particularly French Jews, many of them to Israel’s shores.

People in Israel’s building industry are predicting a wave of home buying similar to 2005 and 2006, as Diaspora Jews look to immigrate, or at least have a second home that they can escape to if the situation grows worse.

Roni Cohen, of Eldar Real Estate Marketing, said he had already detected the surge in demand in recent months among France’s 500,000 Jews, half of whom live in the greater Paris area. After the attack on the Jewish Museum in Brussels last May, Eldar – which markets high-end real estate projects – set up a new unit for marketing overseas.

“Now, in light of the recent difficult events, we expect that tens of thousands of Jews will be seeking to immigrate to Israel, and that will create demand for new homes,” said Cohen.

While a Finance Ministry survey found that about 40% of foreign residents buy homes in Israel as an investment, 25% do it as a refuge from anti-Semitism, and the remaining 35% to immigrate. Even before last week’s attacks, French Jews accounted for 29% of all home purchases in Israel by foreigners in the first 10 months of 2014. Americans made up close to 16% of the buyers and other Europeans 6.8%, according to the Central Bureau of Statistics.

Prime Minister Benjamin Netanyahu said over the weekend that an Israeli governmental committee would convene in the coming week to find ways to boost Jewish immigration from France and other European countries.

“To all the Jews of France and to all the Jews of Europe, I wish to say: The State of Israel is not only the place to which you pray, the State of Israel is also your home,” he said.

However, aware that a similar call by then-Prime Minister Ariel Sharon in 2004 offended France’s leaders, Netanyahu avoided any outright call for France’s Jews to leave. He said only he would tell them that “any Jew who wants to immigrate to Israel will be received here with open arms.”

That has already begun, said the head of Eldar’s foreign unit, Dan Gingis, who grew up in Paris’ 12th arrondissement. “According to reports we’ve been getting from France in recent months, close to 20,000 applications to immigrate have been filed. The Israeli embassy there can’t keep up with the pace,” he revealed.

Gingis says that if in the past French Jews sought small vacation apartments near the beachfront for investment, today they are in the market for a real home, and are ready to buy one anywhere. In many cases, they are middle-class families without a lot of money who have to sell their homes in France to finance the purchase.

French and European Jews looking for a second home in Israel were prepared to pay as much as twice the average price for the property they wanted, but the new sort of buyer coming to Israel will be paying less, said Gingis. That will place them in head-to-head competition with Israelis, who are already struggling with high house prices and insufficient supply.

For now, however, the evidence of a new wave of Diaspora home buyers remains anecdotal, since official figures have yet to be released.

The record year for foreigners buying homes in Israel occurred nearly a decade ago. In 2005 and 2006, overseas Jews bought some 5,000 units annually, accounting for about 6% of the market. Since then, home buying by foreigners has declined – especially after the 2008 global financial crisis, when the number dropped to 3,840.

The market bottomed out the next year at just 2,800 units, and then recovered slightly to some 3,500 annually in 2011 and 2012. In 2013, the last full year for which figures are available, the number edged down to about 3,200 homes.

In the first half of last year, it was down 25% from the same time in 2013, at just 1,200, with foreigners accounting for just 2.6% of all purchases – the lowest since the market was buffeted by recession and the second intifada in 2002.

Whatever the reason for their purchase, the figures also show that foreigners are paying less for their Israeli homes than in the past. In 2011-2013, the average was between 60% and 80% more than what Israelis were willing to fork out. But in 2014, the gap narrowed to just 39%.

Properties promising a sea view, prestige address in Herzliya Pituah or views of Jerusalem’s Old City, which used to lure foreign buyers, are no longer relevant. Foreign buyers are seeking a refuge, not a holiday home or investment property, said Adina Hacham, CEO of the real estate broker Anglo-Saxon.

“That’s a result of the economic situation in their home countries, which, in most cases, has worsened, and higher prices for homes in Israel,” she told TheMarker.

“In Netanya, the French are coming to our office with a significantly lower budget than in the past. They’re no longer looking for luxury apartments or anything by the sea. They’re coming with 1.2 million shekels [$303,000] and looking for three to four rooms in the city.”

Reuters contributed to this report