No less than 31 bids were made recently for a 174-square-meter plot on Batsra Street in the Givat Aliyah neighborhood south of Jaffa’s Ajami neighborhood.
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The property, offered for sale as part of a tender issued by the government housing company Amidar, is zoned for two housing units; its minimum price was set at 486,8000 shekels about ($129,000), not including value-added tax. An Amidar appraiser assessed the value of the lot at 1.07 million shekels before VAT. The winning bidder would get leasing rights for 98 years, with an option to extend them for another 98 years.
The large number of bids would seem to indicate that the competition for the property was fierce, but a closer look shows that half of them did not even reach the 750,000-shekel mark. The bidders were probably hoping that since it was Jaffa, located south of Tel Aviv, they could get the property for a cheaper price.
Ultimately, however, the property sold for 1.3 million shekels, 167% above the minimum price and 21% more than the appraiser’s assessment. The second-highest bid was for 1.15 million shekels.
This experience offers a peek at the current state of the real-estate market in Jaffa, in Ajami in particular. The low opening price played a role in attracting an unusually large number of potential buyers, but the real story behind the interest in the tender is how Ajami has become a hot spot. The special characteristics of the area – a seaside location; low buildings, many of them villas from the 19th and early 20th century; and quaint, narrow streets – all have made it popular with well-heeled buyers and investors.
But unlike other Tel Aviv-Jaffa neighborhoods experiencing the same kind of gentrification, property buyers in Ajami risk involvement in a social and political maelstrom. Despite its distinctive architecture, rich history and enviable location, Ajami became a poor and neglected neighborhood with a predominantly Arab population after the 1948 War of Independence. In 2009 it briefly caught the international eye as the setting for the Oscar-nominated 2009 film “Ajami,” which tells the stories of five residents.
Gentrification is not uncommon in Israel, but the fact that wealthy Jewish citizens are displacing poor Arabs has made the process in this locale more fraught politically.
Property sales in Jaffa, and Ajami in particular, are often complicated by active opposition from veteran residents who claim long-time ownership of land or buildings, or say they were promised to them in one way or another. In many cases, properties on sale have been taken over by squatters, with the tender specifying that the winning bidder will bear sole responsibility for evicting them.
In one case, the winning bidder for one property discovered that the family squatting there had criminal connections and refused to leave or to enter into negotiations for compensation. It took four years of legal proceedings before the buyer was able to get back the down payment he had made, plus some minor compensation.
Even tours of properties in Jaffa do not always go smoothly. Potential buyers who come to view lots owned by Amidar, Halamish or the Israel Lands Authority often find a group of locals waiting to greet them. The encounters start with polite questions about purchasing a property – which the family then says it owns – and progresses to implied and sometimes overt threats. In some cases, “foreigners” are physically blocked from seeing the property.
In cases where there is a real risk of confrontation, police are invited to the location from the start, and if things escalate, their presence is significantly increased.
In addition, local activists have campaigned to end the practice of selling properties in Jaffa to the highest bidder, with the argument that local families and lower-income residents from the area should be given priority to purchase properties at lower prices. Protesters calling for such changes often stage rallies during tours of local lots.
Obviously, someone who comes to see a property – and is met with menacing stares, curses, threats and shoving, and is compelled to run a gauntlet, cleared by the police, between angry neighbors or protesters wielding megaphones, drums and trumpets – is going to conclude that building there is going to prove tricky, to say the least. The sense of insecurity will immediately dampen potential buyers’ interest and significantly dent the value of the properties that are up for sale.
Still, if you compare the Batsra Street tender with one for two adjacent lots conducted just a year earlier, you can see that Ajami is luring more and more buyers, and prices are still rising, in spite of the immense challenges.
A year ago a tender for a 160-square-meter lot attracted only three bids and the property was sold for 669,000 shekels, or about 19% less than the appraiser’s assessment of 825,000 shekels. For the second property, of 149 square meters, only four bids were submitted. It was sold for 21% more than the appraiser’s figure but, at 920,000 shekels, was about 17% less per square meter than the Batsra Street lot.
A year ago, the prices paid for those two lots seemed steep, but even in a nationwide housing market where prices are spiraling higher, the increase in their value is quite impressive, if you use the Batsra Street process as a benchmark. What has happened in Ajami?
There are several answers to this. The image of residential projects in Jaffa in general has improved greatly within the space of just a year, and actually some of the fears about confronting angry residents is apparently dissipating. Prices in Jaffa are still not high relative to Tel Aviv. Moreover, small lots for one or two homes are an attractive proposition for high-end clients who want to build their own home rather than opt for an investment. Prices in cases like that are less of an object – and they have soared accordingly.
The writer is a co-owner of Shefer-Tzruya Real Estate, which specializes in marketing lots and buildings.