Church Land: A Problem Specific to Jerusalem
Sizeable amounts of land (roughly 32,000 acres) in certain areas of Jerusalem was leased by the Keren Kayemet L’Yisrael (Jewish National Fund) from the Greek Orthodox Church in 1952 for a period of 100 years. This lease is due to expire in 2051.
This land now makes up a large part of the Rehavia, Talbiya, and Nayot neighborhoods, where thousands of apartments have since been built.
Interestingly, in 2017, the Greek Orthodox Church sold a portion of their land to the private developers of the Nayot Komemiyut Investments Group. The deal indicated that the developers hold the authority to evict the homeowners of the over 1,000 apartments on that land and do with it what they please.
This has not yet happened, nor does anyone believe that it will. It is likely that within the next 30 years, the State of Israel will come to some sort of deal with the Greek Orthodox Church to protect the rights of the residents of the apartments on the church-leased land.
Church Land Prices in Jerusalem
The Nayot Komemiyut Investments Group has offered to sell the rights of the land to the owners of the residences on it, at a rate of about 25% of the value of a similar apartment on land owned by the Israel Lands Authority. This rate is expected to increase as we near the expiration date of the original lease in 2052.
Alternatively, units on the church-leased land are presumed to sell for about 25-30% less than similar properties on private or state-owned land.
This price decrease is related to the fact that the units will depreciate in value over the next 30 years while they finish up the lease, and will continue to drop in price as the expiration date grows closer.
Our Recommendations
This is a unique situation for the properties on land owned by the private developers as well as those on land being leased by the Keren Kayemet L’Yisrael.
The properties on church-leased land which are expected to decline in price over the next 30 years present an excellent opportunity for buyers to enter the market who have tighter budgets but are looking to purchase in central neighborhoods of Jerusalem.
We always recommend assembling a great team when purchasing property in Israel, but even more so when dealing with a church land property. You will need to have all of your legal ducks in a row, which can be quite pricey depending on the specific needs of the land/ unit.
If purchasing a property on land owned by the Nayot Group, don’t forget to factor in the cost of the transfer of ownership, which will likely amount to the same total as that of an apartment in another area.
In sum, if the price of the apartment is right, and you are equipped with a fantastic team, then buying a church land property could be a great option for you. We urge our clients to not completely rule out a church land property while on their house hunt solely based on the upcoming end of lease, because there are many possibilities of what could happen with the land in the future.
We do not believe that the State of Israel will allow an eviction of about 3,000 apartments on the church land; we predict that Israel will make some sort of arrangement to preserve the rights of the property owners there.
For more advice on Church land in Jerusalem, don't hesitate to contact us directly.
Resources for Further Reading
Have a look at the following links for more information on the church land real estate situation in Jerusalem:
“Church real estate sale rocks Jerusalem housing market” - Globes
“MK Bitan promises legislation to resolve Church land property crisis” - JPost
“Jerusalem court rules in favor of developers in case of former church land” - Times of Israel
* This page is part of the CapitIL Guide to Buying Property in Jerusalem. You can jump around to any of the articles using the guide menu. The next page in the guide after this one is: Real Estate Agents.