Property Business Booms in Jerusalem

A real estate boom in Jerusalem is just one example of a more relaxed and optimistic atmosphere in Israel after almost five years of Israeli-Palestinian conflict.

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The current cease-fire between Israelis and Palestinians is in its third month, and the Israeli economy is picking up. In Jerusalem, one of the cities hardest hit by suicide bombings, the real estate market is now booming. Hundreds of apartments have been sold in the past few months, many of them to Americans looking for a second home. In downtown Jerusalem, new businesses are opening and residents say they're optimistic about the future. NPR's Linda Gradstein reports.

LINDA GRADSTEIN reporting:

Irving Haber(ph) proudly shows off his newly purchased home in the center of Jerusalem, which includes an old water cistern which the former owner turned into a basement.

Mr. IRVING HABER: This house was built in the 1880s and renovated in 1997. So we found the cistern, and they blasted through over here to give us a door and we have an extra room.

GRADSTEIN: Haber, a semiretired physicist from Silver Spring, Maryland, says he had dreamed of owning property in Jerusalem for 25 years. A few months ago, he bought this three-bedroom house and came to spend the recent Passover holiday there. Haber's wife, Ellen(ph), says she's surprised how attached she's become to her new part-time home.

Mrs. ELLEN HABER: And I was so looking forward to coming here this time, actually having the house and taking possession of it, and it's been glorious and wonderful. But now it's extremely hard to leave. Being here and actually owning a house has just gripped me in a way that I wasn't prepared for.

GRADSTEIN: In the past six months, Orthodox American Jews like the Habers have bought an estimated 200 apartments in West Jerusalem, and real estate agents expect to sell hundreds more over the summer. Many of them have children studying at religious institutions in Jerusalem. Real estate agent Alisa Freedland(ph) says they are spurred by both economic and political factors. Over the past five years of Israeli-Palestinian fighting, real estate prices in Jerusalem had plummeted 30 percent. At the same time, she says, an Israeli-Palestinian cease-fire since February has almost eliminated terrorist attacks inside Israel.

Ms. ALISA FREEDLAND (Real Estate Agent): The Jewish population is now realizing, `Wow, I can kill two birds with one stone. I can get into the real estate market in Jerusalem and have a spiritual home where I want to be eventually.' There's just a sense of security now from the foreigners that it's OK to buy property in Jerusalem and it's OK to buy property in Israel.

GRADSTEIN: Many Israelis say they also feel more secure. In downtown Jerusalem, the street musicians have come back, as have the shoppers who had deserted this area after a series of suicide bombings. On Hillal Street, Gidon Sibone(ph) recently opened a 24-hour mini market. He says Israelis are still worried about possible terrorist attacks and stay on the alert, but overall the feeling has changed in the past few months.

Mr. GIDON SIBONE (Business Owner): They are still suspicious, but they feel better. They come with the children. They are doing shopping. You feel that something in the atmosphere is better. That's how business is better. I mean, when people feel better, they spend money, and I hope it will continue.

GRADSTEIN: Israeli economist David Rosenberg says Sibone's experience is reflected in the Israeli economy as a whole. Last year, economic growth was 4.3 percent after several years of negative growth. Rosenberg says the sharp decline in Israeli-Palestinian violence, coupled with the recovery globally of the technology sector, have combined to pull the Israeli economy out of its worst recession ever. He said consumer spending is going up as well.

Mr. DAVID ROSENBERG (Israeli Economist): People have more confidence that, you know, the future will be better and that there is a light at the end of the tunnel. And under those circumstances, people then go out and buy refrigerators and washing machines and cars and things like that. And so we're starting to see that as the second phase of the recovery.

GRADSTEIN: Still, economists caution that consumer confidence is often fragile. They note that the unemployment rate is still close to 10 percent. And they warn that if Israeli-Palestinian violence erupts again, all the economic gains of the past year could be easily wiped out. Linda Gradstein, NPR News.

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