Housing Sector in East Jerusalem, a Market Opportunity Analysis
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Housing Sector in East Jerusalem, a March 19th 2015 Market Opportunity Analysis Transforming knowledge, Advancing Life Real Estate and Housing Sector Opportunity Assessment Submitted to Al-Quds Economic Forum and the Office of the Quartet In the Framework of East Jerusalem Market Assessment Funded by Table of Content Section Overview Page Section Overview Page 1 Market Analysis on the Housing Sector in East 4 1.6 Obstacle to Housing Development 34 Jerusalem 1.6.1 Planning 35 1.1 Demographics 5 1.6.2 Zoning 35 1.1.1 Population 6 1.6.3 Infrastructure 35 1.1.2 Population Movements 7 1.6.4 Land Parcel 36 1.2 Characteristics of the Current Housing Units 9 1.6.5 Land Registration 36 1.2.1 Housing Stock 10 1.6.6 Access to Finance 37 1.2.2 Housing Density 11 2 Stakeholder Analysis 38 1.23 Housing Size 12 2.1 Stakeholder in the Private Sector 40 1.3 Affordability 14 2.2 Stakeholders in the Governmental and Non 57 1.3.1 Housing Cost and Selling Price 15 Governmental Sector 1.3.2 Ownership 22 3 Value Chain Scheme of the Housing Sector in East 75 Jerusalem 1.3.3 Affordability 22 4 Case Studies 78 1.4 Housing Supply and Demand 25 5 Conclusions and Recommendation 87 1.4.1 Construction 26 6 Annexes 91 1.4.2 Housing Supply and Demand Market 28 Analysis 1.5 Profit Potential in the Housing Sector 30 Real Estate and Housing Sector Opportunity Analysis - Al-Quds Economic Forum and the Office of 3 the Quartet. Market Analysis on the Housing Sector in East Jerusalem Demographics Real Estate and Housing Sector Opportunity Analysis - Al-Quds Economic Forum and the Office of the Quartet. Population “Palestinians in East Jerusalem represent 9.1% of all Palestinians living in the occupied Palestinian territories. 64% of the city’s Palestinian population is under the age of 30. Jerusalem has an annual growth rate of 1.84% which is well below the West Bank rate of 2.66% per annum” Population The population in Jerusalem governorate constitutes 9.1% of the total population of Palestine and 14.9% of the population in the West Bank. Whereas, the According to the Palestinian Bureau of Statistics (PCBS), the total population of percentage of persons aged below 15 years in 2013 was 35.2% of the total Arabs in Jerusalem governorate was estimated at 404,165 persons in 2013, of population, while those aged 60 years and above made up 6.7% of the total whom 251,043 (62%) were in Area J1 and 153,122 were in Area J2. population in Jerusalem governorate. This contradicts the Jerusalem Institute for Israeli Studies (JIIS), which estimates The reported compound annual growth rate of Arabs residing in Jerusalem was the Arab population in Jerusalem at 300,200 persons. This can be seen in the chart 3% from 2000 until 2012, against the 1% of Jews. The population density was below on the right. It is worth to mention that an accurate figure about the total 1,182 (capita/Km2) by the end of 2013. population is nearly impossible to find due to the dual lifestyle of Jerusalemites (East J. & WB). Figure 1 The table below shows the neighborhood compounding East Jerusalem taking into account locality J1 and J2. CAGR: 3% Table 1: Palestinian Neighborhood in J1 and J2 J1 J2 • Beit Hanina • Jabal Al – Mukabbir • Rafat • Hizma • Sheikh Jarrah • Ras Al-Amud • Mikhmas • Beit Hanina Al Balad • Shu’fat Refugees Camp • As–Sawahira Al– • Qalandiya Camp • Kharayib Umm al • Wadi Al – Joz Gharbiya • Qalandiya Qatanna • Shu’fat • Silwan • Beit Duqqu • Beit Surik • Bab Al-Sahira • Beit Safafa • Jana • Beit Iksa • Al’ Isawiya • Ath–Thuri • Al Judaeira • Anata • Assuwwana • Sharafat • Ar Ram & Dahiyat Al • Al Ka’abina • Jerusalem “Al - Quds” • Sur Bahir Bareed • A Za’ayyem • At –Tur • Kufr A’qab • Beit’Anan • Al ‘Eizariya • Ash-Shayyah • Um Tuba • Al Jib • Abu Dis • Bir Nabala • Arab Al Jahalin • Beit Ijza • As Sawahira ash • Al Qubeiba Sharqiya • Lahim • Ash Sheik Sa’d • Biddu • Jaba’ • An Nabi Samwil Real Estate and Housing Sector Opportunity Analysis - Al-Quds Economic Forum and the Office of 6 the Quartet. Population Movements “Population Movements are mainly due to the availability of Figure 2: Population Movement more affordable houses either for rent or sale on one hand, and the restriction to build within East Jerusalem on the other” Population Movements The population movements to outside of the municipal borders, represents one of the major key demand drivers. These migration movements are presented since the 80s, and are mainly due to the Israeli policies. In addition to this, there are two other major factors boosting immigration to Ar Ram, Hizma and Abu Dis (which represent principal final destinations of local movements): • Lower Property Prices • Restriction to build within East Jerusalem. Nevertheless, since the second half of the 90s this flow reversed as result of the enactment of the “Centre of Life Policy”, whereby Jerusalemites were required to prove that they live within the borders of Jerusalem Municipality in order to preserve their residency permits. This trend accelerated with the construction of Separation Wall in 2003 as Jerusalemites feared the loss of their ID and consequently, their access to the city. This event not only impacted the actual population growth within municipal borders but derived into a trend of unpermitted house construction. As consequence, the Israeli Authorities developed and deployed harder restrictions, tighter control mechanisms and stronger punitive measures. The map on the right shows the internal migration from 2010-2012, represented by persons by neighborhood. JIIS migration data shows a clear movement from the central neighborhoods to the periphery, with neighborhoods beyond the wall have the highest net migration. These movements are explained in depth on the next slide. Source: IPCC 2013, Data From JIIS, Jerusalem Statistical Yearbooks 2012, 2013, Table V/15 Real Estate and Housing Sector Opportunity Analysis - Al-Quds Economic Forum and the Office of 7 the Quartet. Population Movements “Population movement beyond the wall is encouraged by the accessibility to affordable houses within Municipal boundaries while migration beyond the city boundaries is a consequence of the dual lifestyle” Migration beyond the wall and city are the two major population movements Population Movement beyond the City Boundaries worth considering when discussing Real Estate and Housing. Population Movement beyond the Wall Households are moving to localities beyond the Jerusalem Governorate. This migration is a direct result of the dual lifestyle that most Jerusalemites live. The On the West Bank side of the Separation Wall, little to no enforcement of main destination is Ramallah and in the near future, Rawabi will probably also be considered. planning laws by the Municipality has enabled a proliferation of unpermitted construction and with it attracted a large migration of families seeking an Since these movements are not official, they are not reported by the ICBS or the affordable house within Municipal Boundaries. PCBS. Hence, they cannot be accurately estimated. One of the main reasons why The total population beyond the wall remains inaccurate to date. Based on it is hard to estimate the size of these migration flows is that Jerusalemites move OCHA’s report (East Jerusalem Key Humanitarian Concerns, update Aug 2014), into Ramallah while registering at a family or household alibi in Jerusalem. Tens of thousands of Palestinian residents of East Jerusalem are physically The Government of Israel, through the ministry of Interior, monitors households separated from the urban center by the Barrier. They must cross crowded and if it was discovered that a family lives outside the city limits, their residency checkpoints to access health, education and other services to which they are will be revoked. entitled as residents of Jerusalem. Over the years, this kind of migration has increased due to poor living conditions More specifically, in the OCHA’s report (East Jerusalem Key Humanitarian (high densities and lack of public services) inside the neighborhoods beyond the Concerns, update Dec 2012), it was estimated a total population of 55,000. wall. Nevertheless, poorer families that cannot respond to the increase of rents in Moreover, based on data published by the JIIS, these population movements Ramallah are forced to move back to neighborhoods within city limits. If housing represent 30% inter and intra city migration from 2010 to 2012. rents and selling prices in Ramallah continue to rise/fall, these trends are expected to be reinforced. As stated by NGOs working in policy research and urban planning, zoning and development, the growth in these neighborhoods is not sustainable. Moreover, In conclusion, it can be said that if it were not for the risk of residency revocation, the extent of migration would be greater. there is a latent threat since there is a possibility that Israel Government will hand over the control. In this scenario, residents will be at risk of losing residency permits. This could trigger the return of thousands of households back inside the city wall’s limits. Real Estate and Housing Sector Opportunity Analysis - Al-Quds Economic Forum and the Office of 8 the Quartet. Characteristics of the Current Housing Units Real Estate and Housing Sector Opportunity Analysis - Al-Quds Economic Forum and the Office of the Quartet. Housing Stock “Dwelling in Arab neighborhoods increased by 4.2 percentage points above the growth observed in Jewish neighborhoods in the period between 2012 and 2013” Table 2: Dwelling in J1 2011-2013 Housing Stock While the Arab population Area J1 Dwelling units represents 37% of Jerusalem 2011 2012 2013 As stated in the “JIIS’s fact and trends: 2014”, in the end 2013, Jerusalem had a inhabitants, the proportion of Northern Neighborhoods 15,105 15,733 16,461 total of 208,770 dwellings which represents a slight increase of 2.2% since 2012.