SUMMER 2021 EDITION REAL ESTATE LETTER FROM THE EDITOR TABLE OF CONTENTS Dear Readers, Welcome to the summer 2021 edition of The Jerusalem INTRODUCTION ..................................................................................... 06 Post’s Real Estate magazine. This edition is being published Juan de la Roca under unique circumstances. With the help of the vaccines, we hope to be nearing the end of the pandemic, so it is time to assess the damage and seek ways to jump-start TAXATION IS A FACT OF LIFE ...............................................................07 the economy and increase housing starts. Adrian Boult In addition we have just finished a sharp intensive military campaign. We also have a new government HEALING THE ECONOMY POST-CORONA .........................................10 which must take the necessary steps to generate economic Uriel Lynn activity and reduce the unemployment rate caused by the pandemic and try to halt the real estate price rises which have started anew . SUPPLY AND DEMAND: PROBLEMS AND SOLUTIONS ................... 12 Fittingly, we have articles by three very the important Raul Serogo economic figures Uriel Lynn, president of the Federation of the Israeli Chambers of Commerce; Raul Serogo, EXPANDING OUR ECONOMIC HORIZONS ......................................... 14 president of the Israel Builders Association, and Ron John Benzaquen Tomer, president of the Manufacturers Association of Israel. The pandemic has had dramatic effects on real estate, as NEW SHELTERED HOUSING IN JERUSALEM ................................... 20 working from home is expected to increase substantially. ThAT IS ALSO A GOOD INVESTMENT Thus we have an article about how it will affect the design Yochanan Altman of new housing, and how it will affect the office sector. 90% of the rockets fired by Hamas were intercepted CAESAREA: ThE FUTURE MEETS THE PAST ....................................24 by the Iron Dome anti rocket system but some 10% got Ehud Lahav through and they show that many apartment buildings in Israel do not have a communal shelter and many homes do not have a madad a reinforced room in the home that SAFE AND SOUND: A PROTECTed room of one’s own ............26 acts as a shelter we have a story on how to alleviate that Israel David particular problem. For those planning to purchase a high end home in OFFICE SPACE FOR RENT ....................................................................27 Jerusalem, we have a story about what is on offer in the Dalia Assis capital. And for those living in a penthouse or a top floor apartment, we have an article about how to create your own hanging gardens of Babylon. REAL ESTATE IN THE WAKE OF CORONA ........................................ 28 Amit Dobkin Enjoy your reading,, FROM URBAN JUNGle to ‘urbAN Capsule’ ..................................29 Juan de la Roca Adrian O’Neil PURCHASING A HOME IN ISRAEL ..................................................... 30 Yair Aloni GREEN IS BEAUTIFUL AND BOUNTIFUL ............................................32 Boaz Barak HOW TO RENEGOTIATE A MORTGAGE ..............................................33 Yochanan Altman ThE LUXURY REAL ESTATE MARKET IN JERUSALEM .....................34 Cover photo by Volker Glätsch/ Pixabay Alyssa Friedland CEO Jerusalem Post Group V.P of Commercial Jerusalem District Manager Advertising INBAR ASHKENAZI & Strategic Partnerships Itai BENVENISTI TEL: +972 3 761-9002 Editor Galit EREZ Graphic Designer JUAN DE LA ROCA [email protected] NOA ZOltY NOTE: THE CONTENT OF THE ADVERTISEMENTS IS THE SOLE RESPONSIBILITY OF THE ADVERTISERS SUMMER 2021 EDITION REAL ESTATE 3 INTRODUCTION INTRODUCTION » by Juan de la Roca ince January 2020, life around the globe has been challenging in the extreme. In Israel, the country has been been S buffeted by a toxic combination of the health problems caused by the corona pandemic and a high degree of political uncertainty. In addition, in mid-May there was a brief but bitter battle with Hamas called Operation Guardian of the Walls. Since March, the two major parties that make up the Israeli government coalition have been at loggerheads, making the business of government practically impossible. While the governmental paralysis has had a negative effect on the economy, most of the damage has been caused by the governmental (All photos by Freepik.com) attempts to stem the spread of the pandemic. The government has tried to limit social itself to healing the social and economic ills Despite the fact that the local economy interaction as much as possible. The result caused by the pandemic. The budget is one of has been less hard hit than other Western was shutdowns to prevent physical contact the major issues that will have to be tackled. economies, the damage to the economy is between people. Israel is fortunate in that it is approaching still dramatic. And the reconstruction will be The shutdowns may have slowed the spread of the economic repercussions of the pandemic long, hard, and costly. the virus, but they caused widespread economic from a position of strength. In 2019, just before One of the main issues is persuading those on havoc. They created hundreds of thousands the effects of the pandemic were felt, GDP unpaid leave to return to work and stop living of unemployed and a decline in GDP. Some had risen by just over 3.5%. Foreign currency on the dole. Many of them will be reluctant to sectors of the economy suffered much more reserves in January 2019 stood at $126 billion; do so. This holds true for the young and for than others. While commerce has been hard unemployment was less than 4%; inflation those employed in manual labor but less for hit, other sectors such as tourism, restaurants, rates were low; interest rates were at historic professionals. and leisure businesses such as beauty parlors lows; and exports were at historic highs. In general terms, the main victims of the and gyms were hit even harder. Many had to Consequently, the damage to the economy pandemic are the small businesses and the self- close down, while others have been bankrupted. has been less than expected, and it has been employed. Now that the coronavirus situation Some sectors have been much less affected. less than in other developed countries. is well under control and a large percentage The building sector, for example, has been very According to statistics published by of the population has been vaccinated, we can lightly affected. The government has made it government organs, the GDP in 2020 fell by start getting back to normal, and the country can begin to put its house back to order, a point not to decrease housing starts so as to some 6%, but the foreign currency reserves In economic terms, this means taking the minimize the effect of the pandemic on the of the Bank of Israel stood at historic highs of necessary steps to jump-start the economy. supply of housing and consequently on prices. $173 billion at the beginning of 2020, a hefty The most effective way to do so is to make a The same holds true for the manufacturing 43.3% of GDP. Exports in 2020 fell by only 8.5% industries. Factories that produce foodstuffs compared to the 2019 figure of $115 billion, continued to operate practically unimpeded to the highest recorded annual export figures. keep the local population supplied with food. One of the reasons for the relatively slight The same goes for companies that produce fall in GDP is that the government has been exportable goods, especially the hi-tech paying unemployment benefits to those industry, which is a major component of the who have been temporarily sent on unpaid economy. As a result, exports have fallen. leave. Some one million people are out of But considering that COVID-19 has affected work (12% of the working population). demand in Israel’s export markets, the decrease But the legal unemployment rate – that is, has been acceptable. the unemployment rate not affected by the The coronavirus is a global pandemic, so pandemic – is some 3.5% of the working the problems affecting the Israeli economy population because the majority of those not are shared to varying degrees of intensity by working are being financed by the government. other countries. After the general election in Consequently, these people have the means to March, Israel’s new government must devote purchase their basic necessities. 6 REAL ESTATE SUMMER 2021 EDITION YIGAL ARNON & CO. 1 Azrieli Center, Tel Aviv 31 Hillel Street, Jerusalem Email: [email protected] TAXatiON Tel: +972 3 608 777 Tel: +972 2 623 9200 IS A faCT OF life www.arnon.co.il » by Adrian Boult Israeli residents but spent a long time overseas and then return to Israel can be eligible for tax benefits. These include exemption from paying Israeli tax as lmost everyone must pay taxes, but many well as submitting tax reports for a number of years people engage the services of a tax consultant number of years with respect to income derived from to advise them on how to pay the least amount outside of Israel. A of tax within the framework of the law. Eran These are extensive benefits which, if considered in Lempert is a partner and co-head of the Tax Department advance, can assist in efficient tax planning. of the Israeli law firm Yigal Arnon & Co. Lempert, who specializes in tax law, says, “People What are the tax implications if someone wants to set may not like paying taxes, but they want to benefit up a trust fund with family members as beneficiaries from services provided by governments. In any case, or with non-family members as beneficiaries? they are required by the law of the land to pay taxes. Trust is a great vehicle to accumulate and protect Taxes are an integral part of our day-to-day activities for family wealth and we use it a lot for our clients. A few corporations and individuals. For both, smart planning years ago, Israel revised its law with respect to taxation can minimize tax payments.” of trusts.