Damage to Jerusalem Apartments Approaches NIS 1 Billion Due to Uncertain Church Land Rights

The uncertainty surrounding church lands in Jerusalem has had a measurable impact on property values, according to a study by researchers from the Hebrew University. The cumulative financial damage is estimated to approach nearly NIS 1 billion, reflecting both the decline in property prices and the reduction in completed transactions due to the uncertainty regarding the future of property rights.

An early version of the study was presented last year at an academic conference and received media attention. Since then, additional analyses have been conducted to quantify the cumulative damage and assess the risk the market attributes to the possibility of losing rights. The research highlights how this uncertainty affects the real estate market in the city.

The issue is not solely about the nature of the lease itself. In Israel, many apartments are held under long-term leases with mechanisms for extending rights. However, on church lands, the situation differs. Some contracts include options to extend the lease period, but the conditions for doing so are not always clear, creating a sense of instability.

Researchers Givati and Rigby examined how this uncertainty translates into financial loss. They analyzed all residential transactions in Jerusalem between 2004 and 2024, comparing apartments on land with uncertain rights to those with secure property rights. Their findings reveal a significant price gap. Apartments on land with uncertain rights are sold at prices 14% lower than similar properties with secure rights.

The impact becomes more pronounced as the lease deadline approaches. When more than 51 years of lease remain, the price gap is only 3%. However, when 41-51 years remain, the gap increases to about 10%. In apartments with 11-40 years left until the lease ends, the price is on average 30% lower than similar properties with secure rights.

The trend in property prices over the years also illustrates the growing effect of this uncertainty. Until around 2013, housing prices for both groups of properties moved in a relatively similar manner. A gap began to emerge and widened thereafter, coinciding with the closure of certain religious sites and the ongoing legal and administrative processes surrounding church lands.

Source: Read the original report (translated from Hebrew)