Getting your Trinity Audio player ready...
Every city or town is its own world—a microcosm of life, residents, education, infrastructure, and of course, real estate. Sometimes a city’s development can impact an entire region; other times, urban growth and renewal reshape the demographic makeup and determine a locality’s future for decades to come.
Even basic real estate decisions—whether to buy or rent, where and when to make a move—depend on deep data about a city or town. That’s exactly why we’re launching a special series of reports on the urban and real estate development of cities across Israel. And what better place to start than the capital: Jerusalem.
4 View gallery
High-Rise Development Plan for Towers in Jerusalem: "SOHO" Project by Africa Israel
(Rendering: Yashar Architects)
According to data from Israel’s Central Bureau of Statistics (CBS), this past January saw a nationwide 1.2% increase in home prices compared to the previous month. The Jerusalem District recorded an even sharper rise, with a 3% increase—well above the national average. On an annual scale, CBS reported a 7.7% rise in Israel’s housing price index, while Jerusalem’s yearly increase was slightly more modest, at 5.6%. The highest annual jump was recorded in Tel Aviv, exceeding 10%.
Jerusalem’s price surge is accompanied by another major trend in recent years: a boom in urban renewal projects and a notable uptick in building permits in this field. At the same time, additional lines of the city’s light rail network are under construction, and along those future routes, large-scale development—including high-rises on a scale never before seen in the capital—is already being planned. In the employment and commercial sectors as well, construction, tenders, and potential are all accelerating. Some even believe this may mark the beginning of a reversal in the city's long-standing negative migration trend.
“Jerusalem is one of the most rapidly renewing cities in Israel,” says Yaffa Sadan, VP of Marketing and Sales at Yossi Avrahami Group. “According to data from the municipality, the city’s population is expected to grow from one million to around 1.5 million over the coming decades, and the pace of building plan approvals is exceptionally high. In 2024 alone, approximately 7,700 housing units received building permits in Jerusalem, and plans for another 16,000 units were approved. Thousands more are currently in various stages of planning and permitting.
Yafa Sadan Photo: PR"As a company active in Jerusalem, I can say that Mayor Moshe Lion is highly supportive of development in the city and often provides developers with a ‘green track’ for approvals. New infrastructure is also being built—schools, cultural institutions, public buildings, and more. All of this is fueling strong demand for real estate. Historically, demand for apartments in Jerusalem has always been among the highest in the country, and the number of residential transactions continues to rise each year.”
Sadan also comments on the changing profile of homebuyers in Jerusalem, noting a shift in recent years: “The nature of demand has changed in recent years—due to the war and rising antisemitism around the world, foreign residents, who have always been a key target audience in Jerusalem, are now looking more for permanent family homes rather than vacation apartments or luxury investments. We’re seeing this clearly in the Eden project we’re developing in the city center, which has drawn strong interest from members of the Jewish diaspora—especially from the U.S. (particularly New York and Miami), France, and the UK. They say what attracted them most is the history, heritage, and the sanctity of Jerusalem as the eternal capital of the Jewish people.”
Ilan Gordo, Chairman of the Jerusalem and Environs Builders Association—which represents developers and contractors in the city—adds: “You have to take your hat off to the mayor, who has managed to turn Jerusalem into one of the cities with the most extensive construction activity in Israel.” Gordo also addresses the question of whether the city can actually handle such a large-scale construction boom: “Despite some voices opposing the planning and infrastructure departments' programs in the municipality, we’re confident that the city can absorb the building volumes and the supporting infrastructure. This is a matter of utmost importance—it’s about people’s lives.”
“We must not miss the opportunity to provide real housing solutions for those who need them in the city,” Gordo continues. “The municipality is also creating a healthy mix of housing options, including both for-sale and long-term rental units. But due to current interest rates, which have made rental construction economically unfeasible, we’re calling on the city to reduce the mandatory rental period from 20 years to just five to seven years—under a temporary provision for the next five years. We’ve seen that under these terms, developers are eager to build such projects. Additionally, in my view, the city must make a clear push to promote mixed-use construction. It’s a tool that hasn’t been sufficiently advanced in Jerusalem for years, and it holds a real, practical solution to an urgent need I’m seeing on the ground.”
4 View gallery
"Costa Rica" Project in Jerusalem by Avisror Moshe & Sons
(Rendering: Architect Eden Bar, Bar-Levy Architects)
Dan Parnas, CEO of Carasso Real Estate, also weighs in on the capital’s real estate market: “Jerusalem holds tremendous potential for urban renewal and the construction of tens of thousands of new housing units. It’s one of the most in-demand cities in Israel for both homebuyers and investors, from a range of sectors and communities in Israel as well as Jewish buyers abroad. This demand stems from the city’s unique character, rich history, and the ongoing investment in its development. In response to this strong demand, construction levels are also exceptionally high. Moreover, the Jerusalem Municipality and its leadership are supportive of the city’s renewal efforts and maintain a productive partnership with developers. The city also operates an energetic and efficient urban renewal authority that helps move projects forward.”
Ronit Eshed-Levy, CEO of Africa Israel Residences, also comments on the company’s work with the Jerusalem Municipality: “It’s important to highlight the exceptional cooperation we’ve experienced with the municipality, which has proven to be a tremendous growth engine for the city’s development. The unwavering commitment of the mayor, together with the professionalism of the city engineer and the entire engineering and planning department, stands as a shining example of public-private sector collaboration.
Ronit Eshed-Levy, CEO of Africa Israel Residences Photo: Inbal Marmari"The consistent drive and extraordinary determination shown by the city’s leadership in advancing urban renewal zones deserve deep appreciation and have enabled us to execute complex projects with unprecedented speed and efficiency. Africa Israel Residences and Africa Urban Renewal are leading several major projects in the city, including the SOHO project, the Savionim development in Kiryat Yovel, the Nurit project, San Martin, and many other initiatives in Jerusalem’s older neighborhoods. In the coming years, we look forward to continued development of new neighborhoods that will create investment opportunities not only in housing but also in commercial and cultural sectors.”
Yoni Barel, VP of Marketing and Sales at Azorim, also weighs in on Jerusalem’s momentum: “Today, Jerusalem is leading Israel’s real estate map, thanks to the proactive policies of the mayor, the municipality, and the planning authorities—all of whom are working vigorously to promote residential development in the city. The municipality is advancing large-scale plans that include the development of new neighborhoods and land preparation, while also taking public services and infrastructure needs into account—ensuring that the city’s growth and renewal are done in a smart, well-planned manner.”
Yoni Barel Photo: Tamar Matzafi“One of the core strategies is development along the light rail route, which has significantly contributed to the city’s planning logic, alongside efforts to revitalize older neighborhoods. At the same time, the municipality is also pushing forward rental housing projects, responding to high demand—especially from residents who will need temporary accommodations as part of the urban renewal process, until their new homes are completed. Today, the city sees natural demand from both home upgraders and downsizers, as well as increasing migration from the Gush Etzion area and nearby satellite cities such as Ma’ale Adumim and Mevaseret Zion. Jerusalem also stands out for its demand among foreign residents who wish to settle in Israel, and it continues to lead the demand trends among the Jewish diaspora.”
A boom in urban renewal
Ayelet Kraus, partner and head of the Jerusalem region at the Urban Development and Renewal Company, who previously served as head of planning at Jerusalem’s Urban Renewal Authority and as a senior official in the Ministry of Construction and Housing, says that actual construction of urban renewal projects is finally gaining traction in Jerusalem. According to CBS data, from October 2023 to September 2024, construction began on 1,255 housing units in the Jerusalem District as part of demolition-and-rebuild projects and under National Outline Plan 38/2. That marks a 28% increase compared to the previous year.
“Today, urban renewal already accounts for around 20% of all new housing starts in the district,” says Kraus. “The potential for additional renewal projects is still enormous. Alongside projects that are now reaching the construction stage, there are still many sites being delayed—or not progressing at all—mainly due to residents’ concerns.” According to Kraus, one of the major barriers is related to high-rise construction: “One of the main concerns we’ve identified is fear of moving into high-rise buildings. Many Jerusalemites are reluctant to embrace vertical living—both because of the city’s historical and romantic image, and due to concerns about high maintenance costs.”
Attorney Re’em Razon, founder and CEO of real estate firm Av-Gad, also comments on the city’s renewal efforts: “Jerusalem is a unique city that stands out on Israel’s urban renewal map. The municipality consistently promotes new projects, with a focus on practical solutions that help bring them to life. Today, several projects in the city enjoy strong support from both the local and district planning committees, which helps speed up the process.”
“The city is entering a new era”
Architect Gil Shenhav, founding partner of Knafo-Shenhav Architects and Chair of CTBUH Israel (Council on Tall Buildings and Urban Habitat), also comments on the capital’s transformation: “Jerusalem is at the forefront of urban renewal in Israel and is now one of the leading cities embracing this model as a central vision. Construction is in full swing—not only in residential areas, but also in employment zones, commercial centers, and public buildings. The city is entering a new era, in which the skyline is changing dramatically. This shift is driven by the need to optimize land use and the shortage of available land for a growing population.”
“Planning challenges in Jerusalem are more significant than in other cities—how do you attract a younger, high-quality demographic to a city that in the past has experienced population decline? How do you sensitively integrate modern high-rise construction alongside low-rise historical buildings, while still creating a high quality of life and strong community bonds? All this, while preserving the city’s unique character.”
Dror Ohev Zion, CEO and owner of DRA Real Estate Marketing, offers another angle on the city's development and the wide range of populations it attracts: “Jerusalem, the oldest city in Israel and one of the most significant in the world, has undergone a real transformation over the past decade. Urban renewal projects, infrastructure development, and new investment opportunities are turning it into an especially attractive destination for both local and international investors. The municipality is advancing plans for tens of thousands of housing units through demolition-and-rebuild projects and National Outline Plan 38, while rejuvenating older neighborhoods.”
“Areas such as Katamonim, Kiryat Yovel, and Talpiot have seen sharp increases in property values thanks to upgraded infrastructure and improved quality of life. Jerusalem is a city of neighborhoods, each with its own distinct population, residential style, and real estate trends. For developers and investors, understanding the differences between these areas—their demographics and market directions—is key to success in the city.”
“The renewal process underway in Jerusalem is blurring the lines between neighborhoods, reducing socioeconomic gaps, and transforming once-overlooked areas into luxury zones with soaring demand. That’s exactly where the opportunities lie: identifying these shifts and investing in neighborhoods undergoing significant renewal can yield impressive returns. Jerusalem continues to draw millions of tourists each year, and with the addition of new hotels, entertainment complexes, and heritage preservation projects, the city is solidifying its status as a global tourist destination. This trend is creating strong demand for hospitality properties such as boutique hotels and short-term rentals. The renewal of Jerusalem is not merely an aesthetic upgrade—it’s a true transformation. Smart real estate investments in the city can yield high returns and substantial added value. For investors seeking new opportunities in the Israeli real estate market, today’s Jerusalem is a destination that cannot be ignored.”
Neighborhoods are being transformed
Jerusalem is home to many diverse neighborhoods, and some of them are now on the brink of significant transformation. “Jerusalem is changing before our eyes, with 23-story towers now under construction and many more planned across the city in the coming years,” explains Lee Rom Oknin, VP of Marketing at Tzarfati Shimon.
“The city’s distinctive character—long marked by relatively low-rise residential buildings—is expected to shift in large parts of Jerusalem. These high-rises are attracting new populations, particularly investors and foreign residents. Local Jerusalemites, especially those who are traditionally observant, tend to prefer low-rise living.”
Lee Rom Oknin Photo: Tali Nachshon“In the city center and the Gateway to Jerusalem area, large-scale high-rise development is planned, and in those zones, the towers integrate well with the urban landscape. But in older neighborhoods undergoing renewal and targeting local populations, construction still reflects the mentality and needs of Jerusalem’s residents. For example, in the new Arnona neighborhood, there is an approved plan for around 1,830 residential units, as well as commercial and employment space, hotels, public buildings, community services, an archaeological park, public gardens, and open green areas. We’re currently building the ‘Luria’ project in that neighborhood—a 17-building complex with eight-story buildings totaling 335 new apartments. This project preserves the spirit of Jerusalem’s architectural heritage. It was designed by the local firm Feigin Architects, known for iconic projects like the Waldorf Astoria and the Orient Hotel.”
“There are also other older neighborhoods in the city that are seeing new development without high-rises, such as Rehavia, Talbiya, the German Colony, Baka, Nayot, and Old Katamon.”
Another major project is the “City of the World” quarter, designed by Avner Yashar Architects. This ISA Group initiative is being built between the neighborhoods of Beit HaKerem, Kiryat Moshe, and Givat Shaul, on the site of Jerusalem’s historic flour mill. The scope of the project is substantial by Jerusalem standards: 40,000 square meters of office space, 11,000 square meters of retail, including dining and entertainment areas, a community center, school, conference hall, and 300 residential units across three towers for both sale and long-term rental. According to architect Avner Yashar, “This project is expected to create a dramatic transformation in both the immediate and wider surroundings. It is the first development in the area and the first mixed-use complex in Jerusalem, so its impact will be significant—combining employment, housing, education, public facilities, retail, and more.”
Another fast-developing area is the new Givat HaMatos neighborhood. Anna Fogel, VP of Marketing and Sales at Ram Aderet Group, is overseeing the “Aderet Jerusalem” project there, in collaboration with Sela Real Estate: “The neighborhood is located on a hilltop 813 meters above sea level, adjacent to the neighborhoods of Arnona, Gilo, Gonen, and Talpiot. It is expected to include over 2,500 new apartments, along with commercial and employment space, public buildings and schools, synagogues, and mikvahs.”
Anna Fogel Photo: Naveh Aviani “In terms of accessibility, the neighborhood is connected to key traffic arteries, including Route 50 and Route 60, which link it to all parts of the city. At the same time, infrastructure projects are improving connections between neighborhoods and the city center. In Givat HaMatos, for example, a planned light rail station on the Blue Line will directly connect the neighborhood to the city center and other parts of Jerusalem.”
The בapital is rising: Hundreds of towers on the way to construction
While developers continue to work diligently across the city, the District Planning and Building Committee holds the reins when it comes to approving plans and shaping Jerusalem’s overall urban strategy. Unlike other cities, Jerusalem’s local planning committee does not have independent authority—primarily due to political sensitivities and the city’s well-known complexity—giving the district committee a particularly influential role in shaping the city’s future.
Shira Talmi-Babai, Chair of the Jerusalem District Planning and Building Committee, and Dan Keinan, the District Planner, describe a future in which the capital looks completely different from how we know it today. “We’re transforming entire neighborhoods from the ground up,” they say. “Today, Jerusalem has 15 towers over 18 stories, but there are already approved plans for roughly 500 towers.”
Arch. Dan Keinan, District Planner of Jerusalem at the Planning Administration Photo: GPO“That alone will fundamentally change the city. You have to understand what’s happening—there’s simply not enough land left for horizontal expansion, so urban renewal is the primary path forward. Jerusalem has an enormous number of old apartment blocks; in fact, around 20% of all such buildings in Israel are located in the capital. Renewal is the only real solution to the shortage of available land.”
Shira Talmi-Babai, Chair of the Jerusalem District Planning and Building Committee Photo: Elidor HadadWhen asked whether the city’s infrastructure can support such large-scale construction, they respond: “That’s exactly what the planning is for—forethought and strategy. The infrastructure is being designed with this in mind, and the mayor is fully committed.
"This is a tremendous opportunity to improve many of the city’s aging neighborhoods, and we’re approaching it responsibly and with advance planning. In urban renewal projects, for example, we now require developers to fund long-term maintenance trusts that allow buildings to maintain themselves. This is already being implemented in current building permits.”
Get the Ynetnews app on your smartphone: Google Play: https://bit.ly/4eJ37pE | Apple App Store: https://bit.ly/3ZL7iNv
Talmi-Babai and Keinan explain that the light rail, high-rise construction, and the development of new employment and commercial hubs across the city will help Jerusalem adopt the “15-minute city” model—offering maximum accessibility to everything residents need. Major new development is concentrated along the light rail lines to ensure infrastructure can support the growth. “This is a huge opportunity to revitalize the city and its surrounding areas,” they conclude.
An employment boom alongside housing growth
Beyond residential development and infrastructure upgrades, Jerusalem is also experiencing a renaissance in commercial and employment real estate. “After decades of moderate growth, the capital is undergoing a true transformation with a major expansion of modern office space and housing supply,” says Tzachi Sufrin, Deputy Chairman of the Board at Sufrin Group.
Tzachi Soferin Photo: Naveh Aviani“With a current population of around one million—and a projected increase to 1.5 million within just two decades—the city is simultaneously investing in employment zones, public spaces, and green areas. In recent years, Jerusalem’s employment landscape has been shifting. The old model of working out of outdated industrial parks or residential apartments-turned-offices in the city center is giving way to modern, mixed-use, Class A office towers located in highly accessible areas tailored to the needs of today’s workforce.”
4 View gallery
"Melach HaAretz" Project by Azorim, near Kibbutz Ramat Rachel, Jerusalem
(Rendering: 3Division)
“This transition is happening across several business districts simultaneously, but the most advanced is the Talpiot employment zone. Unlike the overall slowdown seen in Israel’s commercial real estate sector, Talpiot is experiencing strong demand and rising office prices.”
Moreover, the city’s urban renewal efforts and transportation upgrades in recent years—including a new city entrance and another light rail line—have led to a reversal of the long-standing negative migration trend. One of the most encouraging developments is the changing profile of homebuyers: alongside the traditionally dominant religious and ultra-Orthodox populations, the capital is now attracting secular young couples and upgrading homeowners, some of them Jerusalem natives returning to the city. Today, the buyer base is far more diverse and reflects a broader cross-section of Israeli society.