Housing boom
July 15, 2011
It seems contradictory. Some 70 percent of Palestinians live below the poverty line, but houses in the ritzy sections of Gaza City sell for over $1 million (630,000 euros).
"This is the best place in the world," explains real estate broker Essam Mortja. "Real estate markets collapsed everywhere else. But here, it just goes up."
Over 1.6 million Gazans are packed into 360 square kilometers of land - one of the highest population densities in the world. Limited space plus high demand equals high prices.
"Gaza is different from anywhere, not just in the Arab world, but anywhere," says Ismail Al Hasayna, another Gaza City real estate broker. "It is a small area with overpopulation. The demand is high but the supply is limited."
The overcrowding means most Gazans live in poverty. But a small number of business people and professionals returning from lucrative jobs abroad can afford to pay the high prices.
Increasing optimism
Al-Hasayna says prices keep climbing because people see positive political developments. Earlier this year the two main Palestinian parties, Hamas and Fatah, announced they would form a joint government after four years of bitter disputes.
"This year is better than last year because people are optimistic about the reconciliation between Hamas and Fatah," Al-Hasayna says. "They expect the borders to open and they will get material. They live with hope."
Selling real estate in Gaza is a throwback to an earlier era. There are no fancy, four-color brochures, few internet webpages and not even photocopied fliers. When people want to sell their property they do it the old fashioned way.
"They put a sign on the land saying for sale, call this number" Al-Hasayna says ."The neighbors talk among one another. There are no advertisements in newspapers."
Safe as houses?
In another part of Gaza City, a forklift lowers a pallet of concrete blocks at a construction site as Suhail Halima looks on. The wealthy businessman just paid $1 million for this lot in downtown Gaza City. Halima estimates real estate prices have gone up 20 percent since last year.
"The US dollar and Jordanian dinar have lost value," he says. "Gold is at an all-time high. So land is a good investment."
Israeli authorities have periodically bombed and sent tanks into Gaza. They say it's a necessary response to Palestinian attacks on Israel. But Halima says even the threat of future military action hasn't cooled the real estate market.
"The Israeli army destroyed one of my warehouses worth $1.6 million (1.3 million euros)," he says. "We rebuilt the warehouse. But the land kept its value."
Supply and demand
While land is a preferred investment for the rich, it remains unaffordable to the vast majority of Gazans, whose median income is $800 per year. In addition, a lot of housing stock was destroyed or damaged during the three-week war with Israel that ended in January 2009.
Ziad el Zaza, a former deputy Prime Minister, says the Hamas government has tried to provide help. It distributed $69 million (49 million euros) to help rebuild homes and farms damaged during the war with Israel.
"The government has recently sold land at subsidized prices to the poor," he says. "The recipients then spend their own money to construct apartments."
But so far these government efforts are limited, and home ownership remains just a dream for most Palestinians.
Back on the ritzy side of Gaza City, real estate broker Mortja hopes to find more customers for pricey homes. He's trying to lure investment from Palestinians living abroad.
"Come and invest," he says. "Now you can invest in real estate and see a profit in just a couple of weeks."
Mortja is bullish. But with political instability still a threat in Gaza, no one can really say how long real estate prices will keep going up.
Author: Reese Erlich, Gaza City
Editor: Sam Edmonds