JNF Move Could Plunge Real Estate Market into Chaos

YERUSHALAYIM -

The Jewish National Fund (JNF) is reportedly on the brink of  withdrawing from a decades-long agreement with the state on the disposition of land in Israel, a move that threatens to throw the real estate market into disarray.

In a letter to Israeli Prime Minister Binyamin Netanyahu obtained by Globes, the JNF declares that its board “has unanimously decided not to renew the covenant with the state of Israel, signed on November 28, 1961. As a result, the covenant will expire on July 28, 2015.

The decision follows a dispute over demands that it transfer funds to the state, become more transparent and subject to auditing.

Industry sources warned that if the JNF goes ahead with this, it will mean separating its land from the Israel Land Authority (ILA) for independent marketing, which will cause  chaos in the sector, since national planning must take into account the land owned by both bodies.

Furthermore, the JNF is said to be currently unequipped to market land on its own, and would have to hire a staff from scratch, a process that would take months. In the interim, a slowdown in the marketing of land would aggravate the existing shortage and drive real estate prices even higher. The JNF owns about 550,000 acres or 13% of Israel’s available land, mainly in high-demand central Israel.

Should the JNF detach itself from the covenant, it would likely also bring on a fierce legal battle over much of its holdings, derived from expropriations of land left behind by Palestinian refugees after the establishment of the state. A dispute over the amount of payment due to the state for those properties has never been resolved and would inevitably flare again, Globes said.