Jerusalem — So you think Upper West Side apartment prices are crazy expensive?

As the intifada has quieted down, with the high-tech sector on the rebound, and with anti-Semitism in France fueling second-home purchases, real estate prices in Jerusalem — the poorest large city in Israel — are skyrocketing.

Take this no-frills three-bedroom apartment located in the gated community called the Italian Colony, a three-minute walk to the heart of the trendy Germany Colony: It’s going for a whopping $535,000, a price an Israeli real estate agent called a deal. Which may not seem like much to the average Upper West Sider but given salaries in Israel, it’s a relative fortune.

“The price of luxury apartments in Jerusalem has jumped more than 20 percent since the summer,” said Gilad Dayan, a young, energetic agent at Tafnit Real Estate who walked briskly through the apartment, taking in the small kitchen, non-descript living room and pointing out the basement, patio and private garden. “This one is the least expensive in the complex because the owners want to sell it quickly,” Dayan said.

“Talbieh, Rehavia, the Germany Colony, Old Katamon and Baka are all in great demand, especially when it comes to Jews in France and the U.S,” Dayan said of the “hot” neighborhoods in the center and southern part of the city. “Something has definitely changed for the better.”

That “something” is actually a convergence of several factors, according to Bernard Raskin, the owner of Re/Max Israel, the largest real estate company in the country. “There’s been an upturn since December 2003,” Raskin said, speaking by phone from his Tel Aviv office.

“First, you need to remember that the improvement comes in the wake of years of declining prices and volume, when developers and builders weren’t ready to take the risk, and when consumers were delaying their buying decisions thinking prices would continue to fall.”

Finally, Raskin said, there was not enough supply to meet the demand and prices began to rise. Raskin also credited the influx of foreign buyers, especially from France, where anti-Semitism has been growing, for pushing up prices.

“The French Jewish community is very committed to Israel and the North African community is especially Zionistic,” Raskin said. “This, coupled with the growing anti-Semitism in Europe in the past four years, has spurred them to buy second homes here.”

The French tend to favor such coastal cities as Tel Aviv, Netanya, Herzilya, Bat Yam, Ashdod and Ashkelon, and of course Jerusalem, Raskin said. The fact that the euro is so strong “gives the Europeans an advantage” over Israelis and other buyers, he noted.

The real estate agent said he was “initially surprised” by the large number of American Jews who have purchased Israeli homes in the past 12 months “since for them it’s not an issue of anti-Semitism. My feeling is that they are simply Jews who are aware, through their children living here and the Jewish newspapers, that prices are rising.”

Joey Silver, an American-born Jerusalemite who just purchased a 3,500-square-foot house in the ultra-fancy neighborhood of Yemin Moshe, said he decided to buy a home following his mother’s death four months ago. “It’s a good time to buy,” Silver says, adding that “six months ago would have been even better. But as it is, I feel I got a bargain.”

Though he declines to specify how much he paid for the property, which once belonged a Baroness Alex de Rothschild, Silver does admit that it was considerably more than $1 million. “Prices are starting to rise very seriously. In the past six months, as European anti-Semitism has increased, more English and German and French Jews are buying in Israel,” Silver says. But he issued a let-the-buyer-beware warning: “Not every property is a gold mine.”

Re/Max Israel’s Raskin stressed that the weak dollar has not deterred Americans from buying in Israel because the prices of second-hand Israeli apartments are quoted in dollars, not shekels. That is not the case for brand-new apartments. Other factors contributing to the real estate boom are the improvement in Israel’s economy, which grew about 4 percent last year, and the peace process.

“High-tech is rebounding, meaning there is more money available,” Raskin said, adding that Israeli interest rates are at an all-time low. This, coupled with the recent decrease in terror attacks “has made the market quite buoyant.”

Shelly Levine, a real-estate project manager and agent who has initiated large, successful building projects in Modi’in and Ramat Beit Shemesh, both between Jerusalem and Tel Aviv, as well as Ma’aleh Adumim in the West Bank, has also detected a “significant upturn” during the past year.

Unlike many other developers, “we did OK” during the intifada, Levine said of her projects, which she actively markets to diaspora Jews as well as Israelis. Now, however, “we’re receiving five, six times the amount of e-mails and we’re making sales all over the place.”

Levine said that prices in the Buchman neighbood of Modi’in, where her company has completed, and sold, 85 units, with another 155 under construction, have risen about $30,000 in the past year. There, a cottage with 4.5 bedrooms costs under $300,000, the same as a two- to three-bedroom fixer-upper in the better parts of Jerusalem.

“People have come to the conclusion that not everyone can live in Rehavia or Baka, where properties have gone up tens of thousands of dollars in the past year,” Levine said.

While Levine said she prides herself on developing properties that middle-class Israelis can afford, she does have one “glam” project up her sleeve. Within the year she hopes to break ground on a top-of-the-line complex in the heart of downtown Jerusalem, near Nevi’im Street. The price of a two-bedroom apartment in the complex, which will boast a swimming pool and spa, will likely be in the $500,000 range.

“The hope is that we can revitalize downtown Jerusalem,” Levine said, referring to center’s pitiful decline during the intifada, when hundreds of restaurants and shops were forced to shut down because of lack of business.

While real estate agents and potential sellers are clearly excited by the upswing in the real estate market, the recovery is bad news for potential buyers.

“There’s a revival, no question about it,” said Ruby Ray Karzen, an interior designer who also manages renovation projects. “The problem is that many neighborhoods in Jerusalem are so expensive that the average person can’t afford to live here. The young people like my grandchildren are being forced to move out of the city.”

Karzen mentions Sha’are Tzedek, a formerly run-down neighborhood of tumble-down little hovels next to beautiful, tree-lined Rehavia, as an example of gentrification. “People are taking out shacks and putting up beautiful apartments so fast it makes you dizzy,” Karzen said with concern in her voice.

While it is true that certain Jerusalem neighborhoods are becoming prohibitively expensive, Gilad Dayan believes that it’s still possible to find an affordable home in the neighborhoods bordering the more popular ones. In fact some neighborhoods have yet to witness any increase at all.

“In neighborhoods other than the really hot ones, prices have increased about 10 percent since the summer,” Dayan said, his cell phone chirping incessantly. “There are still bargains to be found, assuming you act quickly.” n

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