EAST JERUSALEM SETTLEMENT "NOF ZION" ON THE

C O N F I D E N T I A L JERUSALEM 000859

SIPDIS

NEA FOR FRONT OFFICE AND IPA; NSC FOR SHAPIRO/KUMAR; JOINT
STAFF FOR LTGEN SELVA

E.O. 12958: DECL: 05/28/2019
TAGS: PREL PGOV PHUM IS KWBG
SUBJECT: EAST JERUSALEM SETTLEMENT "NOF ZION" ON THE
AUCTION BLOCK

REF: 08 JERUSALEM 1905

Classified By: Acting Principal Officer Greg Marchese, per reasons 1.4
(b) and (d)


1. (C) Summary. Residential units in the Nof Zion
settlement in the Jabal Mukabbir neighborhood of East
Jerusalem are not selling and the builder is in serious
financial difficulty. According to the developer,
prospective buyers of the high-end apartments were
"uncomfortable" with Nof Zion's location in a Palestinian
neighborhood. Fifty completed units and the rights to build
284 additional units are up for sale. Poloff visited the
site on May 28 and saw few signs of occupants. End summary.

East Jerusalem Settlement in Trouble:
Looking for an International Buyer
--------------


2. (C) Jerusalem lawyer Danny Seidemann told Poloff on May
13 that a tender for the sale of 50 completed housing units
and the rights to build an additional 284 housing units at
Nof Zion settlement in the Jabal Mukabbir neighborhood of
East Jerusalem was published in the London Financial Times in
April. Seidemann said the builder was in "dire financial
straits," owing USD 50 million to creditors, because the
units were not selling. Seidemann said the builder's board
of directors describes Nof Zion as "a millstone around the
company's neck," and he opined that Nof Zion's failure proves
that settlement schemes are economically unviable without
massive GOI support and "messianic settler ideology."


3. (C) Seidemann claimed the situation has "great press
potential," but he also expressed fear that public attention
would force wealthy settlers or the GOI to "save" the failed
settlement. Seidemann said he met privately with Jordanian
officials to suggest that an investor "in the Arab world" buy
the properties.

Settlement Developer: "The Bank Took Nof Zion"
-------------- -


4. (C) Hanoch Kas, CEO of Nofei Israel, the developer of
Nof Zion, told Poloff on May 20 that the builder of Nof Zion
"went under" because it was too difficult to sell
"luxurious," high-end apartments in Jabal Mukabbir. Kas said
there was no problem with permits, but many prospective
buyers (mostly immigrants from the U.S.) said they would be
"uncomfortable" living in a Palestinian neighborhood. Kas
claimed that Nofei Israel, unlike the builder, "didn't lose
too much money" on its investment. He said "the bank"
advertised the property in the Financial Times hoping to
appeal to international buyers.

No Movement on the Ground Observed
--------------


5. (C) Jabal Mukabbir resident Mahmoud Hamdan told Poloff
on May 28 that he has observed no movement on the ground
recently at Nof Zion settlement, which appears empty, and he
was not aware that the development is being sold. (Note:
Kas said only "40 to 50" settlers had moved into the
settlement out of the 100 apartments sold in the two finished
buildings. He did not know if the remaining 50 to 60 buyers
would still move in. End note.) Poloff visited the site on
May 28 and saw nothing to contradict Hamdan's claim of
limited occupancy.

MARCHESE