Wealthy Israelis Buying Up Swank New York Real Estate
Eloise is moving out of the Plaza, at least for now, and the Israelis are moving in. On the last day of April, the Plaza Hotel — mythical home to the mischievous children’s-book character — closed until 2007 for renovations. An Israeli owned-firm, Elad Properties, is planning to convert the New York landmark into a combination hotel-apartment building.
Elad’s American president, Miki Naftali, had assured New Yorkers at a press conference in late April that Eloise will retain her dedicated room in the new hotel. A few weeks before, however, it was an Israeli, the billionaire diamond merchant Lev Leviev, who put in the first bid for one of the planned penthouse apartments, a reported $10 million.
With residential real estate booming in New York, and a slumping market in Israel, real estate experts say a flurry of moves by Elad and Leviev’s company signal a broader Israeli charge into the market.
Leviev, known for his massive support of Lubavitch Hasidic activities in his native Russia, owns a burgeoning New York real estate business, which he established after conquering the diamond world. Just two weeks ago, Leviev’s Africa-Israel Investments, which works in America with the Hasidic real estate developer Shaya Boymelgreen, paid $210 million for a single building on Wall Street. It was the duo’s 15th project in New York since Leviev entered the American market three years ago.
“Israelis are becoming a presence in New York,” said Shimon Shkury, a business professor at Yeshiva University and a partner at the real estate firm Massey Knakal, who moved to New York from Tel Aviv six years ago.
Shkury said that population trends and financing deals had drawn a long line of Israeli investors large and small. Dozens of Israeli firms are believed to be currently active in the New York market. Also active are large numbers of Israelis who have settled in New York in recent decades. One of the most visible, Tel Aviv native Yair Levy, made an eye-popping deal in early April with the purchase of the Sheffield apartment tower near Carnegie Hall for $418 million, the most ever paid for a residential building. His partner, real estate veteran Kent Swig, is the scion of one of San Francisco’s most prominent Jewish philanthropic families.
Not all the contacts between Israelis and American Jews have gone as smoothly. Indeed, several of the most high-profile Israeli investments have led to highly public Israeli-Diaspora disputes, so to speak.
Leviev and Boymelgreen came under pressure because of their plans to build a hotel on a site along the Brooklyn waterfront where developer Bruce Ratner was hoping to create a new cultural complex, known as Atlantic Yards. Ratner is the scion of one of Cleveland’s most prominent Jewish philanthropic families.
Ratner’s development has been hotly opposed by a crop of Brooklyn citizens’ groups, and Boymelgreen posed his plans as a responsible alternative for the area. The tension between Ratner and the Boymelgreen-Leviev partnership was smoothed over when the duo sold the property to Ratner for $44 million in mid-April. That left many of the citizen’s groups angry with their fellow Brooklynite Boymelgreen.
A much more bitter dispute followed the purchase of the Plaza Hotel by Elad Properties last September for $675 million. The company faced emotional opposition as soon as it announced its plan to convert 655 hotel rooms into 200 luxury condos — eliminating 900 hotel jobs in the process. The hotel workers’ unions that led the public campaign, the Hotel Employees and Restaurant Employees Union, is part of the traditionally Jewish garment workers union, Unite, as a result of a July 2004 merger. The union made some attempts to appeal to traditional sympathies in its efforts to win backing in New York and Tel Aviv for its fight against the Israeli-based developer.
Sources close to the negotiations say that Naftali, Elad’s American president, initially showed little interest in the union’s concerns. Naftali did not return calls for a comment.
Elad also ran into opposition from cosmetics heir Ronald Lauder, a prominent art collector and preservationist and former chairman of the Conference of Presidents of Major Jewish Organizations. The exterior of the Plaza is deemed a historical landmark, but Lauder has fought, as a “concerned citizen,” to ensure that important elements of the interior are also preserved, such as the Palm Court and the ballroom where Truman Capote’s Black and White Ball was held.
Lauder and union leaders made separate trips to Israel at the beginning of April in an effort to put pressure on Elad owner Yitzhak Tshuva, who built his fortune on Israeli gas stations. Lauder met with Tshuva, while a waiter and a doorman from the hotel visited with the head of Israel’s labor federation, the Histadrut. The Plaza employees asked their Israeli hosts, “How would you feel if someone came here and bought the King David Hotel and wanted to make it into a department store?” according to a union spokesperson.
A few weeks after these trips, New York mayor Michael Bloomberg called in the unions and Elad for four days of negotiations. They reached a compromise to save 350 hotel rooms of the original 805, and scale the number of new apartments back to 150. The union has expressed satisfaction with the deal, but Lauder has been less easily appeased. Lauder’s spokesman, Hank Sheinkopf, said he is waiting to see the final plans put forward by Elad.
“If the integrity of the landmark is not protected — if the Plaza Hotel does not remain a grand hotel — Mr. Lauder may take legal action,” Sheinkopf said.
These disputes, though, do not appear to have slowed the Israeli movement into New York. Elad, which was established in New York in the 1990s, has focused much of its attention on converting old buildings into apartment buildings, a popular practice given the high residential real estate prices in New York. Leviev and Boymelgreen, on the other hand, have built many more of their properties from the ground up.
The chief economist for Leviev’s Africa-Israel Investments, Dan Avidan, said the urge to expand into New York is natural for Israelis.
“In Israel, when you start a project of 100 units, you will be happy if you sell it in two years,” Avidan said. “In New York, we sell it in two weeks.”
Shkury, the New York real estate agent, said that in the 1990s, Israel’s real estate market was booming with the influx of Russian immigrants, Today, though, that growth has stalled, while immigrants keep coming to New York. “If you look at Israel,” Shkury said, “you see there is nothing to invest in.”
Avidan said there are also more psychological reasons for the interest in New York.
“We have direct flights, and almost every Israeli speaks English — it’s easier than working in Russia, where English is not enough,” Avidan said. “We feel like home.”
A message from our CEO & publisher Rachel Fishman Feddersen
I hope you appreciated this article. Before you go, I’d like to ask you to please support the Forward’s award-winning, nonprofit journalism during this critical time.
At a time when other newsrooms are closing or cutting back, the Forward has removed its paywall and invested additional resources to report on the ground from Israel and around the U.S. on the impact of the war, rising antisemitism and polarized discourse.
Readers like you make it all possible. Support our work by becoming a Forward Member and connect with our journalism and your community.
— Rachel Fishman Feddersen, Publisher and CEO
