Exploring real estate valuation practices in an informal market

Abstract

This study investigates the intricate realm of real estate valuation in the Palestinian neighborhoods of East Jerusalem. Drawing on 27 interviews with real estate appraisers and an analysis of betterment tax valuations, arbitration reports, and court minutes spanning the years 1991–2023, we unpack the distinct valuation practices in this informal urban setting. We discuss the unique challenges involved in valuations in informal real estate markets and how appraisers address them, suggesting that appraisers in East Jerusalem grapple with structural, top-down challenges—arising from inconsistent Israeli planning regulations, geopolitical instability, and an underdeveloped mortgage market—and bottom-up obstacles stemming from limited transaction reporting by local Palestinian residents. To navigate these challenges, appraisers employ creative solutions, such as a 'copy & paste' strategy, referencing older arbitration verdicts, and creating complementary databases. They also rely on local knowledge and their familiarity with the field. Our research sheds light on the innovative methods appraisers utilize to assess land value in the complex and dynamic environment of East Jerusalem, and in informal areas more broadly.