Jerusalem Hotel Projects: One Nears Revival While Another Stalls
An analysis of Jerusalem's two abandoned hotel projects reveals contrasting futures. While the long-stalled HaLeom Hotel is finally advancing toward completion under a new management framework, the notorious Jerusalem Pearl remains trapped in a cycle of developer revisions, legal hurdles, and prolonged municipal neglect.
The fate of two prominent abandoned hotel projects in Jerusalem illustrates the complex challenges facing urban real estate development, legal disputes, and municipal oversight. While the delayed HaLeom Hotel near the government complex approaches a potential resolution, the long-abandoned Jerusalem Pearl Hotel near Jaffa Gate remains stalled in bureaucratic and legal limbo.
HaLeom Hotel: A Decade-Long Standoff Near the Supreme Court
Designed as a 400-room luxury hotel opposite the Supreme Court, the HaLeom Hotel project has stood as an empty concrete-and-glass shell for over a decade. Ownership under Nitzba, controlled by Kobi Maimon, became entangled in severe financial and legal disputes with execution contractors. Key subcontractors, such as the aluminum and cladding firm Alumcon C.L., filed massive lawsuits against Nitzba citing unpaid debts of millions of shekels and systematic delays. Construction work came to a complete halt in October 2023.
Obtaining Form 4—the municipal occupancy permit certifying structural safety—requires signatures from execution contractors and site engineers. Due to outstanding financial disputes, contractors refused to sign off on the required paperwork. Nevertheless, recent developments offer a glimmer of hope. According to the Jerusalem Municipality, construction work is progressing in accordance with active building permits, including two recently constructed upper floors. The latest permit was issued on July 7, 2025.
Furthermore, in July 2026, Airport City Group (Nitzba's parent company) announced the launch of a new hotel chain in partnership with former Fattal Israel CEO Avia Magen, who will serve as the network's CEO. The chain will initially comprise six hotels, including the HaLeom Hotel in Jerusalem. Magen stated that the completion of the HaLeom Hotel is expected to take slightly over a year.
Jerusalem Pearl Hotel: Two Decades of Neglect
On the opposite side of the city near Mamilla and the Old City walls, the Jerusalem Pearl Hotel has remained an abandoned eyesore since 2008. The property became the subject of protracted litigation after the owners sought property tax (Arnona) exemptions by claiming the building was unusable. The municipality countered that the owners deliberately sabotaged the interior, stripping flooring, plumbing, and ceilings, to manufacture eligibility for tax exemptions.
Although municipal authorities attempted to secure demolition orders in 2017, courts ruled that existing property laws do not mandate maintenance obligations for private owners, limiting the municipality's enforcement power. A subsequent mediation process led to a 2019 plan for a 150-room hotel and 20 residential units, but the demolition permit expired in 2021. In March 2025, the local planning committee approved a final framework stipulating that if development does not proceed on schedule, the municipality retains the right to expropriate the land for a public park.
Developer U-Turns and Future Uncertainty
Despite previous agreements, the developers claimed the earlier framework was economically unviable and submitted a revised plan (No. 1182591). The new proposal seeks to eliminate residential spaces, increase the room count to 220, and introduce 300 square meters of commercial space. Municipal officials noted that while a decision to deposit the new plan was made in 2025, it has not yet been formally deposited for public objections, delaying demolition and construction permits.
Additionally, Feigin Architects, the firm responsible for the original design, parted ways with the project after a multi-year partnership, adding another layer of uncertainty. Meanwhile, the Jerusalem Pearl continues to receive property tax exemptions as an uninhabitable structure.
These contrasting cases highlight the systemic limitations local authorities face when private financial disputes and developer delays paralyze prime urban real estate, leaving abandoned structures to blight Jerusalem's core business and tourist districts for decades.
