VZCZCXYZ0000
RR RUEHWEB

DE RUEHJM #0356/01 0571700
ZNY CCCCC ZZH
R 261700Z FEB 10
FM AMCONSUL JERUSALEM
TO RUEHC/SECSTATE WASHDC 7702
INFO RUEHAM/AMEMBASSY AMMAN 8830
RUEHEG/AMEMBASSY CAIRO 0061
RUEHDM/AMEMBASSY DAMASCUS 8267
RUEHLB/AMEMBASSY BEIRUT 4522
RUEHTV/AMEMBASSY TEL AVIV 5226
RHEHNSC/NSC WASHDC
RUEKJCS/JCS WASHDC

C O N F I D E N T I A L JERUSALEM 000356 
 
SENSITIVE 
SIPDIS 
 
STATE FOR NEA/IPA, SEMEP AND EEB, NSC FOR KUMAR, OPIC FOR 
DRUMHELLER 
 
E.O. 12958: DECL: 02/25/2020 
TAGS: ECON EAID EINV PGOV KPAL IS
SUBJECT: CONSTRUCTION UNDERWAY ON ARAB-OWNED MALL IN 
DOWNTOWN EAST JERUSALEM 
 
Classified By: CG Daniel Rubinstein for reasons 1.4b and d 
 
¶1. (SBU) Summary:  Construction is underway on a landmark 
Arab property in East Jerusalem.  The building, originally 
intended to open as a hotel in 1967, is now scheduled to open 
with retail, commercial, and hotel space in January 2011. 
The Nuseibehs, a very prominent Jerusalem-Palestinian family, 
received a green light to recommence the project from the 
Municipality of Jerusalem in April 2009, after nine years of 
discussions with municipal officials.  The Nuseibehs' 
self-financed renovation began in July, and is scheduled to 
be completed at the end of 2010.  End summary. 
 
A Plan That Began in 1967... and 1972... and 2000... 
--------------------------------------------- ------- 
 
¶2. (SBU) Mohammed Nuseibeh, a successful East Jerusalem 
property developer, and his son Samer gave EconOff a tour on 
February 25 of a landmark property in the heart of East 
Jerusalem's commercial area.  Nuseibeh said that he 
originally started building a hotel on Salahaddin Street, the 
"Main Street" of East Jerusalem, in 1966.  The hotel was 
scheduled to open in December of 1967, but the 1967 war 
derailed the plan.  In 1972, Nuseibeh decided to re-start 
construction and applied for the necessary permits, but was 
once again set back by the outbreak of the Yom Kippur war in 
¶1973.  In the late 1970s, Nuseibeh said, the cost of 
construction in downtown Jerusalem became prohibitive, and he 
turned his attention to building apartment complexes in the 
East Jerusalem suburb of Beit Hanina.  For years, the 
property remained an unoccupied skeleton of a structure. 
 
¶3. (SBU) In 2000, Nuseibeh decided to turn the property into 
retail and commercial space, and began discussions with the 
municipality.  Nine years later, in April 2009, the 
municipality agreed to recognize Nuseibeh's original 
Jordanian construction permit, on the condition that Nuseibeh 
abide by current codes throughout the building.  His 
self-financed renovations commenced in July 2009. 
 
¶4. (SBU) The nine-floor building, called the "Addar Mall," is 
planned to have over 100 shops and 50 offices, ranging in 
size from 22 to 80 square meters each; a food court with an 
outdoor terrace; and a 23-room boutique hotel on the 8th 
floor.  The higher floors will offer a 360-degree view of 
Jerusalem. 
 
¶5. (C) Nuseibeh said the municipality has been extremely 
accommodating since the permit was approved, noting the 
project was allowed to proceed even though the property does 
not have a regulation-size parking lot.  (The building's 
underground lot has room for only 25 cars in a congested area 
where street parking is scarce.)  Nuseibeh said, "Even the 
Israeli media says this project will completely change the 
face of Salahaddin Street."  He noted that over the last 15 
years, the building had become a hangout for drug users, as 
evidenced by the number of heroin needles found on the ground 
floor when the renovation began. 
 
¶6. (C) Nuseibeh son, Samer, who serves as the project 
engineer as well as its marketing manager, said the project 
has received enthusiastic support from the local community. 
He claims to have signed lease agreements for nearly half of 
the space available.  Some of the first to sign leases are 
lawyers, doctors, and engineers who have been working in 
their homes or shared spaces because of the lack of available 
office space in East Jerusalem.  The building is expected to 
be ready for occupancy around the end of 2010, he said. 
 
The (Non) Competition in the Neighborhood 
----------------------------------------- 
 
¶7. (C) The Nuseibehs also own East Jerusalem's Addar Hotel, 
across the street from the American Colony Hotel. Samer said 
Addar has an 80% occupancy rate, compared to the 20-30% that 
is typical for in East Jerusalem hotels.  He noted that 
tourists are nervous about the security situation in East 
Jerusalem, and often cite concerns about "demolitions and 
demonstrations" as reasons for cancelling their reservations. 
 He confessed that he listed the hotel's address as "10 St. 
George's Street" rather than "58 Nablus Road" (the building 
 
faces both streets) in promotional materials in order to 
present a more "positive" image. 
 
¶8. (C) Nuseibeh said that the tourism sector in East 
Jerusalem has been stunted since 1967 by a lack of proper 
urban planning, the cost and availability of land, lack of 
access to finance for large-scale projects, and the municipal 
permit regime.  He said that in 1967, there were around 800 
hotel rooms in West Jerusalem and 1,500 in East Jerusalem. 
Today, he estimated, there are over 25,000 rooms in West 
Jerusalem and perhaps 700 functional rooms in East Jerusalem. 
¶9. (C) Nuseibeh pointed to three high-rise hotels next to 
Addar, built by Israeli companies on land expropriated from 
Arab owners, and said that these three hotels alone -- the 
Olive Tree, the Leonardo (formerly the Novotel), and the 
Grand Court -- have over 1,200 rooms, nearly twice as many as 
the number of functional (and Arab-owned) hotel rooms in the 
rest of East Jerusalem. 
 
RUBINSTEIN