A Shining City On a Hill

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Photograph by Yoray Liberman for TIME

Housing boom Construction is expected to generate 10,000 jobs

Sitting in his ramallah office, Bashar Masri, the managing director of Bayti Real Estate Investment Co., watches the construction of the first planned city in Palestinian history — which is going on 9 km away — in real time on multiple split screens on his computer. On one screen, a water truck circles an area marked by rolling hills, while on another, bulldozers and other heavy equipment carve huge blocks out of the rocky slopes. Despite the political obstacles, quite a bit of progress is already visible on this massive site under excavation in the West Bank. Since January 2010, new roads have been opened and concrete foundations have been set. When construction is complete, this craggy stretch of land 32 km north of Jerusalem will be transformed into a modern, 40,000-person metropolis called Rawabi. "There is a lot of risk in a project like this," the man behind the ambitious undertaking says, in what can only be described as a huge understatement.

Indeed, Masri is navigating uncharted territory. At $850 million, Rawabi (which means hills in Arabic) is both the largest construction project and the largest private foreign investment ever made in the Palestinian territories. And given that it aims to do something rarely done in the Arab world — namely, provide affordable, desirable middle-class housing in a region where the wealth gap has led to conflict and revolution — it is being watched quite carefully at home and abroad.

Designed under a master plan by the global architecture, engineering and urban-planning firm AECOM in conjunction with experts from the Palestinian universities Birzeit and An-Najah, Rawabi represents a marked departure from the traffic-clogged, haphazard urban sprawl of most other West Bank cities. Spread across 23 neighborhoods, Rawabi is being constructed as a high-tech, environmentally sustainable city of gleaming mid-rise buildings, public parks, cafés and shopping areas, with designated residential and commercial zones. It will feature a business district as well as a cultural center, an amphitheater, schools, mosques, churches and hospitals.

Rawabi will be a sleek, wired city, something almost unheard of in the West Bank. But more important, Rawabi is geared specifically to a woefully underserved sector: college-educated, young professionals who have long been priced out of the housing market. By building large-scale, affordable housing, Masri believes he is creating an instrument to develop a fledgling middle class in a society that has traditionally straddled two economic tiers: rich and poor. Homes range from million-dollar mansions (mostly unattainable in an area with a per capita income of $1,554) to sometimes poorly made, albeit cheap flats, a situation that has long forced multiple generations and extended families to live under one crowded roof.

The units in Rawabi are expected to cost $65,000 to $100,000 — 25% to 40% less than homes in the surrounding area. "The Arab world has long catered to the rich," says Masri, who was born in the northern West Bank city of Nablus and lived for a time in Egypt. "It has ignored the majority, which is poor or middle income. This isn't rocket science. Homeownership is one of the most important issues for a young family to feel stable and secure."

Clearly, Masri is onto something. Although the first 1,000 units in Rawabi are not set to be finished for another two years, more than 7,000 applicants have registered on the development's website to purchase apartments.

Eight months ago, Salah Abu Ein, 24, the manager of a retail store in Ramallah, registered for an apartment in Rawabi. Engaged to be married and studying for his M.B.A. at al-Quds University, Abu Ein is typical of the growing ranks of educated workers who have had few options when it came to purchasing power. He is also emblematic of the cultural shift of his generation of Palestinians, who no longer want to live in the traditional extended-family setup, preferring to raise nuclear families on their own. "When I get married, I want my own place," he says. "Rawabi is a safe place for me and my future children."

It's notable that homeownership is becoming such a priority in the Arab world at the very time that it's coming under fire in the U.S. and other rich countries, where it is often seen as the prime driver behind the financial crisis. While this may seem like a contradiction, it's not. In the past few years, homeownership rates in parts of the U.S. and Europe surpassed historical highs (many economists would like to see them lower in the coming years), while in the Arab world, they have plenty of room to grow. Currently, housing shortages are at a critical point; the World Bank estimates that unmet demand in the West Bank and Gaza will hit 400,000 to 450,000 units in the next 10 years. The situation is similar in many other parts of the Middle East. This month Saudi Arabia's King Abdullah pledged to spend $15 billion on housing in the kingdom to help satisfy pent-up demand (and mitigate one point of strife that has fired up the region). If successful, Rawabi offers a broader template for other cities in the West Bank and Gaza and eventually the rest of the Arab world.

Unlike his target customers, Masri grew up in comfort. His family is one of the largest, most prominent and wealthiest in the West Bank, with far-flung interests in real estate, communications and finance. Masri's father was a doctor; one of his cousins, the billionaire entrepreneur Munib al-Masri, is often referred to as the Palestinian Rothschild.

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