Where I’d focus (best place, and why)

Jerusalem City Center (Jaffa Rd, Prophets St), Rehavia, Talbiya
You’re buying demand that already exists, and conversions can be faster than raw land development.

Jerusalem corridor and hills outside the city (Mevaseret Zion, Neve Ilan, Mateh Yehuda area)
More land, fewer Old City constraints, still close enough to sell “Jerusalem” without the toughest planning friction.

Mateh Yehuda (Judean Hills)
This is the proven “wine route” play near Jerusalem, and the tourism proximity is the real monetization lever.

Judean Hills if you want tourism adjacency and premium brand.
Galilee, Golan, Negev if you want more land and sometimes more incentive upside, but you give up “next to Jerusalem” positioning.

The A to Z process (same skeleton for all 4 plays)

Pick the model: Hotel (build vs convert vs buy operating). Winery (vineyard only vs visitor-center brand vs full production).
Decide your tax status and entity: Israeli citizen does not automatically mean Israeli tax resident. That changes taxes and banking.
Shortlist assets, then check planning first: No romance, no promises. Start with zoning and permitted use.
Confirm land rights: Private (Tabu) vs Israel Land Authority lease. Most land is state managed and often held via long leases, not simple freehold.
Read the TABA zoning plan for each plot: If it is not zoned for what you want, assume years, uncertainty, and objections.
Infrastructure due diligence: Road access, electricity, sewage, and for vineyards: water quota and connection.
Offer only with hard conditions: Contract is conditional on zoning confirmation, clean title, permits path, financing, and any grant eligibility you are counting on.
Financing: Land and development financing is tougher than residential. Underwrite with conservative timelines.
Permits and licensing: Hotel (planning, building permit, safety, accessibility, business license). Winery (building permit, business license, health and production compliance, plus any visitor use permits).
Operate, then optimize: Hotels (operator, positioning, distribution). Wineries (direct to consumer via tasting room is usually the profit engine).

Ministry of Tourism grants: the Tourism Investments Directorate can approve a 20% grant on the recognized investment for hotel projects.
You only apply once your planning is real: they require a valid municipal construction plan with appropriate zoning.
You need real equity: minimum 20% equity ability (bank confirmation, special handling if your bank is foreign).
Cash arrives by milestones, not upfront: payments are staged and tied to project milestones and reporting.
Sometimes there are add ons in specific places: (example in the official procedure: Tiberias reached 28% with a potential performance add on). This is location and track dependent, so I underwrite to 20% unless eligibility is confirmed in writing.

Expect far less “clean, big, predictable” money than hotels. The real lever is getting the zoning and permitted uses right, then building a high margin visitor center model.

Purchase tax on land or commercial rights is commonly 6%.
There’s a built in refund mechanism: if the land qualifies and you get a building permit within 24 months, you can get back 1⁄6 of the purchase tax (effectively dropping 6% to about 5%).
New immigrants (Olim) can be eligible for a purchase tax discount on residential and business property, which matters if your timeline includes making Aliyah.

You can grow grapes on agricultural land.
A winery building is treated as industrial or commercial use, so agricultural zoning usually does not allow it by default.
Rezoning is slow and uncertain. Never buy based on “it’ll get approved.”
If land is Israel Land Authority leased, change of use approvals and fees can be brutal.
Easiest legal path in practice: Vineyard on agricultural land. Winery production on industrial or commercial land.
If you want the romantic estate winery, assume bureaucracy and time.

Conversion play: buy an office or residential shell and convert to hotel use where the city will allow it. It can be materially faster than raw land.
Grant strategy: design to match the Ministry’s requirements early, so you do not redesign after you apply.
VAT advantage: many tourism services to foreign tourists are zero rated VAT, and foreigners typically are not charged VAT at hotels.
Eilat edge (if you go national): Eilat has free trade zone tax and VAT mechanics that can materially improve economics.

Visitor center first: the tasting room and direct sales drive margins, not the vineyard.
Custom crush entry: build brand and sales before you sink millions into a facility.
Kosher multiplier: if you want Israel mainstream and many export channels, plan kosher from day one. It changes staffing and process, so retrofit is painful.
Water and access are deal killers: if water quota and legal road access are not clean, I walk.