According to Jewish tradition, King David purchased the entire city of Yerushalayim (Jerusalem) from Aranuah the Jebusite. The threshing floor on which King David intends to offer sacrifices, is now called the Temple Mount in Yerushalayim. As this site would later becomes the location of the Beit Hamikdash (Holy Temple), David purchased the land publically so that the Jewish ownership of the land would be indisputable. Although David was offered the site as a gift, he did not want any future generations to claim that it was stolen by the children of Israel and therefore, he insisted on paying for the land.
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Source: Israel in the News