You have to consider the Tanzimat reforms in the waning Ottoman Empire, specifically the Land Code of 1857 and the Nationality Law of 1869. The Land Code misappropriated much of the tribal land in current day Israel/Palestine to Ottoman administrators, which was later brought under the control of Britain after WWI. Particularly after the Nationality Law, which granted citizenship rights irrespective of religion, the Jewish National Fund was able to purchase and settle that land. Under British rule, the settlement accelerated. It’s worth noting that there was massive migration to the Holy Land of Jews, Christians, and Muslims. During the late Ottoman period, 1850 to 1915, the Muslim population doubled (+300k), and the Jewish & Christian populations tripled (+26k and +54k respectively). By the British Mandatory period, the majority of the population in the Holy Land were immigrants.

But anyway, you’re right. Although there was always tension between Muslims and Dhimmis, the specifics of the contemporary conflict can’t be traced back much further than the late 1800s. Perhaps if the original negotiated Arab homeland consisting of the Arabian Peninsula, Israel/Palestine, Iraq, Syria, and Lebanon had been honored, the entire region would be much more stable today. Hard to say what would have happened to the Jews during WWII, though.