Real estate is a profitable asset in one’s investment portfolio, both in the short and long term. The same applies to the real estate market in Istanbul, one of the most lucrative economic sectors.
Keep in mind that the Turkish real estate market is rapidly evolving, and all prospective participants must be fully informed about the market and its future directions. This article aims to make you aware of these long-term predictions and offer an accessible route to secure these long-term profits.
The demand-driven factors forecasting Turkey’s real estate sectors, such as the country’s crossroads terrestrial location, the impactful boom in the construction sector, urban renewal, and demographic trump card, have enabled Turkey to see leaps among the world’s economies with GDP exceeding $900 billion. The real estate holding one-fifth of the total GDP, the commercial, office, and residential properties have immaculately outmanned over the past five years, yielding exponentially escalated rental and selling prices for the residential and retail cost. House Pricing Index in Turkey has increased from 50 in 2011 to 160 in 2021, a 220% increase in 10 years, corresponding to ~15% increase in prices every year.
Housing Pricing Index in Turkey
source: tradingeconomics.com
Long Terms Trends in Turkish Real Estate Market
Turkey’s economy is ranked 19th globally, and the democratic nation is forecast to be among the top ten economies by 2023. Although the real estate market is overwhelmingly large, it contributes significantly to the Turkish financial industry’s upward growth trends.
- The Turkish market has a track of the highest annual home sales.
- There is a net positive return on investment (ROI).
- Rental yields in central areas are guaranteed to be at least 5%, and in the city center, they can even be as high as 8%.
Why is there such a high rate of capital appreciation in the real estate market?
The ongoing urban transition in Turkey is a significant driver of rising property prices.
Another contributing factor is tourism. Urban transformation is accelerating, especially in Istanbul, and will keep the construction industry alive for the coming ten to twenty years.
What kind of investment will yield a significant return on investment?
Doing due diligence on the project’s composition is a thoughtful way to ensure that the capital gains are favorable. Although there are lucrative areas on the outskirts of town, it is better that you stay close to the city center.
What are the Major Turkish Cities for real Estate Investment?
In August 2020, Istanbul being the limelight for tourists and the most populous city of Turkey, took the lion’s share in the housing sales with 30,292 sold units, taking a share of 17.8% in overall sales. This metropolitan city is followed by Ankara, securing the second slot in the home sales market with 17,131 sold units and a 10.1% share. Last but not least, the Western province Izmir with a 6.5% share, has taken up 11,145 house sales in the real estate market.
The sky is the limit for investing in Istanbul
The vibrant city of Istanbul is by far the best investment area. In Turkey, you can earn a healthy rental income all year. The city’s population and amenities grow every year, placing Istanbul at the top of Turkey’s list for investment accommodation.
Here is a list of some of the best investments you can make in the city.
Umraniye
Whether you’re looking for commercial or residential investments, you can’t miss looking at Umraniye’s portfolio.
- Shopping malls, recreational centers, children’s parks, and cultural centers have all grown in importance as infrastructure has expanded to meet the expected demand of Umraniye property owners over the last decade.
- There is never a shortage of things to do in Umraniye, which is part of Turkey’s largest and busiest region, and any hobby enthusiast can indulge in their passion.
The city has everything for everybody.
Kosuyolu
The constant development and upcoming luxury housing have caught the attention of many foreign investors.
- With the addition of shopping malls, business centers, luxurious cafes, and restaurants, as well as its proximity to the Marmaray metro line and the proposed Eurasia tunnel, the Koşuyolu district has become an indispensable location for many citizens.
Kagithane district
In addition to residential and commercial buildings, Turkish foreign construction companies began constructing large residential and investment projects in the city, including hotels and commercial complexes.
The diversity has attracted many investors in the last few years.
Antalya- Emerging as a favorite spot
In recent years, Antalya has seen the construction of several new modern apartment complexes. It has proven to be very common among those looking for investment property in Turkey and offering year-round rental yields in the city.
Located on the southern coastline of Turkey, this is definitely on the top of the list for investors.
Typical gross rental yields in Turkey/ Istanbul
Location! Location! Location! The rental yields depend entirely on your site.
In Istanbul
Gross rental yields on apartments vary from 2% to 4.7 percent, based on the return received on the purchase price of a rental property before taxes, vacancy costs, and other expenses.
In areas like Kocaeli and Bodrum
In areas where per square meter rates are lower, rental yields can reach from 4.3 to 4.5 percent in these areas.
Real Estate in Turkey for Foreigners
Out of 11.2% residential sales in 2020, 40,812 houses were sold to foreigners, with an estimation of 19,175 units being sold in Istanbul. Following Istanbul, the holiday resort town Antalya holds the second spot with 7,735 properties, and in the capital city, Ankara, 2,746 units sold.
Iranians have surpassed the list of foreign buyers who have bought 7,189 properties, followed by Iraqis ranked second with 6,674 units. In contrast, Russians, Afghans, and Azerbaijanians bought 3,078, 1,929, and 1,279 house units, respectively.
Number of Residential Sales to Foreigners
Why do Foreigners Purchase Property in Turkey?
1 out of 4 investors pursue Turkish citizenship after the investment and 14% pursue Turkish residence. Investment and short time vacation are the top two reasons for property purchase by foreigners.
Reasons for Foreigners to Buy Real Estate in Turkey
How has the Demand for Real Estate Changed in Turkey in 2021?
Real estate is a top investment vehicle for many investors. Before the pandemic, the most prudent factors that were primarily taken into account to determine prices in Turkey were cities, the location where the property is located, proximity to the hospitals, schools, airports, and places of entertainment. But with the pandemic situation going on, the criteria have shifted markedly. 35% uprise in the rents of properties with gardens and prefabricated houses have been reflected during the sales. Besides, the apartments in more than 3 decades old buildings are less in demand due to seismic threat. Given the new demand, the construction companies are building low-rise villas near scenic suburbs to catch foreigners’ attention. As the construction sector has not been compromised during the pandemic, the mortgage rates are rising gradually. Side by side, the property prices are escalating due to an increase in demand for housing.
