50% returns in Istanbul: fact or fiction?
In Istanbul’s fast-moving property market, investors have an exciting number of options. However, while there's money to be made in Istanbul property, Property Turkey director Cameron Deggin explains that not all deals are created equal - and buyers should be aware that not all offers are genuine ones when they invest in Turkey.
“Just as you wouldn’t buy the first property you come across when you’re looking for somewhere to live, you also need to be extremely selective when making an investment,” Deggin says. “It’s possible to make capital gains of up to 50% in the medium term - you just have to know where to look, and for that, you need local knowledge and expertise.”
Beware “have-a-go” agents
Istanbul’s buoyant real estate market has attracted a number of inexperienced agents trying to grab a slice of the action, he says.
“These have-a-go agents don’t know the city or the market with any depth, so they stick to memorised pitches.”
There is little to no consultancy involved, and the agents will stick to the two or three projects they’re paid to sell - many of which have over-inflated rental guarantees that don’t quite add up.
“The majority of these projects are dead ducks,” he says. “You will never sell them at a profit - if you’re able to sell them at all.”
“You also need to be aware of projects offering 8-10% guaranteed rental returns. There are several projects on the market that currently offer these terms. They are gimmicks and not what they seem.”
Maximum returns: how to select the ideal investment
When we select a medium term, capital growth investment strategy, Deggin explains that would-be investors need to look at the following factors in Istanbul apartments:
- Buying at rock bottom: Buying at the lowest possible price level means buying before the project is launched, or obtaining a significant discount. Projects that have been around for several years have already appreciated.
- Arrange favourable payment terms: 30% downpayment with the balance paid over 24-36 months is the most effective way to finance your property. Any longer, the price will go up.
- Choose your area carefully: If you buy in an area where there’s a limited supply of new projects to market, you’re assured of a swift - and lucrative - exit route.
If the above factors are met, your investment will be a rewarding one, he says.
Choose your area - wisely
Deggin recommends buyers steer clear of areas like Esenyurt and Beylikduzu, where hundreds of new projects jostle for space each year, greatly lowering the chances of a profitable exit strategy.
So, with a budget of up to US$200,000, where should buyers look if they want the coveted 50% returns?
Going back to the points mentioned earlier, Deggin recommends two areas: the Media Highway (Basin Ekspres) and Bahcesehir.Media Highway here.
Bahcesehir property here.
Going the consultancy route
“As well as being unscrupulous, the one-size-fits-all approach taken by many agents simply doesn’t work. And that’s because in Istanbul, investing is more than just throwing your money at the first glossy sales pitch that comes your way and there’s often a fine line between a successful investment property and a dead duck.”
The most effective route to investment is thorough careful consultancy, Deggin says. Buyers need to consider their options carefully, taking into account their budget, investment goals and preferred exit strategy.
“Buying a property is a huge investment in money and time, and it’s not a decision to be taken lightly.”
Most crucially, he continues, buyers need experienced agents to guide them through the process of selection and purchase.
“If your agent doesn’t know the city and the market like the back of his hand, steer clear,” Deggin warns.
“Anyone can put a sign above their door and call themselves a real estate agent. However, few agents have the expertise or experience to be truly successful in the city. In the 10 or so years we’ve been operating in Istanbul we’ve seen a large number of agents come and go. Istanbul’s real estate market is fast-moving and exciting, and you really have to be on top of your game if you want to stand out.”
Deggin, who has invested in Istanbul apartments himself, urges would-be investors to carefully consider their options before investing in the city - and to give him a call to discuss their unique requirements.
“Just as no two investments are the same, no two clients are alike. This philosophy explains why we’ve had such success working with our clients on a case-by-case basis,” he says. “Get in touch to find out how to invest in Istanbul and get a tailored investment plan that’s specific to your needs.”