A beginner's guide to investing in Istanbul property
The city that straddles two continents has always been a focus for outside trade and investment. However, in the past decade the city’s fortunes have reached stratospheric heights as investors race to capitalise on Istanbul’s property boom.
Recent statistics from the Global Housing Price Index show real estate prices in Turkey leaped an incredible 18.5 percent in the second quarter of this year compared to the same period in 2014, making Turkey second only to Hong Kong globally. The market shows no sign of slowing as the year draws to a close.
At the forefront of the property market is Istanbul, home to one in five Turkish property sales. Investors are attracted to the city’s luxury property and new affordable developments outside the central city. Return on investment is high, with off plan developments increasing in value by 50% within two years of completion, and rents are continuing to soar.
While many Eurozone countries continue to flounder and the Middle East remains risky, Turkey is considered a safe place for investment, and Istanbul in particular, considered a leading European financial centre, is leading the pack.
1 Know your market
Istanbul is a behemoth of a city. With 14 million people living in neighbourhoods that run the gamut from luxurious to bohemian to positively rundown, it’s difficult to know where to start. However, there are two ways we can discover the best areas for investment: we can look at the areas currently attracting investment, and predict which areas will follow.
Established investment areas
Bomonti, in Sisli’s old quarter, was once a neglected and rundown working class centre. However, with demand for centrally located accommodation growing, around a decade ago the suburb began to shape up. Its fate was sealed when the Hilton moved in, building the largest hotel in the city. Bomonti property prices have been some of the fastest moving in the city over the last few years. Prices are high in Bomonti, but its location (just a kilometre or so from Nisantasi Street, the city’s most expensive), means prices are likely to double within five years. Take a look: Hotel-style apartments in Bomonti
Beyoglu is a popular district in the heart of Istanbul’s European side. Full of cultural and historical attractions, the area is full of established older properties and generally commands high property premiums, although there are a number of districts (such as Galata, Gumussuyu and Tarlabasi) undergoing regeneration where lower prices can be found. Beyoglu is one of the top areas in the city for return on investment, but property prices are high so require a large capital. Take a look: Bosporous view apartment in Beyoglu
Caddebostan is an upper-scale residential area located in Kadikoy, the large and popular district of Asian side of Istanbul. The district has a number of branded residential projects and the price per square metre is increasing rapidly.Take a look: Stunning residence for sale in Kadikoy
Bahcesehir, Istanbul’s garden city, is a planned suburb with an emphasis on green space and some high quality new builds. Due to its convenient location (great transport links to the central city) and leisure facilities, it’s popular with middle class families with young children. In 2013 the sqm price was $1282 and rental yields 5%. Property prices have doubled here since 2005 but are still rising, especially with improved infrastructure and urbanisation.Take a look: Bahcesehir investment apartments with lifestyle features
Besiktas is located on the Bosphorus shore, and encompasses a number of historical sites, as well as a burgeoning business infrastructure. Well known neighbourhoods include upper-class areas Levent, Etiler, Bebek, Kurucesme and Ortakoy. Besiktas attracts office investment and has experienced very strong growth, with sqm price reaching $2022 in 2014, making it the city’s most expensive area. Rental prices are also high. The investment payback for this district is under 17 years. Take a look: Prestigious Besiktas apartments in central Istanbul, and Besiktas apartment at bargain price.
Up and coming areas
In a city as large as Istanbul, there’s bound to be a few not-so-great areas. However, a government scheme which is beginning to improve inner city urban areas means these rundown, often unsafe areas are quickly transforming. Investors have been fast to cotton on. Looking at areas where urban regeneration has taken place, it’s clear that having a little vision is conducive to some excellent returns. In the next few years, a number of new developments will be offered at favourable prices, presenting an amazing opportunity for anyone wishing to enter the Istanbul property market at the ground floor.
Here are some of the areas where huge change heralds huge gains for investors:
Beylikduzu is located in the European suburbs in Istanbul’s outskirts, neighbouring Marmara Sea, Esenyurt, Buyukcekmece and Avcilar. Beylikduzu is popular with the city’s middle class, and is home to an increasing number of luxury projects. Square metre sales reached $711 in 2013 and continue to grow. Rental is high and stable, and return on investment is 16 years. Take a look: Spectacular homes in premium area of Beylikduzu
Working class Gaziomanpasa is located on the city’s desirable European side, and a number of new sea view developments are popping up here at good entry level investment prices. Property experts predict that the price per square metre will increase by 50% within the next three years, and rental income will reach 7% within two years. Take a look: Panoramic Golden Horn apartments at bargain prices
Kagithane, in Sisli, is poised upon massive change. A quarter of the houses in the area will be replaced - that’s around 45,000 homes. One in four streets will undergo huge regeneration and infrastructure connecting the suburb with the central city is to be improved. Investors are already buying Kagithane developments at extremely favourable off-plan prices.Take a look: Leading Kagithane project at forefront of urban transformation
In Fikirtepe, an area being billed as Istanbul’s New Manhattan, 50,000 properties are about to hit the market over the next three years. Located on the city’s Asian side, it’s about to become a major suburb, home to thousands of city dwellers, with excellent links to the central city and wider Istanbul.
2. Discover your investment options: what kind of investor are you?
High end luxury
If you’re after the serious returns, you’ll need to focus on the upper end of Istanbul property. You’ll need to reach far into your pocket - but the rewards are off-the-chart incredible.
Spending $1million+ on Istanbul property will net you an Ottoman villa overlooking the Bosporus. Or a top-end luxury penthouse apartment with five-star hotel facilities. Or perhaps an incredible modern villa in an exclusive development, outside the central city . If your budget takes you into this bracket, Istanbul is truly at your feet, and just about anything your heart desires will be a possibility.
Mid range luxury
Budget: $400,000 - $1 million
A mid range budget will net you luxurious apartments in the central city, with fantastic facilities - and more importantly, for investors, incredible return on investment.
Take the Anthill Residence. In 2009, units went on sale for $283,000. Today, these residences are selling for $556,000 - almost double the purchase price. If you’re looking for an investment of this calibre, start in Besiktas, Beyoglu and Bomonti.
Our pick for mid-range luxury is this beautiful central development, due for completion in two years’ time, is listed at an off-plan price of $655,000. By 2020, the properties will likely see rises of 50% - taking the value up to $980,000.
City suburbs commuter property
Budget: $100,000 - $400,000
Looking for a safe investment with very favourable returns and guaranteed rental income? Look to the city’s middle class commuters. As young city workers (a strong demographic in Turkey’s cities) come of age, they begin to head out of the central city in search of safe spots to raise a family, within commutable distance of their offices. Returns on these properties are extremely favourable, and rental income is reliable. Suburbs like Bomonti are great places to start if you’re in this investment demographic.
This family-friendly development is a great example of the kind of property commuters are moving into. With great facilities and travel links to the central city, rental demand is only bettered by the investment potential.
Outer city commuter property
Budget: $50,000 - $100,000
Low-cost housing is in high demand in the city, and to meet the demand of commuters who can’t stretch to inner city properties, a number of new developments are growing on the city’s outskirts. While you obviously won’t see the spectacular returns to be found in the central city, appreciation is steady and rental income reliable. These low-cost developments are found in areas like Beylikduzu and in some parts of Bahcesehir.
This commuter-friendly development has an excellent payment plan in place and potential for some good gains, with year-round rental income.
3. Take action
Now you know the basics, it’s time to put your plans into action. Headed by Cameron Deggin, Property Turkey are established agents with more than a decade’s experience investing in Istanbul and wider Turkey. They know the country, and more importantly - they know the market. What sells, who’s buying, and which developments are prime investment.
“We’ve seen some serious gains in the last few years in Istanbul, but there are still ample opportunities for new investors with a large number of developments poised to enter the market,” Deggin says.
Dividing his time between the London headquarters and his home in Bodrum, Deggin’s passion for Istanbul investment property goes far beyond selling it: the seasoned investor is about to buy a Bosporus view investment apartment in Bomonti.
The investment expert is confident that the project - “the best in the area” - will double in price within three years.
Deggin’s investment acumen means he has a stable of happy clients. “Our track record is good - our clients have some impressive portfolios covering the whole city.” Deggin adds that a number of his clients are now reinvesting the gains they made from original purchases four or five years ago.
For more information on investing in Istanbul property, contact Cameron Deggin.
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