For potential investors, the numbers continue to add up in Turkey, with property prices leaping by a third in the last year in Istanbul, and the number of units sold up by almost 20 per cent. Propertyturkey.com director Cameron Deggin explains the appeal Turkey’s largest city holds for investors - and why prices continue to rise.
House prices in Istanbul have shot up by 29 per cent in the last year, according to the Turkish Central Bank. Recent data showed the nominal house price index increased by 19.08, while the real index increased by 10.17.
Price rises were consistent around the city, with Besiktas properties experiencing the biggest jump.
The number of property sales is also at a high, with 2014’s total home sales up by 19.4 percent over 2013. This includes a record number of sales to foreign buyers, with 18,959 units sold in 2014, an increase of 21.3 percent.
Istanbul was near the top of the chart with 5580 units sold to foreigners.
Enduring investment appeal
Cameron Deggin says the numbers clearly indicate an upwards trend. “Istanbul property prices continue to rise extremely consistently,” the Turkish real estate expert says.
The numbers are testament to Turkey’s stable economy, he says. “Despite the uncertainty of the recent elections and a well-publicised economic slowdown the real estate market continues to shine.”
According to Deggin, the success of the last decade or so - and the spiralling prices - can be explained by a number of factors.
Over the past two or three years, the Turkish government’s determination to encourage investment saw a number of rules and red tape abolished, he said. “It’s never been easier to invest in Turkey - and investors have started to realise just how easy.”
Much of the motivation behind courting outside investment has been the ambition to turn Turkey into an economic powerhouse, Deggin says. “We’ve heard many times how President Erdogan - the former PM who turned the country into the economic success it is today - is aiming for Turkey to become one of the world’s top 10 economies by 2023. One of the ways it will realise this is by encouraging foreign investment.”
“The ease of investment is certainly great news for the property market - and for potential investors.”
A safe haven
Deggin highlights how Turkey has continued to outshine Eurozone countries in economic growth, employment and trade. “For a good few years now Turkey’s economy has been in much better shape than its European peers, which hasn’t gone unnoticed by investors looking for good capital gains and low risk.”
“Investors see Istanbul as a safe haven outside of the risky Eurozone.”
Istanbul’s prosperity has pushed Turkey into the top five fastest growing property markets in the world, according to global house price data released by Knight Frank.
Huge internal demand
Around 40 percent of Istanbul’s population is aged under 35. These dynamic young workers are changing the city’s fortunes - and its geography. Highly educated and newly solvent, the young professionals of Istanbul want quality housing, either to buy or to rent. Currently there is simply not enough housing for everyone, which is pushing up prices as well as rents.
“The demand for housing is running at around a quarter of a million units each year,” says Deggin. “There is simply no way to cater for these buyers without a radical change.”
Transforming a city
That change is urban transformation. Aiming to redevelop shanty areas and secure buildings at risk from earthquakes, urban transformation aims to develop infrastructure and create housing for the growing population. Areas like Kagithane, Gaziomanpasa and the historic Bomonti are just three areas where urban transformation is taking place - and prices are responding.
“If you look at the parts of the city that have been transformed already and study the property prices, you have a really good idea what kind of prices you’ll see in developing areas in the future,” he says.
Deggin anticipates that the price per square metre will increase by 50 percent within three years, with rental yields exceeding 7 percent of the property value in two years.
The development can be roughly divided into two kinds, says Deggin. Remodelled residential zones in the central city, and new build complexes on the outskirts of the city. Each project is attracting great interest from foreign investors, hoping to get in before prices inevitably rise.
2015 and beyond
As for the future, Deggin is optimistic. “Turkey has a long history of exceeding economic expectations. From the incredible turnaround after 2001’s banking crisis, to the remarkable way it pulled through the recession, to the recent outperforming of economic growth rates - I have no doubt property prices will continue to perform.”
Deggin says would-be investors have a number of options. “There are so many types of properties on the market. Renovated historical apartments in Beyoglu, branded luxury developments in Sisli and new developments just outside the central city in developing areas like Bomonti and Atasehir.”
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