One of the world’s most exciting cities, Istanbul has come alive over the last 10 years as Turkey’s shining star; leading the charge that has seen Turkey awaken from a sleeping giant to become the official gateway between the East and the West, a leading spot for investment, and business centre that is ever-changing and undergoing dramatic growth – to say that Istanbul is a diverse and vibrant city is certainly an understatement.
Shining bright at the top of the real estate ladder for investment in Turkey, Istanbul is home to historic districts, upcoming areas, established neighbourhoods, and famous communities; but how do you spot where to buy? How do investors get in ahead of the crowd to spot Istanbul’s ghettos that are going places? We provide you the answers to all your questions about where the next big district may be in Istanbul.
The main factors in the development of Istanbul
Over the last ten years, the changing face of Istanbul has seen the city rise to become the mega city it is known as today. Tourism has skyrocketed – currently Istanbul sits behind only Bangkok, London, Paris, Singapore, and New York in sixth place in a list of the most visited cities around the world with more than 11.5 million tourists expected to have travelled through the city come this year’s end. In 2009 there were an estimated 8 million tourists travelling to and from Istanbul, fast-forward to 2013 and that number had risen to 10.4 million tourists bringing with them almost $9 billion in revenue. Turkish officials expect numbers to rise and Istanbul to overtake Paris come 2016 – this, in turn, bringing with it an influx of development as the city keeps up with the demand of entering tourists.
With the city population increasing by over 250,000 people per year over the last five years, huge projects and expansive apartment buildings are popping up all over the city to cope with the rising demand for housing in one of Europe’s busiest technological cities; international companies such as Microsoft, Coca Cola, and more have all based their regional headquarters in Istanbul to connect to markets surrounding the bustling region. Currently the Turkish government forecasts the need for up to 2.5 million homes to be built by the end of 2015 and up to 500,000 new home buyers annually – resulting in a huge real estate boom.
This significant real estate boom has resulted in huge opportunities opening up for savvy investors and smart buyers to get in and transform sleeping districts before the hard hitting development sends prices rocketing; the last 10 years have seen nothing but improvement and expansion in the city, but, is it too late to ride the prosperous Istanbul real estate train? How do you ensure you haven’t missed the opportunity to get involved with one of these sleeping districts? What about those looking to buy hotels in Istanbul? Let’s take a look at current market openings and thriving districts.
How to spot the top investment districts of Istanbul
It is an exciting time for real estate in Istanbul, the interest in Istanbul property is showing absolutely zero signs of slowing with investment flowing into the city from all over the world, turning this giant city into a superpower with multi-million dollar projects and luxury estates springing up in some of the most prestigious districts in the city, but, are these the type of projects you SHOULD be looking at?
There is somewhat of a general trend in Istanbul whereby agents will push the usual suspects such as Esenyurt and Beylikduzu with promises that these areas are the best for investment due to superb transport links, cheap prices, luxury facilities, and amazing design features – are they really? We are going to let the cat out of the bag here, but most agents are given huge incentives to push these areas and secure high commission checks for securing your signature against one of these high rise properties in these popular areas. Now, these areas are great areas to invest in in their own right, but, to put it bluntly, there are better opportunities out there in Istanbul. Why are we telling you this? Well, it is simple really – unlike most agents in Istanbul, we have a hand on some of the city’s real winners, yesterdays inner city ghettos that are just too close to prestigious areas with an unprecedented level of potential for investment.
Bomonti example: Current prices for real estate per m2 will see you paying up to $2,500 per m2 in areas such as prime Sisli and Beyoglu to name a few. 5 years ago it would have been possible to purchase a property in Bomonti for around $500 per m2, a bargain as you can imagine. Today? Those prices have rocketed up to $1,500 per m2 and original investors who placed their faith in Bomonti and the incoming development have found themselves to be on the end of high gains and huge real estate profit.
A stone’s throw from the exclusive Nisantasi area and only three kilometres away from Taksim Square, Bomonti was an old town built around an historic brewery, big names such as Trump, Hilton, Rixos, and IC Residence have snapped up land at lower prices and overseen the huge transformation of Bomonti to become a new centre for business at favourable prices and one that is predicted to go toe to toe with nearby Nisantasi within the next five years.
Now, is there a new Bomonti in Istanbul? The answer is yes – Kagithane. Located close to prime areas such as Nisantasi, Sisli, Bebek, and Taksim – Kagithane is an area of the city that has been neglected for many years, somewhat of a ghetto until just a few years ago and an area undergoing a huge transformation and regeneration, Kagithane is one of the best kept secrets in Istanbul real estate investment.
In 2013 it was possible to buy a home in Kagithane for around $800 per m2, fast forward just one year and we have seen houses selling for a minimum of $1,000 per m2 – you have an opportunity to get in and invest in Kagithane today before prices sour, and believe us, they will sour.
Just like the rapid rise of Bomonti, Kagithane is expected to rise fast and rise hard, real estate investment opportunities in Kagithane are like gold dust and one can join in with the likes of Trump, Hilton, and more who have already placed their trust in Bomonti and Kagithane – two of the top investment districts that you will find within the city centre and ones that are sure to have a large long-term benefit for those who invest today.
So, is it all about inner city or can one find gems in developing European suburbs also?
You don’t have to look within the inner city of Istanbul to find excellent property prospects and top investment opportunities. Bahcesehir is found on the western suburbs of the city on the European side and is an elegant suburban high-end area with lots of development over the last 10 years and a favourite for expats and city professionals looking to escape to a more tranquil area of the city yet within good travelling distance to the city centre; on a good day you can reach Taksim 35 kilometres away within an hour drive. Well connected, Bahcesehir is close to the main TEM Motorway, as well as two Bosporus bridges crossing from Europe into Asia – those who live in Bahcesehir have the advantage of being just a few minutes away from the motorway for easy access around the city.
Designed for family life in the city, Bahcesehir has a calm aura and relaxed atmosphere surrounded by nature and many parks, walk-paths, and modern facilities. Bahcesehir lake park has been compared to New York’s Central Park, while several major shopping malls are close by for you to enjoy a city lifestyle, without that busy city feel. Since 2005, many luxury villa and apartment projects have been constructed in Bahcesehir, enhancing the infrastructure and appeal of the area to bring it in line with some of the larger districts in the city, while real estate prices remain up to a third cheaper than what you could pay in prime central areas of the city.
Why invest in Bahcesehir? With easy access to the city centre, a laid back lifestyle as well as lovely surroundings, Bahcesehir is a desirable area for those with families and young professionals – this, in turn, makes Bahcesehir a hotspot for investment due to the high demand of rental homes providing easy income for those who purchase real estate in Bahcesehir.
Since 2005, studies show that prices of property have doubled in Bahcesehir and over the next five years are set to continually rise in a steady fashion as the suburb fully reaches its potential. Last year it was possible to purchase a luxury home in Bahcesehir for around $1,000 per m2, that price has increased to over $1,350 per m2 this year and is set to increase even further next year and beyond.
With the upward trend of prices in Bahcesehir set to reach a peak within the next five years, an investment today would pay off handsomely tomorrow.
The final word
In a city as big as Istanbul, it is easy to get lost, easy to look for easy options of investment in city centre favourite districts and regions, however, we have shown that if you take the time to look past the clutter and delve into what Istanbul really has to offer, then you will find that there are still some available areas and districts that are set to see huge price increases over the next 5-10 years.
The three areas mentioned above, Bahcesehir, Kagithane, and Bomonti all provide excellent investment opportunities in areas that are on the cusp of reaching their full potential, and strategies that, if implemented correctly, will pay off handsomely with high capital growth forecasted in excess of 10-15% per annum, and high rental yields between 6-10% for long term and short term rental contracts.
For more information on investing in Istanbul real estate, including where to buy, current opportunities, and investment strategies, please give us a call today to speak with one of our designated investment market analysts.
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