Right now, in 2023, we can see a fear of financial collapse across markets around the globe. Inflation around the world is up and there is a lot of free capital that investors are unsure where to place. There is a lot of cautious sentiment, and hazy outlooks when it comes to the future of many industries. But in Turkey, “hazy” is not a word that can be used to describe the country’s vision for its economic future and its future prominence as a world leader. For Turkey, the future is illustrious and it is a future where it will regain its place on the world stage in the vein of historical eras of old. Turkey has lofty ambitions and the Istanbul Finance Center is a landmark that represents both the success of infrastructure projects that have been deployed over the last ten years, as well as the foundation of vitality for decades to come.
World Financial Environment
Cameron Deggin believes that the global market is potentially, “talking ourselves into a recession.” Post COVID, demand side, logistics, supply chain issues and implications have had an adverse effect on consumer and B2B pricing. Self fulfilling prophecy. Concern and fear freezes investor activity. The reduction in activity produces slower growth and less new projects. Unprecedented inflation in the last 40 years. Interest rates increase highest since the 1980s. Slowing down global demand for goods and services.
House sales will go down with less participating buyers. “12-18 months expectation. Economic environment will slow down. Real estate prices will slowly increase. It will not last, because the underlying causes are not fundamentally detrimental to the market over the long term,” says Cameron Deggin.
COVID reaction has also driven much of our current economic situation. Emerging markets kept doors open for the majority of the COVID era and the interest rates have been kept low. They have been kept low to fuel global investment and attract foreign direct investment.
Foreign Investment Profiles
There has been a shift in the investor profile we have seen come through our offices. In general, there has been a lower number of investors in total, so far in 2023. Which reflects the overall trend globally of investors becoming more cautious as it relates to where to allocate their capital. However, the investors that have come to us have generally arrived with larger amounts of capital investment.
What does that tell you? Number one, there has been a shift in market sentiment, short term or otherwise. But it also shows us that this is actually a prime time to invest in Turkish real estate if you are capable of doing so. Investors who invest in times like these, which the “smart money” does, are the ones who reap the largest rewards when the global environment inevitably rebounds, restabilises, and reignites.
The Future of Turkey
The Istanbul International Finance Center has opened this month. This is a project that we at Property Turkey are particularly proud of, as we have recommended this project to our clients over the past several years. We had seen the potential of this project to become the new financial center of Turkey, and one of the great financial districts in all of Europe.
That potential is beginning to be realised as most all of the major banks in Turkey, including the Central Bank of Turkey, have now begun the process of moving their international headquarters into the IFC, located on the Asian Side of Istanbul.
This represents a unification of all of Turkey’s major economic forces within the same geographical circumference. This is significant because even in an age where business is done from miles and miles away, Turkey’s main players will be within walking distance of one another. This creates an economic hub, or engine, that will significantly increase the efficiency of Turkey’s economic future.
Turkey is Where East Meets West
This hub not only represents a major trade post in Turkey and Europe. Turkey is quickly becoming the head of a global region both politically and economically. Istanbul Finance Center also represents the greatest financial district in the global Middle East. It already is and will become an even greater force in the region. Its importance and recognition is growing at an outstanding pace.
So for Turkey to crystallise its place on the world stage, as a pillar of economic and political importance for both Europe and the Middle East, it needs to have a robust infrastructure to develop and realise those ambitions. Over the last ten years, Turkey has been developing large scale projects all over the country as a foundation for this growth. IFC is the culmination of that chapter of activity and represents the beginning of the next chapter.
IFC the Symbol
The Istanbul Financial Center is the beginning of a new chapter in Turkish and world history. The chapter could and should prove to be very prosperous for Turkey. There is no city in the world more perfectly situated to take this particular mantle than Istanbul. To be the bridge between East and West has always been at the core of Turkish life. With a new financial hub, there is now a new tangible capital that brings that idea out of obscurity and onto center stage.
This is a tangible foundation, backed by the Turkish government, that clearly displays a vision for Turkey’s future to the private sector. With a bustling financial hub, Turkey’s free market economy will now have a rallying point that will encourage and foster new, innovative private sector growth over the foreseeable future.
Results Up to Date
Even over the last four years we have seen remarkable growth in anticipation of this new chapter. From a real estate perspective, the price per square metre of new developments in Istanbul has doubled since 2020. Growing from $2,000 per square metre up to $4,000 per square metre.
In Istanbul Finance Center, our company alone has seen this growth first hand. First quarter of 2021 we were selling units in the IFC for $2,500 per square metre. Today, we are selling units at fair market value, $5,250 per square metre. This reflects the growth of Istanbul and Turkey as a whole. But even further, this reflects the palpable excitement for the IFC project. IFC properties are outperforming the greater Istanbul market by about 32%.
There are many factors that have driven this specific growth numbers. But the overall takeaway is that the IFC is far outpacing the larger Istanbul property market. The reasons for that are both idyllic future oriented and present day growth realisation. We are seeing this process play out in real time, on a daily basis, boots on the ground. IFC is real and Istanbul is emerging back onto the global stage, as it was so many eras ago in history.
The Next Istanbul Opportunities
Today we are focused on two main areas that represent the major focus of new development around town. The first being the Historical Peninsula and districts on the banks of the Halic / Golden Horn. This is the most central districts of Istanbul. They hold all of the historical treasures and have incredible waterfront locations along with proximity to major development projects that both attract tourists and locals alike.
The second area is Fikirtepe. Fikirtepe is one of the beacons of urban regeneration in Istanbul. They are revitalising the district in a way that no other Central Istanbul district has been regenerated. It is deploying some of the finest, structured city planning with world class, cutting edge urban design. It is around 30% complete today, with another 70% still to go over the next decade.
The Golden Horn, or Little Bosphorus as we have dubbed it, is the more attractive of the two for a few reasons. This type of urban regeneration is more focused on preserving Istanbul’s historical gems, while creating spaces that will be enjoyed by the public. So this is actually more valuable to Turkish cultural history. It also, currently, has a greater population of residents that have been proven to be vulnerable should a large earthquake strike the area. So there is true urgency in this area to preemptively save lives, and cultural identity.
These kinds of urban regeneration projects will require billions of investment from both the government and the private sector. The government has been working hand-in-hand with the private sector to swiftly complete these residential projects. In the Golden Horn, in particular, there are currently large swathes of industrial zoning. So those industrial zones are being removed and displaced to outside of the city centre. This is the most straight line approach to urban regeneration. That freed up area can now serve the population without displacing residents in the process.
In other words, the urban regeneration happening on the banks of the Golden Horn, will be the most valuable, have the swiftest construction schedule, and is the most sustainable to current residents and Istanbul landmarks. We see it as easily the greatest investment opportunity in Turkey, right now.
Reach Out to Property Turkey for More
Thank you for your time. Please reach out to us and we will get you in touch with one of our expert agents to guide your prosperous investment journey in Turkish real estate.
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