Istanbul Real Estate – Why and Where to invest

Turkey’s largest city and one that straddles two continents, Istanbul provides a natural gateway between the East and the West and has always been a focus for investment on all levels.

However, the last 10 years has seen a stratospheric rise in real estate as investors rush to capitalise on Istanbul’s property boom, with one in five Turkish property sales now being made in Istanbul – the city’s historic appeal, new affordable developments, return on investment, and business hub connections are just the tip of the iceberg that makes Istanbul one of the world’s most exciting markets for properties.

So, WHY and WHERE should you invest in Istanbul? Read on to discover just what sets this metropolis city above the rest.

Five years of growth; important factors

In the last five years, Istanbul has come to the fore as a European financial centre, leading the pack as Eurozone countries continue to struggle and the Middle East remains too much of a risk. Istanbul provides a safe place for investment.

1. Population Increase – Over the last five years, the population of Istanbul has increased from around 13 million in 2010 to an estimated 17 million residents in 2016. With the lowest percentage of year on year population increase being 1.5% in 2014 – one thing is for sure; Istanbul is still on the rise.

2. Huge tourism increase – Not only is the population of the city increasing, but Istanbul is fast becoming one of the top destinations for city breaks and shopping vacations for tourists from Europe and the Middle East with recent statistics suggesting that Istanbul is well on the way to becoming the second most visited city in Europe after London. In 2011, tourism numbers were around 8 million visitors per year, while 2015 saw a record number of visitors as more than 12 million made their way to the city.

3. A strong economic performance – The above graph shows that since 2011, Turkey has outperformed EU GDP annual growth rate in all but one quarter. Although the annual rate has balanced to a steady rate in recent years, Turkey shows no signs of slowing down just yet, leaving the rest of the EU playing catch up.

4. Property prices on the rise – Strong economic performance, increasing population, booming tourism industry, and many other factors (mentioned below) all contribute to one thing: property price increases. In the last five years alone, there is an abundance of districts and areas where property prices have more than doubled due to an influx of investment, development of infrastructure, and gentrification. If you purchase in the right area at the right time, the gains can be stratospheric.

What does this mean? Looking at this graph, it is clear that property prices over the last five years have seen the most impressive jumps in Kadikoy, Sariyer, Bakirkoy, Beyoglu, and Atasehir. However, it is worth noting that prices in some areas are already peaking, making your investment window a small one. Property Turkey notes that areas such as Eyup, Bomonti, and Gaziomanpasa as the next areas to experience huge price jumps in the next 3-5 years and the areas prime for investment today - continue reading to find out just why you need to invest in these areas. 

Why invest in Istanbul? Future city development

A country with bold aims and an ambitious mindset, 2023 will be the centennial year of the Republic of Turkey. In his 2023 Vision, Recep Tayyip Erdogan outlined a list of goals for Turkey to attain by this date, which included:

- Become one of the world’s top 10 economies – Turkey was 17 in 2014

- Raise Gross Domestic Product from $1 trillion in 2014 to $2 trillion by 2023

- Per capita income to reach $25,000 by 2023

- Build 11,000 kilometres of new railway and expand existing train networks

- Be the fifth largest tourism destination in the world

- Increase tourist numbers to 50 million by 2023 – 39.8 million in 2014

- Reduce unemployment rate to 5% and a working population of 30 million

These goals will only be achieved by continued investment by Turkey and we are seeing developments happening all over the country, none more so than in Istanbul. Future city development of Istanbul will see massive improvements of transport systems, infrastructure, and much more, including:

Third Airport of Istanbul – 

First phase is to be completed in 2018, and the airport will offer four terminals and six independent runways with the aim of carrying an annual passenger capacity of 150 million by 2028, easing the pressure on Ataturk Airport. This $4.8 billion project will ease passenger flow to the city and see tourist numbers rise significantly to Istanbul along with new flying routes. Connections will be provided to Sultan Ahmed Bridge and Yavuz Sultan Bridge, while 2016 will see the opening of a Metro to the airport from Gayrettepe.

What impact with this have on real estate? 

Once the third airport of Istanbul opens, the Turkish government has plans to significantly scale down operations at Ataturk Airport, having a huge impact on properties in the vicinity of Ataturk Airport stretching all the way to the areas surrounding the third airport. 

This project is one that will benefit immensely from the scaling down of Ataturk Airport. The reducing in size of the airport will see space saved for recreational areas, green areas, parks, and other high-end developments - creating a city within a city feel, and increasing development and infrastructure in the area surrounding this project. This project is currently launched at prices up to 50% cheaper than stated completion prices. 

Right next to Ataturk Airport is Basin Ekspres, and prices here are currently around 2,300USD per m2 and are expected to double within the next 3-4 years as the third airport is finished and the area undergoes development. We can compare this to current prices of real estate in Atakoy. 

Another project being directly impacted by the third airport is this one found in Bahcesehir. Located in the most elite and pretty area of this part of Istanbul, the project will be linked straight to the new airport, providing buyers with easy access to the airport. The project also benefits from the full backing of the Turkish Government (Emlak Konut), and is set within wonderful green areas with social facilities and plenty of room for prices to increase upon completion. 

Third Bridge of Istanbul – 

Costing 4.5 billion Lira to construct is Yavuz Sultan Selim Bridge. The targeted completion date is mid 2016 and will see the opening of this 8-lane bridge with 2-lanes of railway. Once completed, the bridge will be the widest suspension bridge in the world with a total width measuring 59 metres. Linking roads between Odayeri – Ikitelli and Pasakoy – Camlik Roads, the bridge will have connections to Northern Marmara Motorway – Istanbul (Kinali) – Canakkale – Savastepe Motorway and Istanbul – Izmir Motorway.

Should you buy property in this area? 

Prices of land around the third bridge have already gone up considerably. There is also very limited zoning in these areas so real estate is speculative. Property Turkey advises that there are better investment opportunities in the city for you to consider. 

Eurasia Tunnel – 

Nearing completion in October 2016, this seabed connection will take you from Asia to Europe via the highway tunnel and will cut current travel times from 100 minutes to a mere 15 minutes, making it easy to navigate the city. Serving Kazlicesme – Goztepe route, the tunnel will be 14.6 kilometres long and will connect from Bosporus Bridge – Sultan Ahmed Bridge, Kadikoy – Kartal Metro Line, Marmaray Metro. The tunnel will transform commuting times from Asia to the centre of the city.

Should you buy property in this area? 

With property on the Asian side, particularly Kadikoy and Atasehir seeing huge upturns in prices per m2, anyone looking to invest in the Asian side of the city would do well to have a closer look at properties in these two areas. The easier access to the city centre will see continued increases in the value of properties here. This project is located in Atasehir, just next door to the financial center (listed below) and offered to the market at discount prices with extended payment plans to take advantage of, we also expect to see price increases of up to 40% before this project in completed in 2017. It is located in one of the most established and upmarket areas on the Anatolian side. 

Financial Center – 

This $2.6 billion project has been earmarked already and will be completed in 2018 to incredible standards using cutting edge technology and real estate advancement. The new home of The Central Bank of Turkey and the headquarters of Turkey’s top banks including Ziraat Bank, Halk Bank, and Vakifbank – the master plan of the project provides for distinct areas for culture, business, civic, and governance. Included are 45 million sq. feet of office, residential, retail, conference, hotel, and park space.

Should you buy property in this area? 

Yes! Once completed, the International Finance Center will have a direct impact on property prices in Atasehir and Kadikoy. Looking at the price graph above, you can see that real estate prices in Kadikoy and Atasehir have seen some of the most impressive price growth rates from 2010 - 2015 with both areas doubling in price per m2 in just five short years, and there is still room to grow - meaning you still have an investment window to purchase today to reap the rewards tomorrow. Projects to keep a close eye on for investment potential include this one - our real estate analysts expect this project to outperform expectations in the next few years. 

Metro Line Extensions 2014 – 2019 – 

Istanbul is home to one of the most advanced Metro Line systems in the world. Currently there are five lines in operation, with a further four lines planned or currently under construction for completion in 2019. Along with this, current lines are being expanded to incorporate more stops. Once finished, navigating Istanbul will become a walk in the park, with you never being more than a short distance away from a Metro Line connecting you to the centre.

All of these developments in Istanbul have a direct impact on real estate prices and life for residents who live in the city. The continued investment being poured into the city will see further reinforcement and expansion as the city grows into a metropolis hub, leaving one question on everyone’s mind – where should I invest?

Where to invest? The established areas

In a city as large as Istanbul, knowing where to invest is the key to successfully navigating and climbing the real estate ladder in Turkey. The established areas of the city offer premium homes at premium prices – and for someone looking for high rental income and economic performance, the established areas offer an abundance of homes and areas to choose from.

Beyoglu: 

The heart of the European side of Istanbul, Beyoglu is full of history and culture and is one of the most important areas in the city. Beyoglu properties don’t come cheap though; they are priced at a premium and require a large capital, although the returns can be extremely high. On the lower scale of Beyoglu property, you can find lower prices in areas undergoing regeneration – Galata, Tarlabasi, and Gumussuyu. 

Featured is a stunning apartment with incredible Bosporus Sea view and roof terrace. This apartment has a rental history of attracting more than 2,500USD per month in income and is fully furnished and ready to move in. Found within walking distance to historic Istiklal Avenue and Taksim Square. 

Real estate value ratings (out of 10)

Price growth per m2 over last 5 years: 8

Price growth potential in next 5 years: 8

Location and transport facilities: 10

Lifestyle and amenities close by: 9

TOTAL: 35/40

Besiktas: 

Situated along the Bosporus shore, Besiktas is upper class and is home to a number of historical sites and a flourishing business district. In 2014, Besiktas was the most expensive area in Istanbul, and rental prices are also high – the average payback for investment in Besiktas is under 17 years. Popular neighbourhoods for investment include: Levent, Bebek, Etiler, and Ortakoy.

Featured is a high end project listed at below market prices for investment today. Designed by a renowned architect and winner of a European construction award, the project is equipped with extensive facilities and is within walking distance to Nisantasi and Sisli. 

Real estate value ratings (out of 10)

Price growth per m2 over last 5 years: 8

Price growth potential in next 5 years: 8

Location and transport facilities: 9

Lifestyle and amenities close by: 9

TOTAL: 34/40

Bahcesehir: 

The Garden City of Istanbul, Bahcesehir is a well planned and thought out suburb of the city that offers quality real estate surrounded by green areas and a peaceful lifestyle. Conveniently located with great public transport links to the city centre, Bahcesehir is popular amongst middle class families looking to escape from the centre of Istanbul. Property prices in Bahcesehir have doubled since 2005 and are still on the rise with impressive rental yields and bargains still to be found.

Featured is an incredible project that has been backed by the Turkish Government (Emlak Konut) for a risk free investment. With extended payment terms and a full range of social facilities and communal areas, this project is reasonably priced and has easy access to the new Third Airport. 

Real estate value ratings (out of 10)

Price growth per m2 over last 5 years: 7

Price growth potential in next 5 years: 9

Location and transport facilities: 9

Lifestyle and amenities close by: 9

TOTAL: 34/40

Kadikoy: 

One of the most popular districts on the Asian side of Istanbul, Kadikoy is an upper class residential area and is home to a large number of projects catered towards high-end living. Property prices have risen from around 1,500USD per m2 in 2010 to more than 2,500USD per m2 in 2015.

Featured is a brand new project found less than one minute from a Bosporus Bridge and 10 minutes to Sisli and central Istanbul. Favourably priced in an area where prices are rising dramatically, this one ticks all the investment boxes and is a must see. 

Real estate value ratings (out of 10)

Price growth per m2 over last 5 years: 10

Price growth potential in next 5 years: 8

Location and transport facilities: 8

Lifestyle and amenities close by: 8

TOTAL: 34/40

Tomorrow’s investment? Major Urban Regeneration and Transformation

The rapid transformation of Istanbul into a behemoth city with more than 17 million residents, doubling since 2000, was not without problems. The speed at which the city developed left behind urban issues and areas where development was not at the standard required, with poorly built construction leaving homes that were susceptible to the elements.

To combat this, government backed Kentsel Donusum (Urban Transformation) was introduced with the aim of regenerating central areas of Istanbul into prosperous new centres, essentially bringing the areas back to life and at the forefront of Istanbul real estate development.

Presented by the Turkish government as essential for Turkey’s economic growth, Urban Regeneration began just over a decade ago and is happening all over the city and inner city areas. An example of regeneration can be seen in Fikirtepe where 50,000 new housing projects are in line to be completed within the next three years alone – transforming Fikirtepe into ‘Istanbul’s Manhattan’ on the Asian side of the city.

For investors, Urban Regeneration opens up a wealth of new opportunities as neighbourhoods of Istanbul smarten up with new lifestyle facilities, infrastructure, shops, cinemas; becoming upmarket and trendy locations where prices are only going to head one way – up.

Top picks for investors looking to capitalise on Kentsel Donusum include: Gaziomanpasa where we have a number of new developments, Kagithane currently undergoing major change, and Beylikduzu on the European suburbs. These three areas are expected to see huge upturns in real estate value and rental hikes, making the time to invest now.

Bomonti: 

Found in Sisli’s old quarter, Bomonti is just a kilometre away from Nisantasi Street and is an area that has undergone huge redevelopment and transformation from a rundown working class part of the city into a centrally located flourishing investment hotspot for luxury living. Home to the Hilton Hotel, property prices in Bomonti are expected to double within the next five years, reaching the same levels of nearby Sisli and Nisantasi just a few kms away. 

Featured is an outstanding investment opportunity - early bird priced hotel style apartments at entry level prices in the heart of Bomonti, only eight minutes away from Taksim. Prices will increase by up to 40% upon completion in 2017 and there is a full range of facilities and payment terms available. 

Real estate value ratings (out of 10)

Price growth per m2 over last 5 years: 9

Price growth potential in next 5 years: 10

Location and transport facilities: 9

Lifestyle and amenities close by: 9

TOTAL: 37/40

Gaziomanpasa: 

A great spot for those looking to pick up entry level investment properties, Gaziomanpasa property is expected to increase in value by around 50% within the next five years, with rental income also expected to reach 7% within two years. You will find a number of stunning sea view developments here.  

Featured is a world class project nestled between Gaziomanpasa and Eyup - one of our top tips for investing in this area of the city. Within walking distance to all public transportation facilities, the project is affordably priced and offers overly spacious homes accommodating the whole family with ease. 

Real estate value ratings (out of 10)

Price growth per m2 over last 5 years: 9

Price growth potential in next 5 years: 9

Location and transport facilities: 9

Lifestyle and amenities close by: 8

TOTAL: 35/40

Eyup:

An area where urban regeneration is happening at a steep pace, Eyup property prices will rise considerably over the next five years to reach the same levels as neighbouring districts, making the time to invest: now. Full of luxury facilities and on-site social areas, this project offers advantageous payment plans and discounts for cash buyers, and will rise in value upon completion. 

Featured is a lovely project that is ideal for both investment or lifestyle buyers. Close to the Golden Horn, and within easy distance to Taksim, these are designer homes with affordable payment plans and excellent on-site facilities. Found close to a large shopping mall. 

Real estate value ratings (out of 10)

Price growth per m2 over last 5 years: 8

Price growth potential in next 5 years: 9

Location and transport facilities: 9

Lifestyle and amenities close by: 9

TOTAL: 35/40

Kagithane: 

Located in Sisli, Kagithane is currently undergoing huge regeneration with a quarter of all properties here expected to be rebuilt – providing investors with around 45,000 houses to choose from. The regeneration will also focus on infrastructure and links to the centre of the city – pick up an off plan apartment in Kagithane today and enjoy extremely favourable terms and prices that will only rise upon completion.

Featured is a high quality project designed by a world renowned architect to ensure a luxury lifestyle for each and every person who buys here. There is a 50% expected price increase upon completion and high rental potential is assured. 

Real estate value ratings (out of 10)

Price growth per m2 over last 5 years: 8

Price growth potential in next 5 years: 8

Location and transport facilities: 9

Lifestyle and amenities close by: 9

TOTAL: 34/40

Fikirtepe: 

Stated to be the ‘New Manhattan’ of Istanbul, 50,000 homes are going to be constructed in Fikirtepe within the next three years. Found on the Asian side of the city, it is easily accessible to the centre and will be come a major suburb in the next five years for those commuting and those with family.

Featured is an outstanding project with striking Bosporus Sea views. Ideal for commuting to the centre and designed to the highest quality possible, the project is close to public transport and a Bosporus Bridge, while the Eurasian Tunnel is only three minutes away. 

Real estate value ratings (out of 10)

Price growth per m2 over last 5 years: 8

Price growth potential in next 5 years: 8

Location and transport facilities: 9

Lifestyle and amenities close by: 8

TOTAL: 33/40

Beylikduzu and Esenyurt: 

Found on the suburbs of European Istanbul, Beylikduzu is neighbours with Esenyurt, Avcilar, and Buyukcekmece and is a popular area for those looking for affordable properties at low prices. Beylikduzu and Esenyurt have seen some of the smallest increases in property prices over the last five years, making it an area to proceed with caution when investing. Some real estate agents of Istanbul are known to receive large incentives from developers to sell in this area, and as such, market Beylikduzu and Esenyurt as major investment areas - the reality is very different. By following factual advice from the experts, you can find gems in these areas, however the reality is that there is a glass ceiling to where prices can rise to. 

Featured is one of the best available options in Beylikduzu. At Property Turkey we pride ourselves on offering only the best of the best - and in Beylikduzu, you will not find much better than this comprehensive project available today with low deposit on three year payment plans. 

Real estate value ratings (out of 10)

Price growth per m2 over last 5 years: 6

Price growth potential in next 5 years: 6

Location and transport facilities: 8

Lifestyle and amenities close by: 7

TOTAL: 27/40

Property prices over the next five years

Over the next five years, expect to see further major development in the infrastructure of the city and a continued level of success for investors – if Turkey’s long history of exceeding expectation economically is anything to go by, there is no doubt that property prices in Istanbul will continue to perform and outperform predictions.

Five years may not seem like a long time to you, but five years in Istanbul could see prices rise dramatically, so what are you waiting for? Contact us today and join the investment train full steam ahead, stopping nowhere except Istanbul.

Written by: Ricky Carbis