Turkey’s 2024 ‘Buy Zone’ period for real estate investors

In Turkish real estate investment, timing matters as much as location. The ‘Buy Zone’ is a key phase when property prices drop to their lowest following a previous cycle of growth. Knowing when a ‘Buy Zone’ is about to occur presents unique opportunities for investors to buy before a new wave of growth starts.

In Turkey, the ‘Buy Zone’ usually occurs every 7-8 years and identifying when the market has levelled out presents vast opportunities for investors, usually within a six-month maximum window. Having a deep understanding of the market, undertaking diligent research, and having a well-defined strategy can make a huge difference for investors.

Following a phase of sustained growth, real estate prices in Turkey started to come down in 2023. Is Turkey entering a ‘Buy Zone’ in 2024? To understand that, we need to first look at the period of 2015 – 2023.

Europe’s property market growth since 2015

Since 2015, the European property market has seen significant growth, with several countries experiencing remarkable increases in nominal property prices.

House prices in Hungary have surged by over 166% since 2015, reflecting a significant upward trend. Within the OECD, countries in northern Europe, such as Sweden and Finland, have experienced relatively modest changes, with nominal housing prices rising by just over 4% since 2015. Other notable countries include Spain at 25.7% and the United Kingdom at 14.4%.

In stark contrast, Turkey, spanning two continents has witnessed staggering increases, with prices soaring by 1,194% since 2015. In Istanbul, the price of apartments now rivals those in notoriously expensive cities like Paris and London. Recent data indicates that Turkish house prices have skyrocketed, increasing by 12 times over the past nine years in nominal terms.

Turkish Central Bank and policies until May 2023

Although Turkish housing prices had been increasing steadily since 2015, it was only in 2021 that they began to rise steeply. This acceleration peaked in 2022, with house prices soaring by 168% within a year, followed by another substantial increase of 76% in 2023.

Meanwhile, in Europe and the United States, housing prices experienced a downturn in late 2022. Central Banks in these regions began raising interest rates to combat high inflation, consequently leading to an increase in mortgage rates.

In Turkey, the Turkish Central Bank opted to lower its benchmark rate in August 2022. This decision came despite the fact that by November of the same year, the country's inflation had surged to nearly 100% and was above 50% for almost the entire year.

The pursuing of a low rate by the Erdogan government throughout Covid and up until May 2023 resulted in huge GDP growth across all aspects, including real estate prices – a level of growth that would normally take six years to accomplish was accomplished in three years.

When real estate prices are adjusted for inflation, real-term Turkish property prices increased by 96.7% at the end of 2023 when compared to real-term prices in 2015.

May 2023 – Turkey introduces new monetary policies

Following the May 2023 elections, Turkey implemented a change in economic management, with a new team adopting stricter monetary and fiscal policies. The Central Bank responded by significantly increasing interest rates, quadrupling borrowing costs, and reducing interventions. The benchmark rate increased from 8.5% in June 2023 to 50% at the end of March 2024 in an effort to tackle inflation and stabilise the currency.

Following the implementation of new measures, by the end of February 2024, the inflation rate in Turkey was recorded at 67%, a notable decline from over 100% recorded in 2023. The Central Bank of Turkey voiced its commitment to upholding a stringent policy approach until inflation drops to target levels, with a year-end inflation projection of 36% and a long-term target of 9% by the year 2026.

What does this mean for Turkish real estate?

Up until 2022, the low interest rates offered from banks and the continuing price increases of properties led many Turkish nationals to view real estate as a reliable choice for safeguarding their finances and securing their future by buying homes.

After the May 2023 elections, a shift in monetary and fiscal policies prompted Turkish banks to begin offering higher interest rates. Consequently, Turkish nationals opted to deposit their funds in banks, attracted by the prospect of earning higher interest returns. This shift in financial behaviour contributed to a slow-down in the local real estate market.

The high interest rate policy is expected to continue until the second quarter of 2025, aligning with government targets and paving the way a new wave of growth. Following this period, new low interest rates and various stimuli are poised to invigorate the economy. This is expected to reignite interest among Turkish buyers in the real estate market, with nationals once again opting to deposit their funds towards real estate investments.

How to take advantage of Turkey’s 2024 ‘Buy Zone’

1 – Cheaper properties for investors – House prices continue to rise in nominal terms but are failing to keep pace with inflation. In real terms, some have even experienced a decrease in value. Essentially, Turkish properties are getting cheaper for foreign investors who purchase using favourable currencies. This situation creates opportunities for cash buyers looking to invest. In 2023, 1.2 million properties were sold in Turkey, of which 35,000 (3%) were sold to foreigners.

2 – Higher rental income for owners – In cities like Istanbul, there exists a significant ratio between house sale prices and rental rates. Traditionally, the sale price of a house was approximately 300 times the monthly rent, on average. However, current rental rates are outpacing house price increases and this ratio has now decreased to a range of 250 months. This means that investors are able to recoup the cost of a property far quicker.

3 – Buy today before Turkish nationals return – As Turkish nationals are anticipated to re-engage with the real estate market in 2025, a huge opportunity arises for foreign investors to capitalise on current low prices. By making strategic investments now, investors can position themselves to ride the anticipated growth wave from 2025 onwards. This 'Buy Zone' period is forecasted to extend until the end of summer 2024.

Reasons to invest in Turkey 2023 – 2030

Medium-Term Program – The Medium-Term Program (2024-2026) outlines Turkey's economic plan, focusing on growth, jobs, and keeping prices stable. It aims to make sure prices and finances are stable, tax reforms, and efficiency in government institutions. Turkey aims to reach a national income of $1.5 trillion by 2028. International organisations like the IMF and OECD are optimistic about Turkey's economy, estimating that Turkey will be the 9th largest economy by 2030 and 5th largest by 2060.

Employment and exports – Turkey's emphasis on employment and production-oriented strategies has resulted in a substantial rise in exports, climbing from $169 billion to $265 billion from 2020 to 2023. This surge in service exports and production capability indicates a positive macroeconomic outlook.

Young population – At the heart of Turkey's economic prowess over the next period, lies its youthful population. With a median age of around 31 years, Turkey boasts one of the youngest populations in Europe. This demographic dividend presents a fertile ground for economic growth, innovation, and consumer spending. The young and dynamic workforce not only drives productivity but also fuels demand across various sectors.

A regional hub – Positioned as the bridge between Europe, Asia, and the Middle East, Turkey serves as a pivotal regional hub for trade, commerce, and investment. Its strategic location offers unparalleled access to emerging markets and establishes Turkey as a vital link in global supply chains. Investors can leverage Turkey's connectivity to expand their reach and establish a foothold in diverse markets.

Infrastructure development – Turkey's ambitious infrastructure projects highlight its commitment to sustainable growth and development, from modernising transportation networks to enhancing energy infrastructure. Projects such as Istanbul Airport, the Marmaray underwater railway tunnel, and the development of high-speed rail networks exemplify Turkey's commitment to connectivity and trade.

Entrepreneurial innovation – Turkey's vibrant entrepreneurial ecosystem and culture of innovation are driving forces behind its economic dynamism. With a burgeoning start-up scene and a thriving community of innovators, Turkey offers fertile ground for investment in cutting-edge technologies and emerging industries.

Top 2024 Istanbul investment properties

Sense Sisli: Istanbul city centre apartments

Discover prime investment opportunities with Sense Sisli apartments, located in the bustling heart of Bomonti, Istanbul. Situated within walking distance of Nisantasi, Cevahir Shopping Mall, and Sisli Metro, these residences offer lucrative short-term Airbnb rental potential of up to 10% annually, along with eligibility for Turkish Citizenship by Investment.

Reasons to choose Sense Sisli:

- Central location in Sisli, where demand consistently exceeds supply.

- Below-market prices ensure promising capital growth potential.

- Airbnb-approved guaranteeing income stream up to 10% annually.

EXPLORE SENSE SISLI PROPERTIES BY CLICKING HERE.

Sense Levent: Designer residences in Istanbul

Discover Istanbul's premier designer residences with Sense Levent apartments. Created through a partnership between Designer Turkey and architect Saffet Kaya, these homes epitomise affordable luxury. Located strategically in Kagithane, central Istanbul, these residences offer growth potential, Airbnb-approval, and are perfect for Citizenship.

Reasons to choose Sense Levent:

- Prime central location near amenities, transportation, and business districts.

- Benefit from rental management system and legal representation in Turkey.

- Expect high annual rental returns, making these a top investment choice.

EXPLORE SENSE LEVENT PROPERTIES BY CLICKING HERE.

Sense Gokturk: Istanbul Redefined

A 10 minute drive from Istanbul Airport and an easy 20 minute commute to the dynamic city centre, Sense Gokturk seamlessly blends into its environment while offering easy access to charming cafes, delightful restaurants, and cultural gems. Suitable for Turkish Citizenship by Investment – a unique opportunity to explore Istanbul Redefined.

Reasons to choose Sense Gokturk:

- Luxury-designed apartments surrounded by nature – ideal for families.

- 10 minute drive to Istanbul Airport, 20 minutes to Istanbul City Centre.

- Built by a GYO Developer, adhering to highest standards of transparency.

EXPLORE SENSE GOKTURK PROPERTIES BY CLICKING HERE.

Don’t miss the ‘Buy Zone’ – contact us today

"The next 3-4 months are crucial for investors eyeing the Turkish market as it enters its prime 'Buy Zone' period. Prices are currently at their lowest, having dipped by approximately 10-12% from their peak. Following this window, prices will start to rise, signalling the beginning of another 7-8 year growth cycle. Don't delay – seize the moment and position yourself for success in the Turkish real estate market."

Cameron Deggin