real estate in Turkey
The growing and increasing demand for real estate in Turkey in general,and in Istanbul in particular, has led to an increase in real estate prices and their clear rise today, despite the depreciation of the Turkish lira against the dollar and other factors that some may see as negative.
such as global inflation and the war between Russia and Ukraine, but the real estate investor understands that the most profitable investment opportunities are formed when the demand for investment.
The factors we will explore today justify the growth in real estate prices and confirm that this rise will be sustainable and growing as long as demand continues to climb, as seen by the past years.
Today's investor gets the benefits of yesterday's opportunity. Today's investor will see the benefits of his investment in the near future. That is why, according to Will Rogers, a foreign investor, "don't wait to buy real estate." Purchase real estate and wait."
That is, instead of waiting to buy a property, buy a property and then wait. He notes that the real estate market in general offers investment chances that are regularly updated, and that it is also important to begin this investment as soon as the opportunity comes.
Let us begin with this introduction, which summarizes what many real estate investors are thinking in the Turkish real estate market today:
A large number of investors who are still looking for a suitable property in Istanbul, whether for housing or investment, must have contacted real estate agents in the second half of last year 2021, and perhaps some of them visited Istanbul on their own in the middle of last year and saw some real estate offers but did not make a decision to purchase any of them at that time.
Today, as the spring season nears, investors' requests for new offers are renewed, due to the ability to schedule a close visit and select the right properties, but these investors are surprised by the new prices of the properties, which have increased by no less than 70% in the last nine months. What happened over this short period that dramatically altered real estate prices? The property that was valued $ 100.000 in June 2021 is now worth between $ 170.000 and $ 200.000 in March 2022.
Is it because real estate agents utilize overstated pricing to mislead customers?
Or is it due to illogically higher pricing by real estate developments in order to boost profits?
Is this surge reasonable and justified in ways that real estate agents and developers cannot control?
What are the causes of the 2022 real estate price increase?
Whatever the true reasons, we noticed that from the beginning of 2022 until the date of writing this article,
hundreds of customers do not accept the new prices of real estate in Istanbul, and after field tours, the majority of them decide to postpone the idea of ownership again, perhaps real estate prices will return to what they were, will the future of real estate prices in Istanbul return to previous levels,or is the rise unavoidable, and the following era will see higher real estate prices?
It is impossible to accurately anticipate the future of real estate prices in Turkey in general, and in Istanbul in particular, without answering the questions posed above, and without knowing how the real estate price plan will proceed.
01. Related Reasons To Exchange-Rate:
If we go back to 2017, the Turkish lira's exchange rate against the US dollar was approximately 3.4 Turkish liras to the dollar, and the price of a 3-room residential property in western Istanbul in an area like Beylikduzu within a residential complex was in average about 610.000 TL, equivalent to approximately $ 180.000, and the price of the same property today.
With the Turkish lira's average exchange rate dollar exchange Rate nearing 15 liras for every dollar, equivalent to nearly 2.5 million Turkish liras,
which is about $ 165.000, essentially increasing the price of residential real estate on the basis of the Turkish lira does not considerably impact its price when calculated in other currencies such as dollars.
In the time between late 2018 and mid-2021, when the Turkish currency fell sharply against the dollar, residential real estate values remained nearly constant, which means that the recent property we discussed at 610.000 TL had a modest increase in price to 720.000 TL.
If we calculate the exchange rate of the lira against the dollar, each dollar equals 8 Turkish liras (obviously, the exchange rate and price of real estate during this period were not fixed, but if we calculate for the dollar, we will get the price approximately $ 90.000 on average).
This means that between the end of 2018 and the middle of 2021, real estate prices were highly competitive and amounted to half the real price of the property when calculated in foreign currencies such as dollars.
A big portion of residential real estate is not suited for investment, which means that the property may be acceptable for your family to live in, but when resale later, if the calculation is done in a foreign currency, the price will be lower.
We will discover that the selling price is close to or even less than the buying price, therefore we constantly warn in Right Home that there are investment properties that aim to gain a greater price when reselling them, regardless of their location or number of rooms. If you are interested, please get in touch with us.
Current real estate prices are not regarded high when compared to those before to the beginnings of the Turkish lira's dramatic drop in late 2018.
The lower prices over that time period (late 2018 to mid-2021) are viewed as an investment opportunity, especially for residential properties, to close the price gap created in recent months and return to their full worth.
And here's a key question: Why didn't real estate prices rise automatically as the Turkish lira dropped in value against the dollar?
Actually,Turkish investor is aware of the fluctuation in the value of the Turkish lira against the dollar,his investment strategy is primarily centered on the Turkish lira.
As a result, when the value of the Turkish lira dropped in a short period of time, it does not make sense in this local market to quickly boost real estate prices 100 percent, but this growth will surely take time.
We must also remember the arrival of the Corona virus and its bad influence on real estate investment, which delayed future price increases.
However, with the increase in building material prices, as we shall see in the following points, the price gap has appeared quite rapidly.
02.Related Reasons To Materials For Construction
Although Turkey exports many construction goods such as kitchens, marble, doors, and locks, it imports a considerable portion of fundamental construction resources such as iron and cement. Consider the following pricing trend for iron and building materials in recent years:
By the middle of 2021, the price of iron and building materials had risen by around 80% for iron and 25% for other construction materials.
The dramatic increase in building material prices will effect not just projects under construction, but also the pricing of ready-to-move-in real estate, because the developer who sells fully prepared real estate must pay the increased construction material prices to begin his new project.
Because of the great demand for low-priced houses and the low demand for high-priced properties, offers of resale and used properties are gradually approaching the prices of new properties, which will surely lead to a market balance in the coming months.
03.Related Reasons To Rental Price Increases
Raising real estate prices to attract a larger rental return is an incorrect solution, but the opposite is true, which means that a high rental return qualifies any property to be sold at a higher price.
According to government figures, rental costs in Turkey in general, and Istanbul in particular, have risen dramatically in recent months, reaching more than 120 percent in certain places and 84 percent on average.
This means that most of the properties were eligible for double the rent they were qualified for in past years within a year.There is no point in raising the rent of any property unless there is a real demand for this property at the increased price.
The presence of residents willing to rent these houses, even if they were double the price of last year, was seen in most neighborhoods of Istanbul.
04.Related Reasons To Offer And Demand
The negative effects of the Corona virus and the global economic economic crisis have had a significant impact on the movement of constructing projects, therefore for Istanbul, demand has become higher than supply, which will almost certainly lead to a rise in the prices of real estate originally offered in the market today.
Furthermore, the scarcity of suitable land for building near critical infrastructure places suitable land in high demand, leading to an already high land price even before construction begins.
05.Related Reasons To Economic Reasons
High rates of inflation in America, which will shortly be supported by interest rate increases by the US Federal Reserve, will lead currencies to fall against the dollar, temporarily strengthening it but decreasing its purchasing power in the long run.
The world has not yet recovered from the Corona virus's negative economic consequences, whether on production or supply chains, which leads to increased prices in general, including building costs and so real estate prices.
The growth of real estate prices in Turkey may be determined by analyzing the primary elements we discussed, and whether or not they will continue to influence the growth in real estate prices in the following years.
In terms of investment and housing, Istanbul real estate developments provide a wide range. If you want to invest in real estate and buy a property in Istanbul, you may visit our website, akdinvest, to learn more about our portfolio and projects.