Turkey properties and the return on real estate investment
By 2023, the Turkish real estate market will have about 6.3 million residential units for sale with a market value of US $ 400 billion. This is due to the high demand for Turkish real estate in recent years and the sale of more than 1,200,000 properties in 2015 alone. The real estate sector in Turkey accounts for 19.5% of the country’s GDP, which explains the interest of the Turkish government in the real estate sector in the last decade.
In this article we will address the study of the return on investment of the most important and largest Turkish cities that foreign investors are interested in investing in. Among these attractive cities for real estate investment, we will address some of the details of investment on : Istanbul, Trabzon, Izmir, Ankara and Bursa.
Istanbul, a good investment return and strong competition
Istanbul is a highly urbanized residential city where its population is gradually growing as it continues to expand. This population movement is creating more demand for residential space. For this reason, revitalizing old areas and developing their infrastructure has become a very important priority for the city of Istanbul, which has left a lot of history behind.
Istanbul is far ahead of its rival local cities and European rivals. As the Istanbul Development Agency’s latest report on investment in Turkey puts it, the city is not only successful in delivering new offers but also excels at a huge margin in selling this new real estate inventory. Istanbul is characterized by a large demand, which exceeds the supply by much, which explains the high investment return of real estate in the city and this makes the city also ranked second in the world as the best return on investment property.
Many real estate investors in Istanbul prefer commercial real estate, especially the office sector. However, while the price changes in these markets when they become more competitive due to the large demand on them, investors are starting to move their investments towards some new opportunities in developing cities such as Izmir And Ankara.
7% -12% is the return on investment in Istanbul real estate
According to the Reiden Real Estate Corporation, real estate prices in Istanbul increased by 7%,- 41% in the last three years and 106% in the last five years. According to the same organization, the rate of change in the prices of sale of residential properties in all cities (68 cities) is 11.55% per annum, while property rental prices rose by 4.89%.
Investment in real estate of Istanbul is a profitable investment compared to other cities due to the tourism and economic revolution known to the city. This reflects a huge increase in the internal demand for real estate and the high return on real estate. This return on investment varies according to the type of the real estate. It is certain that commercial real estate is much better than residential real estate in terms of return on investment.
Ankara, the administrative capital of Turkey
Ankara is Turkey’s second-largest economic pole and the center of Turkey’s economy and industry. The city’s geographical location, the city’s workforce, and the largest concentration of its human resources, places it in a very important position for Turkey. Foreign investments were up to $ 25 billion in 2014.
You may not hear much about real estate in Ankara and about foreign investments in Ankara real estate. But the real estate sector in the city is very sophisticated and the city is the second largest city in Turkey in terms of demand for real estate, demographic growth of the city and internal migration in addition to the concentration of the largest local and international companies in the city are the most important reasons Which explains the rise in demand from the local population, which also explains the high prices the city has seen in the last three years.
8-10% annual return on investment
According to the Reiden Foundation, the prices of residential properties in Ankara rose by 8% compared to last year and by 30% in the last three years and by 60% in the last five years.
What distinguishes the real estate sector in Ankara is its low prices compared to Istanbul and the standard of living is suitable for the middle classes, which makes it a desirable city to live and invest at the same time.
Izmir, the city of future investments
Izmir is the third largest city in Turkey and is the second Turkish trade pole after Istanbul. It is considered the best Turkish city in terms of living according to the social capital index of the Turkish Ministry of Development and considered by some international institutions as the fastest growing city in Turkey due to the local and international investments that the city has attracted in recent years.
The real estate sector in Izmir is witnessing a sudden growth. The high demand for real estate in Izmir and the interest that the sector enjoys from local investors has made it a developing market with many opportunities for real estate investors. The price of residential properties in Izmir has increased by 14% With the past year, 56% in the past three years and 93% in the last five years according to the Zingat index issued by the Real Estate Corporation.
What about other Turkish cities?
Some of the other Turkish cities may not be compared to those mentioned in the article in terms of economic size, size of supply and demand. However, some Turkish cities are witnessing good growth in the real estate sector and an important development in infrastructure
- Bursa: Which is close to the city of Istanbul, its strength as well as the city of commercial excellence and the point of Istanbul, Izmir. Property prices rose after the opening of the Izmit bridge, which reduced the time between Istanbul and Bursa.
Residential real estate prices rose by 20 per cent compared to last year, according to REIDEN, and by 78 per cent over the past five years, due to the high demand for Bursa properties because of their good prices and the city’s availability for all the city’s good assets.
- Trabzon: Which is considered as touristic city with great excellence and has started to attract great interest in the last three years by the Gulf countries because the city is suitable for nature lovers and the fact that the city is one of the most conservative cities in Turkey. This touristic movement has made foreign demand for real estate in Trabzon a qualitative leap as Trabzon has become one of the cities listed in the list of property ownership of foreigners in Turkey.The investment return on residential properties is weak compared to other cities. The best property investment is the purchase of hotel apartments, although the supply is very low. The prices of residential properties in Trabzon rose by 13% compared to last year and by 52% in the last three years according to the same source.