The return on real estate investment in Turkey
The return on real estate investment in Turkey is one of the most important features that motivate foreign investors to invest in Turkey, where there are many projects, including residential and commercial projects, which are distributed throughout the cities of Turkey.
Istanbul is distinguished from the rest of Turkey cities by the fact that the investment return from Istanbul real estate is very high and competitive not only at the local level but also at the European and international levels.
Real estate in Istanbul offers many opportunities with a huge investment return and guaranteed for several years up to 20 years in some projects.
The method of calculating the return on investment of a property is different according to the types of the investment, as in real estate investment the capital invested in the property remains the same and the value does not change, but on the contrary, if you choose the right real estate opportunity, this may increase the value of the property, which means increase the capital, for example, in the case of investing in a property with a guaranteed investment return of 6% for 5 years, the investor receives 30% of the value of the property.
If the investment site is promising, that is, real estate prices are set to increase, the investor gets an investment return from reselling the property in that area, bringing the real estate investment return to between 70% and 100% of the value of the original investment.
There are many projects in Istanbul that offer real estate opportunities with a guaranteed return on investment for many years, for example, apartments and hotels in the Basin Express project: Hotel concept apartments, Rotana project in Istanbul
The investment return on commercial real estate in Istanbul
It is worth mentioning that the shops are considered as real estate that allows their owners to get Turkish citizenship, like any other real estate investment, if the foreigner owns a real estate that worth 250.000$, which means it is an opportunity for two advantages at the same time: to get Turkish citizenship, and a profit by operating the shop or rent it out with a good return.
Commercial properties include:
- Shops are as diverse as other real estates, where there are many options that are very profitable as an investment opportunity.
- Warehouses are a very successful and sustainable investment as Istanbul is one of the most commercially active cities in the region.
- You can invest in hotels or hotel apartments that known for their long-term investment returns because of the high demand.
- Commercial offices that benefit from the investment return resulting from leasing to companies that are continuously established in the city with a developed economy.
- Construction companies are constructing office buildings very suitable for the real estate market in terms of space and services.
For more information about owning a shop in Istanbul, read the following article: Information about owning a shop in Istanbul
Investment return in residential property in Istanbul
The return on investment from residential properties is obtained in two main ways:
- Rent: Many foreign and local investors buy and rent residential properties in Istanbul. It should be noted that the rent in Turkey rises annually in varying proportions, and the rent of any property in Turkey increases by more than 10% annually.
- Resale: In many cases, under-construction properties are purchased for sale by the investor after the completion of the project and high profitability.
Guaranteed return on investment in Turkey is one of the most important advantages of real estate investment, where a foreign investor can own residential or commercial property with a guaranteed annual return up to 10% of the value of the property, and the profit return is generated from the rental of the property within the terms of the purchase contracts.
The demand for rent is steadily increasing in Istanbul, offering greater opportunities for investment with a guaranteed return. Also, according to the law, rent in Turkey is increasing by an annual rate calculated based on any property of any kind, which means an annual increase in investment return.
It should be noted the importance of choosing the location of the property whatever the purpose of buying it, especially in the case of investment to obtain a return on profit.
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Is real estate investment in Turkey a profitable investment?
To answer this question, we must know what distinguishes the Turkish real estate market from the rest of the real estate markets?
First: The Turkish real estate market depends primarily on domestic demand and supply, as this is the primary driver of the market, avoiding as much as possible the real estate boom that occurs in the markets that depend on the foreign buyer, so Turkish real estate market is an active market in which the buying and selling operations abound.
In 2018 about 1.350.000 properties were sold in Turkey, the ratio was one property for foreigners out of every 60 properties, and in 2017 the ratio was one property for foreigners out of every 40 properties.
Also, the devaluation of the local currency exchange rate against the dollar leads to a noticeable increase in exports and foreign investment. Therefore, the exchange rate of the Turkish lira against the US dollar has significant positive benefits.
Second: The economic reforms and development plans put in place by the Turkish government, which are expected to increase significantly the demand of foreign investors to establish companies and buy real estate in Turkey. By the year 2023, the Turkish real estate market will provide approximately 6 million housing units with an estimated market value of $ 400 billion, as domestic and foreign demand for homes and offices will increase for investment and housing.
Third: The return of rent in Istanbul is considered relatively high, as Istanbul is one of the most urbanized cities in Turkey and the world, and its population increases annually with its geographical expansion and continuous urban development, and this population growth, in turn, drives the real estate market and creates more demand for residential units, so rebuilding and developing infrastructure in the old neighborhoods in Istanbul has become a demand and a very important priority for the Turkish government and construction companies. Rental returns in Istanbul are higher than those in European countries, where the rental yield in Istanbul reaches 4-5 % annually, and in hotel apartments, offices and shops range between 6% to 8%, while in Paris and London for example, it does not exceed 2-3%.
Fourth: The return on investment in Istanbul real estate, compared to the rest of the Turkish and European cities. As stated in the latest report issued by the Istanbul Development Agency on investing in Turkey, Istanbul is not only distinguished by providing new and appropriate offers, but also excels at the same time by a wide difference in the field of selling this new real estate stock, meaning that the demand for Istanbul real estate exceeds the supply, and this is reflected in the high returns on investment for Istanbul real estate, which makes it ranked second in the world as the best return on investment from real estate.
Many real estate investors are moving to the field of commercial real estate in Istanbul, especially offices, as it is one of the most competitive sectors due to the great demand for it, and as we mentioned earlier, the rental yield in offices and shops ranges between 6% to 8% annually.
There are many reasons that drive investors to interest in commercial real estate and work in them. The most important of these reasons is that they are often sold or rented for a long time, which encourages the investor to choose those properties, as the contract period can extend to 10 years depending on the goal that it was renting for, in addition to the continuity of investment profits for several years, such as renting apartments and shops that contribute to the recovery of capital in a short time and obtain a fixed income at a specified time.
Commercial real estate in Turkey is considered to be simple in costs, even at the time when there is no tenant, the costs are very simple, and in the same context the tenant can modify and decorate inside the commercial real estate, which increases the aesthetic of the decoration or redistributes the office in proportion to his work, all these expenses are on the tenant, not the investor.
Real estate prices vary according to the conditions surrounding the property, which fully affect the rise or fall in real estate prices for that investment, the most important of these factors is the area that overlooks it or the location of the property within the city, as well as the age of the commercial property, its external appearance, and its ongoing modifications affect the property price.