Many real estate investors today, in light of the current conditions in the world of high inflation and expected recession, are fully aware that real estate investment is the best shield to protect their wealth from any decline in their local currencies or inflation in the prices of materials and goods.
But at the same time, not a few of them preferred to get ready-to-let properties immediately with a higher return as possible, and they were temporarily dispensed with investing in under-construction properties (albeit with a higher return) in light of fears related to the economic recession and the potential delay of real estate developers in delivering their projects.
In today's article, we will answer the following questions:
+ What are the best properties in Istanbul to get the highest rental yield?
+ What are the factors affecting the rental yield and how can they be improved to increase the return?
+ Is real estate investing in these circumstances the best type of investment?
+ What are the best projects that offer a rental return of up to 10% annually?
+ What are the best properties in Istanbul to get the highest rental income?
Many investors measure Istanbul real estate on real estate in their home country, some of them believe that investing in shops is the investment with the highest return, and this is not true in Istanbul and the reason is that the shops with really high rents are also high prices and therefore if we calculate the return as a percentage of the capital, we find that it does not exceed 5% at best.
Some believe that investing in offices is the best option, and this is also incorrect. The reason is that offices are divided into two parts:
● Commercial offices: which are delivered without finishing and the office is an open space for the tenant to divide and finish later according to the commercial activity he will practice in. In this case, this section of the commercial offices has a high return, but also has a high price and therefore as a percentage of the capital will not the return is more than 5%.
● Home-office offices: They are residential complexes, but their properties can be used for limited commercial purposes, meaning the property owner can rent a limited business that does not have many visitors daily, instead of renting his property for housing.
The prices of this type of real estate are not relatively high, but at the same time the rental yield will not be very high, as it should be close to the prices of real estate in the same complex that is rented for housing. Here we are talking about a return that may reach 6%.
Some investors work in the field of agriculture in their countries and believe that the best option is to buy agricultural land in Istanbul, ignoring that more than half of the population of Turkey works in agriculture and that the state provides a lot of support to local citizens who work in agriculture in order to revitalize this sector and also export to neighboring countries and therefore regardless if the foreign investor is familiar with advanced farming methods, he will not be able to compete with the same countrymen in this field.
Some investors believe that buying old properties at cheap prices will bring them the highest rental returns without noting that the demand for old properties is very low, and this is the main reason why they find an old property at a cheap price, not because of their skill in finding the cheapest property in the area!
Finally, investors who contact a professional real estate broker in order to obtain a free consultation regarding the best options available in order to obtain the highest rental return, and the answer today (which may vary later, so it is necessary to communicate with us to provide everything new) is that the hotel apartments are managed by well-known brands is the best rental return that can be achieved in Istanbul.
+ What are the factors affecting the rental yield and how can they be improved to increase the return?
Since we mentioned that hotel apartments are currently the best option in achieving the highest rental return, but it must be noted that there are many factors that greatly affect this:
● The location of the hotel apartment greatly affects the return that will be distributed to the owners according to a specific system that suits each existing hotel apartment and its advantages. Buying a hotel apartment close to the center of Istanbul is much better than buying a hotel apartment in areas far from the center.
● The name of the brand that runs the project, the more upscale and popular this brand is, the more hotel guests choose to go to the hotel where you own your apartment.
● The size of the hotel apartment is not that important compared to the location and the brand of the hotel.
● The rental guarantee for the first two or three years is not important compared to the expected return in the following years after the end of the guarantee.
● The rental guarantee in general does not make sense unless the return after the end of the guarantee will be in the same percentage, slightly less or higher.
● The return can be improved by obtaining a professional real estate consultation that explains the options available in the market and compares them fairly.
+ Is real estate investing in these circumstances the best type of investment?
No doubt about it.
To avoid prolonging this point, I will present a previous article I wrote to discuss this point in detail: Save your money from inflation in 2023 and from economic stagnation in 2024
+ What are the best projects that offer a rental return of up to 10% annually?
Today's best projects may not be the best tomorrow. Therefore, I will not share in today's article the names of specific projects, but you can contact us to view the best options at the time of communication.
But we will talk about the possibility of achieving a return of 10%, knowing that the rental return in Istanbul apartments, even furnished ones, will not exceed 7%, so how can you get a return of 10% annually when investing in hotel apartments?
To answer this question, we must differentiate between the types of real estate leasing, from which we can calculate the return more accurately:
● The annual rent for real estate: It is the lowest type of leasing, but at the same time it is the easiest type and does not require real estate management or periodic maintenance. Its value is about 4% of the property value on average, and it can reach 5.5% if the apartment is rented with furniture.
● Weekly or monthly tourist rent here you need to manage the property and semi-periodic maintenance, but the return can reach 8% if the property is managed perfectly.
● Daily rent: It is the highest type of rental return, and a return of up to 12% per year can be obtained if the property is ideally managed and maintained on a daily basis, but this type of rental needs a full-time person to do it and also needs consistent marketing campaigns so that renting the property guarantees most days of the year and thus obtaining the highest return, and this is in fact the choice of many investors, but on the ground we have noticed a great stumble for this type of investment, and even if the real estate management company pledged, we did not find the ideal results except in very rare cases.
● Hotel rent: It is classified as daily rent with services, and therefore the return is considered the highest, and a return of up to 13% can be achieved in it, but we must not forget that there are hotel management fees, and therefore the net return will be close to 10%, and thus the investor can feel comfortable as he manages the property with a well-known brand hotel as mentioned earlier.
