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Why Are Prices of New Properties in Central Istanbul High

Last edited:Feb 11, 2024
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Why Are Prices of New Properties in Central Istanbul High
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The question might seem straightforward at first, but as we delve into the significant price disparities between old and new properties in the center of Istanbul, it becomes a crucial inquiry that requires a detailed and accurate response.

 

Let's begin by categorizing all property types in the center of Istanbul and then proceed to elucidate the reasons underlying the price differences, which can reach over 16 times per square meter for properties that are nearly adjacent.

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This is the Levent area in European Istanbul, a central district comprising a modern section with skyscrapers, some of which offer views of the Bosphorus, and a part of Levent that still retains its old construction, consisting of low-rise buildings with subpar structural materials.

 

Approximate square meter prices are as follows:

In old buildings without a view, the price per square meter can start at $600.

In old buildings with a view, the price per square meter can start at $850.

In relatively tall, white buildings with an age of around 15 years, the price per square meter can start at $2,000 without a view.

In the same building with a view, the price per square meter can start at $2,500.

In the Sapphire Tower (the tallest building in European Istanbul), the price per square meter can start at $7,000 without a view.

In the Sapphire Tower, for high floors with a Bosphorus view, the price per square meter can start at $10,000.

Now, let's delve into the reasons that make the price per square meter in a luxurious Bosphorus-view skyscraper 16 times more than that of an average old building nearby.

 

Note before we begin: We chose the Sapphire Tower for general comparison as it is the tallest building in the Levent area. It's not necessarily the best investment option. To discover the prime investment opportunities in any area of Istanbul, feel free to reach out to us for a complimentary consultation.

 

1- Location

At first glance, this point might not seem appropriate to address here, as the old building is very close to the skyscraper we are comparing it to. However, the reality reveals a substantial difference.

 

When you opt for a luxurious lifestyle, you are purchasing the entire surrounding neighborhood, not just the building that houses your property. Observe the significant contrast between the two images below:

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An image from a neighborhood located directly behind the renowned Sapphire Tower in the Levent area.

 

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An image taken in front of the Sapphire Tower in the Levent area.

 

 When you intend to lease a residential apartment or an office space in the Sapphire Tower, you can set an appropriate rent without even considering the rental prices in the old neighborhoods behind it, as they offer an entirely different lifestyle that cannot be compared.

 

The invaluable security provided by an upscale neighborhood is a paramount factor for many renters or potential property buyers from you in the future. The proximity of your property to the main road and transportation hub differs greatly from a property that is even 5 minutes away from the main road and transportation.

 

The old neighborhoods are deserted at night and not secure during the day, especially considering that Istanbul is a city with numerous terrains of ups and downs. This profoundly affects the return on investment from the property and consequently its per square meter price.

 

2- Building Age

Any building in Istanbul that is over 24 years old cannot be compared to any new property. This is because any property constructed before the year 1999 (when the Istanbul municipality introduced the new seismic engineering code) is susceptible to collapsing with the first earthquake that hits its vicinity.

 

Many of the old buildings throughout Istanbul were constructed haphazardly due to rapid urban expansion and a significant population increase, justifying the city's horizontal expansion in an unorganized manner.

 

Inadequate construction materials were used without proper engineering supervision. Many old houses were even built by their owners themselves. Even small buildings were not in a better state; a local contractor hastily constructed them with minimal safety and security measures, with the sole aim of quick construction for sale, profit collection, and moving on to build anew.

 

After the major earthquake that struck the nearby city of Izmit and extended its impact to Istanbul, measuring 7.6 on the Richter scale, causing over 17,000 deaths, the Istanbul municipality established a new building code and did not issue permits for any new building that wasn't earthquake-resistant.

 

Although this law was highly beneficial for new constructions, what about over 500,000 houses built before this law without considering safety and seismic resistance standards?

 

Today, foreign investors take pride in acquiring a 30-year-old property in areas like Avcılar, Fatih, Şişli, or Taksim at a low price, unaware that this investment is contingent upon the first earthquake that will destroy not only their property but similar properties, and result in the loss of lives.

 

We've provided this explanation due to the cases we witness on a daily basis from our experiences.

 

3-Used Building Materials

Construction materials are essential to ensure the building's durability and its resistance to earthquakes. They also guarantee its ability to stand strong after many years of construction.

 

However, the materials used for both the exterior and interior cladding play a significant role in determining the per square meter price of a specific property. Observe the images below:

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Ceiling Height, Roof Design, Wall Design

Type of Insulated Glass Used to Maximize Sunlight while Ensuring Sound Isolation

Quality of Wood Used for Flooring

Quality of Materials and Elements Used for Decoration and Building Facilities

Each detail from these and many others plays a crucial role in determining the per square meter price and return on investment of any property.

 

I am genuinely surprised by real estate brokers who promote new constructions in central areas and compare the per square meter price in those with the price in a fully-specified tower.

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Sometimes, a building might indeed have a beautiful view and be a new earthquake-resistant structure, yet it cannot be compared to a fully serviced high-quality tower. The return on investment is entirely different.

 

4- View

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This beautiful view condenses a lot when convincing a tenant that the rent you are asking for is reasonable and suitable, no matter how high it might be.

 

Furthermore, when you plan to resell your property later, a view like this will make the decision for the new buyer and their spouse quicker and smoother.

 

There's no need to compare views from old or limited-floor buildings, the situation here is entirely different and incomparable.

 

When we think from an investment standpoint, not residential, we must focus on the principle of uniqueness.

 

How many properties in the same area offer such a view? The fewer the number, the less the competition, the higher the level of uniqueness, and consequently, the higher the rental return. Moreover, the possibility of resale later becomes easier and more profitable with greater potential.

 

5- Building's Expected Lifespan

It's not only about the current age of the building, but it's also crucial to take into consideration the building's full expected lifespan.

 

The Sapphire Tower, for instance, with a lifespan of 12 years, can be far superior to a recent building in the same area that utilizes medium-quality materials.

 

The longer the expected lifespan of the property you're investing in, the lower the maintenance requirements and, consequently, the more desirable it becomes, whether for rental purposes or for resale in the future.



6- Property Construction Status

We fully understand that a property under construction often comes at a significantly lower price than its value upon completion.

 

Instead of purchasing an old property in Şişli, for instance, for $150,000, you could put that amount as a down payment on a new property still under construction and comfortably complete the installments.

 

In the end, your property, which is still under construction, even if you paid $300,000 for it, can easily be sold for at least $450,000 when it's ready.

 

Meanwhile, your old property, bought for $150,000, even if your goal is residential rather than investment, won't be easy to resell later, and certainly not at the same price you bought it for.



7- Upcoming Future to the Area

Over time, properties in central areas naturally gain importance and scarcity. But what if you own a property in a comprehensive service complex in an old area, yet with a revitalization plan capable of reshaping all investment standards and expected returns?

 

In such cases, the potential for transformation and increased value due to redevelopment plans can override the initial age or location of the property, offering a unique investment opportunity.

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Look at the complete urban transformation in the Fikirtepe area of Kadikoy. What do you think about the investor who owns a property in these towers during the construction phase?

 

Today, the property's price has multiplied several times based on the dollar. It's no longer a requirement that any property under construction in the Fikirtepe area is suitable for investment. There are more attractive areas today that you can learn about by getting in touch with us.

 

There are several other factors affecting property prices. You can learn about them by communicating with us and obtaining a free real estate consultation.

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