Real Estate Investment in Turkey

When will new real estate prices drop in Istanbul?

Last edited:Oct 12 , 2023
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When will new real estate prices drop in Istanbul?
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New property prices in Istanbul fall when construction stops due to the developer's lack of liquidity as a result of the number of property sales falling sharply.

This is the only definition of the concept of low prices for new real estate, regardless of what is circulated in the media about high inflation, the expected recession, and lack of demand due to high interest on real estate loans. The environment of Turkey in general and Istanbul in particular is an environment that has different characteristics from what you see on television. Or social media about the decline in demand in Britain and the level of demand for real estate loans in America fell to the lowest level in 30 years.

Even the form of real estate investment in Istanbul is very different from the rest of the world, and this is why experienced investors make big mistakes when starting their investments in Istanbul because they literally apply what they know about investing in other countries to Istanbul real estate, and the results are sometimes disastrous.

In today's article, we will discuss very important matters and urgent questions. If you are an investor who wants to achieve a satisfactory result in Istanbul, make sure you finish reading this article until the end.

Old real estate prices in Istanbul are falling, so why aren't new real estate prices falling?

It is the most common question that may be on the minds of those who follow real estate prices in Istanbul today. Remember, before we answer this question, that we are talking about a property for the purpose of investment. However, if your goal is to live or vacation, you will not be upset by his inability to sell this property after several years, not even for the same price. Today, old properties (exclusively earthquake-resistant) represent very suitable housing opportunities, and the opportunity of forcing their owner to sell them at a reduced price can be seized (for fear of the price falling further!).

Old properties that are not resistant to earthquakes (construction age is more than 20 years) and new properties that were built by an unknown developer who did not adhere to the designated engineering code. All of these types are time bombs that you should not buy, not at any price, because they are not actually resistant to earthquakes, and the earthquake disaster in southern Turkey is not Far from us.

 

The answer to the question we asked is simple, and the reason for the decline in prices of old properties is that:

-The seller is the owner of the property, and this person is often not aware that the ideal time in financial crises and monetary tightening policies is to buy more real estate at reduced prices to sell them later at high prices when this period passes.

-The owner himself does not have a clear financial plan to manage his property, and therefore he may actually be aware that this is not an appropriate time to sell the property, but he needs liquidity urgently, which forced him to sell at reduced prices.

-It may be a new investor who originally fell into the trap of buying a non-investment property and now wants to get rid of it at any cost with the aim of buying an investment property or investing in another country because Turkey today, according to what the media tells us, is a racist country or that real estate investment cannot be profitable in Istanbul ( Knowing that we have investors who have received a return based on the dollar of 230% over the past four years until today).

-It may be because he was disappointed because the new real estate agent told him that buying land in Basaksehir will enable him to sell it for five times its price next year! Or the one who was told by the real estate agent that buying on Basin Express Street is the new business center in Istanbul as it is close to Ataturk International Airport (which was converted into a park and now relies on the new Istanbul Airport in northern Istanbul). And many more!

-The news that the owner hears about inflation in America and the decrease in demand for real estate loans, and he applies it literally to Turkey, and the difference is huge, as we will explain later.

Now, after addressing these realistic points that include most cases, we can say that the real estate developer who creates any prestigious project in Istanbul is a developer who has a professional team in studying the markets and anticipating market trends, in addition to a very advanced accounting and marketing department capable of forecasting sales and distributing them to the construction so that the project is delivered. At the right time without stopping due to current circumstances.

Therefore, waiting for a drop in the price of a new property under construction in Istanbul from a reputable developer is a waste of your time and a further decline in your capital due to current inflation.

 

Why does inflation not affect real estate loans in Turkey?

Certainly, it should have an effect, but with a clear and simple condition that has not yet been achieved, and therefore the demand for real estate loans in the local market is still increasing (this is confirmed by official statistics from the Turkish Statistical Institute)

The condition is that interest rates reach a higher level than inflation in the country.

Nowadays, interest is 30% and inflation, according to official statistics, is 61%. Therefore, the mortgage loan is still feasible, and this does not differ from the past when interest was 12% and inflation was 30%, and the day you will find that the interest rate rises to a percentage exceeding with inflation, the real estate loan becomes useless for the local citizen, and this does not necessarily mean a decrease in the prices of new properties, because we said that the real estate developer has a professional team to anticipate market trends, and therefore appropriate measures will be taken before that time.

This can lead to lower prices for new properties that are built by an unknown developer or one who does not adhere to safety procedures. Therefore, we stress the importance of obtaining real estate advice from a professional before making any decision to purchase a property in Istanbul.

 

What is the correct form of real estate investment in Istanbul?

Although we have discussed this topic several times in various previous articles, we will summarize the most important points here:

The investment property must be distinct from its neighboring properties and achieve the principle of uniqueness.

The property that achieves the principle of uniqueness will be easy to sell later. This second point is choosing a property that is easy to sell later.

The plan for this investment should be clear in terms of the approximate expected return and timeline.

An investment property is one that is under construction and also meets the previous conditions, and not every property under construction is an investment.

The areas of Istanbul must be studied properly and with the assistance of a real estate consultant who has knowledge about the areas of Istanbul and its offers, and also has previous successful experiences so that you can rely on him.

If the investor wants to choose ready-made properties, he must stay away from annual renting without furnishings, as it achieves the lowest return and always causes problems with the tenant. It is better than that to rely on renting furnished apartments with monthly or annual contracts, and it is better to rent today if the investor has sufficient experience in this field.

 

Each point of the above requires a developed explanation and has many details. You can get a free consultation today by contacting us to learn about it.

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