"Is it possible that rent in Istanbul has gotten more expensive than in London?"
It’s a question that’s turning heads: could rents in Istanbul actually be surpassing those in London? The truth is, housing rents in Turkey have been climbing progressively, and on the 1st July 2024, the 25% limit for rent increase was officially removed. This trend isn’t just a statistic; it’s a signal of a shifting move in rental Terrain. In this blog, we’ll talk about the reasons behind these rising rents and what they mean for rental investments. Get an idea as we explore the flow of the rental market in Istanbul and discuss what this means for rental investment opportunities.
Over recent years, Istanbul’s rental market has been on a rapid upward trajectory. Factors contributing to this rise include a rising population, increasing demand for urban living, and economic shifts affecting supply and demand. While Istanbul was once considered an important alternative to major Western cities, its rental prices have begun to align with, and in some cases exceed, those top global focus.
Istanbul’s Rent Increase and the 25% Cap Policy End.
In June 2022, Turkey implemented a cap on annual rent increases, limiting them to a maximum of 25%. This measure, initially intended to last for just one year, was extended by the government for an additional 12 months to alleviate the impact of inflation on households. Despite this cap, housing costs have continued to escalate, contributing significantly to the country's inflationary challenges. According to Türkstat, Turkey’s state statistics agency, housing expenses surged by 93% year after year as of May of the current year. The monthly increase was even more striking, with a 7 % rise in August alone. Further highlighting this trend, Eurostat's recent report named Turkey as the leading country in rent hikes among European Union members and candidates, with an incredible 125% increase in rental costs over the past year.
Rental Property Taxes in Turkey.
In Turkey, rental property owners are subject to three main types of taxes. First, income tax is progressive, starting at 15% for earnings up to 32,000 TL and increasing to 40% for income exceeding 880,000 TL. Second, property tax is an annual fee, ranging from 0.1% to 0.6% of the property's appraised value. Lastly, the Valuable Housing Tax, introduced in 2019, applies to high-value properties, charging 0.003% on amounts over 5.25 million TL and 6% on values between 7.87 million TL and 10.5 million TL. These taxes collectively ensure that property owners contribute based on the value and income derived from their investments.
Rental Guarantees and Strategic Investing in Istanbul
In the world of real estate in Istanbul, many companies claim the rental guarantee to investors as a tempting offer. This promise suggests that your property will attract renters and generate important income. But how sure is this claim?
From our 12 years of experience in the industry, we’ve met many such assurances. Often, agents pitch these guarantees on off-plan or under-construction projects, promising rental returns of 6% to 10% over periods that can stretch up to a decade. While this sounds attractive, in fact it can be a trap sometimes.
Often, these promises are more about attracting investors than providing good value. When led on by low prices and off standards locations, investors may end up with properties that show little appreciation in value. While rental income might meet expectations, the potential for capital gains when selling the property could be minimal, sometimes resulting in no capital gain at all. In brief, not every good deal turns out to be a great investment.
Wise Investment Approach
Consider a scenario where you buy a property for $100,000, slightly below market value, with a more realistic rental yield of 6%. This rental yield, while on the higher end for Istanbul, would generate an annual income of $6,000, totaling $18,000 over three years.
Now, factor in capital gains. If your property appreciates at a steady rate of 7% per year, after three years, the combined rental income and capital gains would amount to approximately $138,000. This represents nearly a 40% return on your investment, this is the realistic way for big gain in today’s Istanbul market.
Strong Demand Despite Rising Rents in Istanbul
In Istanbul, rental prices continue to climb due to strong demand from all social classes, especially workers, students, celebrities visitings, and tourists. The city’scharm, and practical lifestyle, drives a stable search for rental properties. Despite high inflation rates, the demand for rentals remains strong, with rental virtual applications frequently updated to reflect this persistent need. This trend proves that rental targets are largely unaffected by inflation, as consumers continue to rent despite rising costs. This ongoing demand shows the resilience of the rental market in Istanbul, proving that high prices have not discouraged renters.
Central vs. Suburban Rental Properties
In central Istanbul, such as neighborhoods like Beşiktaş, Şişli, Kadikoy, Nisantasi and Taksim, finding suitable renters is typically quicker, often securing a good rental deal within just two weeks. However, properties located farther from the city center, for example, in areas like Pendik or Beylikdüzü, generally take longer to lease, with rental periods extending to a month or even two.
2024 Rental Investment Projects
1-RH 592
In the populous Beşiktaş district of Istanbul, Polat Fulya stands as a project for upgraded living and investment potential at the same time. Developed by Polat İnşaat, a name with over 70 years of experience, this project spans 5,738.75 square meters and contains two blocks—A and B—offering a total of 124 stylish apartments in 1+1, 2+1, and 3+1 configurations.
2-Rh 593
Polat Levent Exclusive, situated in Istanbul's Levent district, is a premier mixed-use development by Polat Real Estate. The project features 77 apartments (1+1 to 3+1), each with options for terraces, balconies, or private pools. It also includes 9 duplex home offices and 21 commercial units for added convenience.
With Levent’s strong market demand and the project’s construction qualities, functionality, and sustainability, Polat Levent Exclusive offers a high potential for both rental income and property value appreciation, making it a smart and promising investment.
3- RH 585
Located in Maslak, Istanbul’s business hub, this skyscraper project offers stunning 360-degree views of the Bosphorus, three bridges, and the city skyline. Spanning 11,067 square meters, the development includes 9 basement floors, a ground floor, and 39 additional floors.
The project features diverse residential units (1+1, 2+1, and 3+1) with separate entrances and activity areas. Built with Turkey’s strongest concrete (C50) and steel, it uniquely includes an infinity pool.
Developed by a leading Turkish construction firm, the project has been awarded "Best Mixed-Use Development Turkey."
The project's good location within an area housing the most significant commercial buildings significantly increases its investment value. It presents an opportunity for investors seeking exponential returns. Invest wisely and capitalise on the strategic advantage this location offers.
4-RH 570
This residential project in Kâğıthane, developed by the famous Namlı Yapı, offers an important advantage in the city. The development features two 14-story blocks with a total of 112 thoughtfully designed apartments. Options range from cozy 1+1 units to spacious 2+1 layouts, with sizes from 65 to 115 square meters.
The project includes large balconies and terraces with impressive city and nature views. On the ground floor, ten commercial units add convenience and foster a vibrant community atmosphere.
5-RH 430
This luxury residential project, located in Nişantaşı near Ihlamur Pavilion, mixes in a unique way the elegance touch with nature vibe. Surrounded by 60,000 sqm of woodland—more than the total green space of Nişantaşı—this development provides a joyful environment.
The project features 160 apartments, ranging from 86 to 760 sqm, across nine blocks. With private terraces and views of Nişantaşı, the grove, and the Bosphorus, this is just like heaven for celebrities and big names when visiting the city.
Our Role at Right Home Agency
At Right Home Agency, we take your investment plan and reflect it in reality.
We do in-depth research and analysis to identify opportunities that perfectly match with your standards and objectives. Our team prepares detailed investment studies for the properties we offer, making sure that they meet your needs and serve your benefit.
Thanks to our strong industry connections, we offer competitive pricing and exclusive deals straight from developers. In addition, we manage the property rent and guarantee the best income, maximising your returns upon resale.
We are committed to the ethics of real estate, focusing on a balanced approach that works for mutual honest benefit. At Right Home Agency, we invest in your investment, aiming for long-term success and satisfaction.
