Current Turkish Property Market and What to Expect
Over the past two years, the world has experienced several major shocks – the virus, military operations, changes in the global economy. In times of severe economic and political upheaval, it is especially important to conserve funds. One of the traditional but effective methods is investing in assets abroad.
The most popular destinations for buying real estate are the United Arab Emirates, Spain, and Turkey. Thanks to a loyal tax policy, affordable prices, a high standard of living and the ease of obtaining a residence permit and citizenship, property in Turkey stands out from other countries. The main part of Turkish real estate buyers are citizens of the CIS (Russia, Ukraine, Kazakhstan), the Persian Gulf countries, Europe and the USA. The impossibility for Russians to buy real estate in Europe during this period forced demand to be redistributed, so Russian residents this year became leaders in the number of purchases (1,887 units in June this year).
In the past year, the housing market in Turkey has seen an increase in prices, and the government has also limited the issuance of a residence permit and raised the minimum investment threshold for obtaining citizenship. But even these restrictions did not affect the demand, which is steadily increasing from year to year. In Turkey, real estate can be bought for currency and cryptocurrency.
The lack of building plots (especially in coastal regions and large cities) has affected their prices, as a result of which developers are forced to reduce the number of offers brought to the market: in the first half of 2022, only 262,000 residential units were built against the necessary demand 800 thousand. The number of building permits is also decreasing.
Given this factor, the Turkish government announced the launch of a social housing construction program: several projects are planned, one of them will be implemented jointly with investment companies. Also, the conversion of unoccupied office space to residential will add about 50,000 housing units.
A noticeable increase in the cost of housing has occurred in the provinces of Antalya and Istanbul. Prices rose both in national and foreign currencies. For example, over the past three years, the value of real estate in Alanya has increased by 550%. The reasons for the growth were fluctuations in the Turkish lira (imported materials are also used in construction), high demand and inflation. Alanya became the one of the leaders in the average cost per square meter of housing in the Antalya region, second only to the central Aksu, Konyaalti and Kaş .
An annual increase in the cost of almost 250% occurred in Istanbul – a square meter of housing here costs an average of 18,653 lira.
Despite rising prices, Turkey has been and remains one of the main destinations for permanent residence. Due to the ease of obtaining a residence permit (the document was even issued for renting real estate), the country has become a new home for residents of the CIS countries and the Middle East, while in some parts of the country the number of foreigners exceeded the local population. The military conflict in Ukraine also contributed to this as Turkey opened the doors for Ukrainians and Russians.
The authorities have introduced restrictions on the largest districts in terms of the number of foreigners living on a residence permit. From July 1, 2022, a 20% restriction affected 1,169 districts across the country.
Restrictions on these areas have led to the fact that those wishing to stay in Turkey for a longer period, renting or buying property, turned their attention to other districts, where, consequently, prices have risen. But the inability to obtain a residence permit does not cancel the right to obtain a Turkish passport, a foreigner can still obtain Turkish citizenship for investments in real estate from $ 400,000.
The state passport program and the simple acquisition of a residence permit for owning real estate in open areas remain the main advantages of Turkey as an investment destination. The government also provides preferential terms for mortgage lending with rates reduced to 1% per month, which stimulated the growth of housing sales on credit (by 40.6% in June 2022 against June 2021).
The country remains popular: renewed EU joining talks and the resilience of the Turkish economy to shocks are positively affecting investment attractiveness. The export industry is at its peak thanks to exchange rate fluctuations and government support for manufacturers and investors. International financial agencies give a positive forecast for the Turkish economy: according to the IMF and Moody’s, GDP will grow by 3% by the end of the year, and the economy as a whole by 2.7% (in 2023, the planned growth is 3%). These figures are higher than in other countries. It is expected that the fight against inflation, aimed at protecting the population, will reduce the level from 70 to 55%. Moreover, the 2022 tourism season exceeded the 2019 figures, providing a flow of investments from abroad.
Turkey is also one of the most important transportation hubs in the world. Several free economic zones are organized here, located in the largest seaports (Izmir, Mersin, Trabzon, Istanbul, Antalya, Adana) and technological development zones – “technoparks”. The country is home to the production of foreign companies that provide the movement of capital and jobs that support the national economy of Turkey. Europe and Russia are one of the main trade partners of the country. Thus, the country occupies an advantageous position in the global economy, providing the most favorable conditions for opening and doing business by foreigners and buying real estate in Turkey.
The mega-projects planned for commissioning by the state are another indicator of the stability and reliability of the Turkish economy: new transport lines will open this year, which will affect the cost of housing in nearby areas.
A potential investor should take into account that real estate prices in Turkey are unlikely to go down in the foreseeable future. The secondary housing market follows the market of new buildings – prices are tightened after new objects. Those who want to buy a home at the lowest possible price should pay attention to the design of new buildings – developers offer interest-free installments, with full payment, a discount is immediately possible. Moreover, project housing is a great way to capitalize on resale due to the difference in price that arises during the construction process (it can be up to 40%).
Considering the increasing cost and value of housing, the risks in such transactions are minimized. However, when choosing such an object, it is worth evaluating the investment potential, which is influenced by almost everything – from location to the view from the window. Thanks to strict state control over the housing market, the interests of the buyer are protected.
