The Bosphorus separates the eastern and western sides of the city.
Istanbul’s surging population growth, coupled with the influx of new-build property, will keep its real estate market at the forefront of many investors’ minds.
By Romesh Navaratnarajah
For centuries, Istanbul has been the centre of trade and cultural exchange between Europe and Asia. The city’s strategic location means it sits on the border of both continents. Even today, tourists and foreign investors flock to Istanbul, contributing to the city’s building boom.
By the second quarter of 2015, there was 1.9 million sq m of space under construction in Istanbul, according to research from Cushman & Wakefield. And this increasing demand for property looks set to continue.
“Back in 2013, the Turkish government forecast the need for 2.5 million new homes by 2015,” said Adil Yaman, Director of Universal 21, the largest property management company based in the city. “Although developers have been trying to meet this demand, a shortage of new supply, paired with increased interest from abroad, means that property prices continue to rise.”
At the same time, Istanbul is now the fastest growing city in Europe. “With a net increase of over 250,000 people per annum, this is definitely a positive trend for buyers,” said Yaman.
Racing ahead
Knight Frank’s Global House Price Index for Q4 2015, which tracked the performance of 55 housing markets, showed Turkey leading the rankings, with year-end prices 18 percent higher.
In its latest report, Global Property Guide stated that the country’s housing market was boosted by robust economic growth. The economy is estimated to have expanded by four percent last year, up from 2.9 percent in 2014.
Turkey’s Prime Minister, Ahmet Davutoğlu, recently expressed his confidence in the country’s future. Writing for The Wall Street Journal, he suggested that “Turkey’s economy has become synonymous with stability and success”, and will continue to appeal to both local and international investors. Looking ahead, he added: “The success of the past decade hasn’t weakened our resolve to go even further.”
Middle Eastern investors boost sales
Last month, Istanbul hosted Turkey’s first Cityscape exhibition, which attracted many leading real estate companies and international investors, to discuss the country’s burgeoning property market. A key group of investors attending the event were from the United Arab Emirates (UAE).
According to the latest Turkish Land Registry report, UAE investment in the Turkish housing market is rising, with property transactions up by 160 percent in the last two years. In 2015 alone, 332 UAE citizens purchased property in the country.
Data from Universal 21 shows that the UAE, along with Iraq and Saudi Arabia, accounted for 62 percent of the company’s total sales last year.
“We have definitely noticed an increase in interest from the UAE, as well as investors from other Gulf nations in recent times,” said Yaman.
Is Turkey safe?
Despite its geographical proximity to conflicts in the Middle East, experts insist that Turkey is safe.
“Turkey is a vast country. It’s over two and a half times the size of Italy, (and) larger than England and France put together. The Syrian border is well over 20 hours’ drive from the popular tourist destinations along the Mediterranean and Aegean coast. That’s the distance from London to Berlin,” said Oceanwide Properties, a Turkish-based property agency.
“Governments, the military, and intelligence services across the globe are dealing with the threat of terrorism every day, not just in Turkey. In light of increased activity, every European country has upped their security measures, especially at government buildings, embassies, airports and public gatherings. Turkey is no exception.”
Affordable city
There are several factors attracting foreign investors to Istanbul, one of which is better affordability. For instance, prices start from just US$90,000 (S$122,153) for a fully furnished one-bedroom apartment, noted Yaman.
Global Property Guide revealed that the decline of the Turkish Lira against all major currencies, especially the Euro, has made residential properties more affordable to foreign buyers. The Lira’s value depreciated by about 13.5 percent against the Euro from an exchange rate of TRY2.8544 = EUR1 in February 2015 to TRY3.2410 = EUR1 by end-February this year.
Meanwhile, capital growth is around 20 percent per annum, which is higher than other European cities. “Prices per square metre for Istanbul’s property have been continuously increasing for the past six years, and there are no indications that this will change,” Yaman said.
While there is high demand for a wide range of properties, he noted that international investors are looking to buy smaller units. “For mid- and long-term investments, one- and two-bedroom apartments are more attractive and popular because of the higher capital growth, (and) greater rental demand; both are easily resold.”
The new Istanbul
Location is also an important factor, and the up-and-coming districts of Esenyurt and Beylikduzu have become property hotspots due to their more affordable house prices and above-average rental yields.
Yaman highlighted that yields of up to seven percent are achievable in Beylikduzu. “Rental demand here is strong due to its proximity to the existing and new airports, six universities, and the metro system.
“Beylikduzu is the symbol of the new Istanbul, continuously growing and transforming the city. It is forecasted to double in size over the next five years.”
Financing is pretty straightforward
Prospective buyers can finance their property purchase through Turkish banks, but Yaman warns that this can be more expensive than in other European countries.
One thing to note is that your total outgoings, including mortgage payments, should not be more than 45 percent of your net monthly income, he said.
Aside from this, conditions are similar to those in most countries, such as a credit check, proof of income, charge over property, deposit of usually 30 to 50 percent (dependent on valuation), and the opening of a bank account.
CITY FAST FACTS
(ISTANBUL)
Population: Approx. 14 million
Total area: 1,830 sq km
Currency: Turkish Lira
GDP per capita: US$9,261 (2015)
GDP growth: 5.7 percent (Q4 2015)
Future transport: Extension of the Istanbul Metro by 2019
Home prices: Up 25 percent in 2015
Distance from Singapore: 8,651 km
INTERNATIONAL HIGHLIGHTS
We look at two apartment projects in Istanbul that offer ideal investment opportunities in 2016.
NEW PROJECTS
Crest Plaza Residence
Beylikduzu District
Type: Apartment
Developer: Universal 21
Tenure: Freehold
Facilities: Fitness centre, swimming pool, Turkish bath, steam room, sauna, health club, cinema room, meeting room, barbecue terrace, games room, library, children’s playground
Nearby Key Amenities: Cafés, restaurants, universities, Tuyap Exhibition Centre, shopping centres
Nearest Transport: Metro station, E5 highway, Ataturk International Airport
Price: £60,000 (S$116,272)
Situated in the Beylikduzu district of Istanbul, the upcoming Crest Plaza Residence is located near transport links and amenities, with the beach and Istanbul’s airport only a short drive away.
Comprising 199 apartments across two blocks, the project offers a wide range of facilities, including a fitness centre, swimming pool, Turkish bath, cinema room and library. The property also features 24-hour security.
A range of spacious one, two and three-bedroom duplex penthouse apartments are available, with prices starting from £60,000 (S$116,272). All either overlook the landscaped gardens or a soon to be completed park.
7th Avenue Residence
Beylikduzu District
Type: Apartment
Developer: Universal 21
Tenure: Freehold
Facilities: Swimming pool, children’s pool, health club, basketball, volleyball, tennis courts, children’s playground
Nearby Key Amenities: Cafés, restaurants, shopping centres, universities, international schools, medical centres
Nearest Transport: Metro station, E5 highway, Ataturk International Airport
Price: £30,000 (S$58,087)
Located on a tree-lined avenue in Istanbul’s Beylikduzu district is 7th Avenue Residence, which consists of a 13-storey residential block, with 20 apartments on each floor.
The units come fully furnished and include studio, and one- two- and three-bedroom apartments. There is also an array of shops on the ground floor. There are a wide range of facilities, such as a swimming pool, health club, basketball, volleyball, tennis courts, and a children’s playground.
Situated within the vicinity are cafés, restaurants, shopping centres, the relaxing beaches of Mimarsinan and Gurnipar, riding stables, an airport, and a boating club.
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