Should You Invest?
Unsurprisingly, residential property in Turkish cities was
identified as an outstanding opportunity in the 'Emerging Trends in
Real Estate: Europe 2006' report produced by the Urban Land
Institute.
Turkey is one of the world's top 20 most populated countries –
growing at a rate of 2% per year – well above the world
average. Rapid urbanisation of a predominantly young
population is creating a severe housing shortage in Turkey with
recent studies highlighting a need for more than 5 million new
houses by 2010. This combination of demand and limited supply
will continue to push prices up in the major cities and towns in
the foreseeable future.
Property funds based in Europe and the Gulf are also pouring
money into the country. Dubai is a particularly heavy investor,
regarding Turkey as an attractive destination for profiteers of
the real estate boom in the United Arab Emirates. A flagship
project is the twin towers (a pair of twisted skyscrapers) being
constructed by Dubai Holdings in Istanbul at a cost of $500
million. The city also boasts a new IKEA and Harvey Nichols
store and budget airline Easyjet has daily flights to Istanbul from
the UK with prices starting from just over £30 in the quieter
months.
The housing market in Turkey has lagged behind Europe and the
previous difficulty in obtaining mortgages has meant that prices
have stayed artificially low. However, with the opening up of the
mortgage market this is about to change. It is not just the
mortgage situation which will have long term effects on the market
- Turkey is getting richer and house prices should grow alongside
the wealth of the country. The Turkish economy grew by 9.9% in 2004
alone, the highest recorded growth that year within an OECD
(Organisation for Economic Co-operation and Development) country.
Growth in 2005 was still high at 7.4% and to the third quarter of
2006 GDP was 5.9%.
- Government committed to strengthening mortgage provision.
- Rising house prices.
- Highest recorded economic growth 2004.
Rental Yields
Average yields are moderate to high in Turkey. In Istanbul
yields of 6% to 7.6% are achievable whereas property in coastal
areas yields around 13% to 16%. Coastal area yields will be
predominantly seasonal, so although higher they will only have
rental appeal for a four to six month period.
Yields for property in the suburbs can be more attractive, with
Ankara suburb property achieving 12% yields and property in the
suburbs of Istanbul achieving around 6.5% to 8.5%. Yields will
always depend on the size of the property; however a house in the
suburbs of the city will normally yield higher than an apartment in
the centre of the city.
location
type of
property |
size
(m2) |
average
price
to buy
(US$) |
cost per
m2 to buy
(US$) |
average
price
to rent
(US$) |
cost per
m2 to rent
(US$) |
yield
(%) |
Istanbul-
Apartments |
|
|
|
|
|
|
| |
60 |
62,460 |
1,041 |
417 |
7.0 |
8.02% |
| |
90 |
98,190 |
1,091 |
635 |
7.1 |
7.76% |
| |
120 |
144,240 |
1,202 |
778 |
6.5 |
6.47% |
| |
150 |
198,900 |
1,326 |
1,119 |
7.5 |
6.76% |
| |
200 |
277,800 |
1,389 |
1,774 |
8.9 |
7.67% |
| |
250 |
645,500 |
2,582 |
3,138 |
12.6 |
5.83% |
Source:
Global Property Guide
Price History
Price increases vary across the country but are
generally expected to double over the next three years on the
back of 40% increases since 2004, meaning those who invest now will
benefit.
Mass tourism hotspots such as Antalya or Alanya offer low budget
apartments from £15,000 ($30,234) where as luxury apartments on the
Bodrum Peninsula, appealing to the more affluent buyer, can cost
anything from £68,000 - £300,000 ($138,530 - $604,805).
The average price for a property of 50 square metres in size in
the centre of Ankara is $60,000 with an estimated 7% yield
achievable. Prices can reach $380,000 for a property 350 square
metres in size and is estimated to achieve a 9.47% rental yield.
The suburbs of Ankara have higher property prices but come with
added land therefore a 300 square metre house with land sells for
$400,000 and a 400 square metre house with land can cost as much as
$500,000. Yields are also higher here between 11 – 12% depending on
the size and condition of property.
In the centre of Istanbul a 75 square metre property costs
around $190,000 and a 300 square metre property can cost $1
million. In the suburbs of Istanbul $300,000 will buy a 150 square
metre property plus land and $1,300,000 will buy a 500 square metre
property plus land.
The coastal areas in comparison are cheaper with a 300 square
metre property costing around $380,000.
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