Can Anyone Profit From Istanbul Property Investment?

  • 12 years ago
  • Uncategorized

Istanbul property now presents overseas property investors with compelling evidence that Turkey is safe for investment. International real estate investors trying to decide whether or not Istanbul is a good place to invest would have one problem, trying to think of things to put on the Cons list.

First of all, Istanbul benefits from Turkey’s being one of the strongest, fastest growing and most stable economies in the world. GDP is growing, unemployment is falling, the banking system is strong with high liquidity giving growing access to mortgages, and the problems like the large trade deficit are being closed, in the case of the trade deficit with record export growth.

As the Turkish economy grows, the population grows more affluent and access to credit improves, demand for property and better property continues to grow. Turkish property prices are growing steadily at around 6% per year, with no fears of hyper inflation or a bubble. This is because the banks lend only based on their own impartial valuations, so you get 70% LTV, but on the value assessed by the bank, not set by a far-from-partial agent.

Excellent Residential Investment Fundamentals

Within this, Istanbul is well known as the Jewel in the crown. Often mistaken as the capital (which is Ankara), cultural and financial centre Istanbul is the fastest growing city in Turkey, with the fastest growing population and the fastest growing economy. More and more people are pouring into Istanbul to find better jobs, and this is creating exceptional demand for property in the city to buy and let. According to developers demand is growing far faster than they can keep up with.

Value and Yields

The final pieces of the puzzle are value and yields. The Global Property Guide recently published an eBook asking whether Turkey was the best residential investment destination in Europe. The report contained a table of European cities and their respective per-sqm average property prices. Istanbul came out near the bottom of the table at just over £2k per sqm, compared to for example £6k in beleaguered Athens. This indicates that Istanbul property is undervalued. The low prices also gives way to strong yields, and while the average rental yield is still 6% to 8%, growing rents are making much bigger yields possible on the right properties.

An Investment for Everyone

This combination makes Istanbul a near-perfect destination for property investment. And at the same time, you have the growing high end segment. According to a recent report by Sotheby’s, Istanbul is beginning to see a growing number of prime property sales over 1m Euros as the city is increasingly perceived as a safe haven amidst the financial turmoil of Europe. On top of that you also have the massive tourism aspect as well, giving way to a strong holiday rental market as well. In short: Istanbul has an investment for everyone.

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