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As Europe's top performing hotspot for overall growth & capital returns last year, Istanbul not only held its position for investment, but has also risen to the top for development & yield prospects for 2012.
Over its 27 competitors Istanbul ranks as the highest in all categories for investment, returns & future potential in the European Region.
Istanbul won with a clear margin, winning for the third consecutive year.
The reasons behind the growth of property in Istanbul are based on solid facts: supply & demand, population growth & availability of finance; real social foundations as opposed to purely speculative reasons so often given for many other property markets.
A range of favourable economic & local conditions have also fallen into place making Istanbul property one of the best investment opportunities offering low risk & high growth.
Ersun Bayraktaroglu, head of real estate for PwC Turkey, stresses that an optimistic report for Europe has failed to materialise this year & 2012 will be a year for the investor to be settled in safe harbours. Bayraktaroğlu said:
“There is a serious uncertainty for Europe. On the other hand, Istanbul remains in first place this year, as it was last year, & continues to be the investment option in Europe for medium & long term European real estate investment.”
To find out more, simply complete “TELL US WHAT YOU'D LIKE” to the right of your screen for one of our property professionals to contact you.
Hollywood siren Megan Fox was also impressed with Istanbul while recently filming an advertisement for Doritos, commenting to Show TV’s, Saba Tumer:
“I want to visit The Grand Bazaar & the Mosques. I want to eat Turkish food as soon as possible. This is not like what I did expect here. I thought Istanbul was a town. But it is a metropolis, with big urbanisation & industry. So many buildings everywhere, I didn’t expect this.”
Alongside her ambition to be an archaeologist Megan told us what she’d like, so “TELL US WHAT YOU'D LIKE” by leaving just a few details & a brief message in the box, just beneath the slideshow to the right side of your screen, for one of our property professionals to contact you.
Property investors have also been examining the current opportunities & the future of Istanbul property as Europe’s premier investment destination identifying the following key reasons to invest: -
1. Growing Economy
Istanbul has one of the world's fastest growing economies with GDP averaging 7.5% per annum over the past five years.
Istanbul property is the centre of everything in Turkey, the main recipient of FDI, the highest for net migration, the highest rents & the highest prices.
The depreciation of the Lira helped to ensure Turkey reached an all-time high of $134.6 billion in exports revenue, which was 18% more than the previous year. (Source: IMF)
Turkey GDP is expected to have reached 9% by the end of last year & the government expects GDP to ease back to 4% in 2012, still great figures when most Eurozone countries will see zero point something as an achievement. (Source: FT)
2. Domestic Migration
Istanbul is an ancient & historic city & today 14 million people are vying for space in a city built to hold a fraction of that number. With foresight the government has introduced plans to revolutionise the way people live & travel around the city.
Major new transport routes are joining outlying suburbs to the city & it is these areas that the government foresees as becoming the future residential heartlands of Istanbul. Plans also include increasing the number of water taxis on the Bosporus to the city.
Whole sectors of society are now moving out of the crowded city centre to well planned satellite districts that offer a more comfortable lifestyle with their well-organised streets, parks & leisure facilities. These are aspirational areas highly desired by professionals. Of course property on the Bosporus continues to be highly sought should you have a few million to spare!
Having one of the fastest growing economies in the world cannot be achieved without job creation. Many of these jobs are being created in Istanbul where the main financial districts & industrial areas are located. Blue chip companies including Sony Ericsson, Microsoft & Coca Cola have all settled with regional headquarters in Turkey, demonstrating its allure in terms of business & industry.
Domestic migration to Istanbul to fill many of those jobs tripled last year & a dramatic increase in net migration to Istanbul was noted – rising from 30,000 to 102,000 people during 2010. (Source: TurkStat)
3. Supply & Demand
The strong commercial mandate provides improved employment & better wages, increasing demand for residential property in Istanbul. Istanbul's population is one of the fastest growing in the world, & growing in affluence as well as numbers, more people with more money demanding more & better quality housing to buy & rent.
Interest rates are comparatively low, & many locals are interested in taking advantage of mortgages, which have become available relatively recently, with its rising population & strong economic growth residential demand in Istanbul is already known to be high.
Demand is outstripping supply by 70,000 units annually in Istanbul & this situation is unlikely to change anytime soon. (Source: TurkStat)
4. FDI, Shopping, Shopping & Yet More Shopping
Istanbul is one big reason why Turkey is drawing huge amounts of FDI into the country. FDI has increased from $36 billion in 2002 to $135 billion in 2011 with large investment in banking, telecoms & construction sectors. (Source: TurkStat)
The retail sector enjoyed strong growth in consumer spending, up 15% year on year in Q3 of 2011, as well as significant interest from major brands on opening or expanding their presence in the city, as well as more widely within Turkey. “It’s where international brands want to be”, the report stated.
Istanbul just can’t build enough shopping centres, 30 are now in the pipeline with the city accounting for two thirds of all mall space in Turkey. There will soon be 275 metres of shopping centre for every 1,000 inhabitants, which is 15% more than the European average. (Source: TurkStat)
5. Rising Rents
The price of property in Istanbul is low by most European city standards, however, there is still a large section of the Istanbul population, who rent rather than buy property. Rental yields of up to 12% are achievable in Istanbul.
Some of those migrating to Istanbul are finding that their Turkish adventure turns into a hunt for rooms to rent with some paying €340 a month or more for a room in the city centre.
6. Capital Growth
If anyone invested in property in Turkey a year ago they would have benefited from a 9.88% rise in the value of their property to November 2011, & those fortunate enough to have bought three years ago reaped rewards of up to 85% on residential & commercial property, with both markets still experiencing record & almost unprecedented growth.
This was above the overall Turkey average with the exception of areas such as the Bodrum peninsula that continue to enjoy growth in domestic & international tourism with the associated expansion of residential & commercial development. (Source: TurkStat)
7. Relaxing Restrictions On Foreign Ownership
Istanbul won the European City of Culture 2010 - for Liverpool, UK this represented £2 billion of investment in cultural & tourism infrastructure, 14,000 new jobs & an extra £220 million spent by tourists up to & beyond 2008. With the new law for foreign investors coming into force in March 2012, anyone is now able to take advantage of the investment opportunities available in this fabulous city.
Savvy property investors are unlikely to be surprised to hear of the loosening in restrictions to foreign ownership. Turkish law was once hostile to anyone who didn’t return the favour when it came to the right to own property in the country – not anymore. Most foreigners can now buy Istanbul property & property in Turkey with relatively few restrictions.
Turkey is welcoming investors this year by lifting any lingering restrictions on citizens from 89 countries. (Source: TurkStat)
Among these are that the buyer is from a country allowing Turkish citizens to buy property, the land is not in a military zone, & the property doesn't exceed the current size limit of 25,000 square meters.
The best locations for investors will depend on the type of investment & the budget, as well as local market conditions. Property for sale in Istanbul is still relatively cheap, buying in this market offers the potential to make excellent profits over the next few years.
Property for sale in Istanbul can start as low as £25,000 for studio apartments & £80,000 for villas. It is possible to find relatively cheap property, but this is likely to be older buildings in parts of the city where perhaps building regulations regarding earthquakes may not have been in position.
8. Location, location, location
Many investors are attracted to the idea of owning a holiday home in Istanbul, whether the dream is a Yali with a view over the Bosporus, a house in a charming historic district or a modern apartment, it can be found in Istanbul & in a city with a population of 14 million you might expect some diversity in property in Istanbul & you would be right.
Istanbul real estate owned by foreigners still tends to be concentrated along the Bosporus or in districts like Nisantasi, Sisli, & Beyoglu.
For a rental investment, options include both business & residential properties in Istanbul.
Consider new complexes being established in many parts of the city that carry amenities within gated communities, which include shops, restaurants, parks, swimming pools & sports facilities. As fitness centres are rare in Istanbul, these areas tend to be especially desirable, & are well served by public transport.
Those interested in business investments may find boutique hotels, restaurants or nightclubs of interest, both in the main tourist areas of Istanbul & in real estate offered along the northern coast of the Bosporus near Bebek.
Among the most promising commercial investment areas are those nearer to the newer Sabiha Gokcen airport on the Asian side of Istanbul & the business centres of Levent & Maslak. Many international businesses are now established in Atasehir & Umraniye.
One option for investing in larger development projects is to purchase shares in an Istanbul real estate investment trust (REIT).
Property in Istanbul housing market in existing suburbs tends to come from an era that paid little attention to quality & overall infrastructure. Istanbul has the lowest ratio of m2 green space per head of population of any European city by far & is a concrete-bound urban jungle with very little parking space.
Bahcesehir, the "Garden City" stands in stark contrast with its well-planned street design, open spaces & high-end facilities. It is an area that affluent Turks might aspire to live in, looking for a greener less stressful environment in which to raise their families without foregoing the leisure, shopping & recreational facilities normally only associated with central districts. Consequently, developments offering parks & leisure facilities are going to be very attractive to local buyers.
So where should you invest for profit in Istanbul?
A stroll around Beylikduzu reveals a district alive with activity & a construction frenzy that is trying to satisfy demand for good quality properties suitable for a well educated, though perhaps less demanding population than some Istanbul districts. Employment is abundant with the bustling Mercedes Benz bus factory keeping many of the district’s inhabitants busy & there are three universities with a student population of 14,000 providing substantial demand for available living space on an annual basis.
The young, dynamic district of Beylikduzu has generated annual growth of 15%, but there are other hidden gems to consider including property in Yesilyurt & Esenyurt.
Yesilyurt means ‘green homeland’, add the gentle lapping of the Marmara Sea & you have a perfect recipe. The population in this district are affluent & living mainly in low-rise houses & apartments with sea views.
Yesilyurt district is also home to the city’s air force academy & with yields approaching 8%; you are unlikely to be disappointed by the rental returns you can get on property.
Esenyurt is another major up & coming area on the European side of Istanbul with prices as low as £25,000 for a luxury studio apartment, the equivalent of a reasonably priced Ford Mondeo. As well as having the cheapest entry point for property in Istanbul, a journey to the nearby airport will take you just 15 minutes by car.
Esenyurt – the classic up & coming district.
The district is also close to the city centre & university campuses & closer still to the booming Beylikduzu & Avcilar districts. Town planners are in the process of creating concepts for cutting edge mixed use developments modelled on those being created elsewhere in the city. Many of those are reaching completion & should see this make property in Esenyurt high on investor’s lists throughout 2012.
Investing in the districts above should generate a solid return on your investment, but if you prefer something closer to the bustling centre of the world’s 20th largest city, restrictions have recently been lifted on foreign investment in the historic, cosmopolitan district of Beyoglu.
Up to 9% yields close to the historic centre of Istanbul.
Property here is within walking distance of Taksim Square [The Trafalgar Square of Istanbul] & enjoys rental yields approaching 9% for smaller apartments, although apartments are expensive here & yields can fall dramatically for larger apartments.
All things considered property in Istanbul offers an excellent alternative to property investment in other major cities in Europe with prices at more realistic levels.
So if you’re an investor who hasn’t invested in Istanbul property yet, then 2012 is the year to do so!
To find out more, simply complete “TELL US WHAT YOU'D LIKE” at the top right hand side of your screen for one of our property professionals to contact you.
Emerging Trends in Real Estate® Europe 2012
A joint undertaking of PwC & the ULI, Emerging Trends in Real Estate® Europe is a trends & forecast publication in its ninth edition. The report provides an outlook on European real estate investment & development trends, real estate finance & capital markets, property sectors, metropolitan areas, & other real estate issues.
Emerging Trends in Real Estate® Europe 2012 represents a consensus outlook for the future & reflects the views of more than 600 individuals who completed surveys &/or were interviewed as part of the research process for this report. The views expressed herein, including all comments appearing in quotes, were derived from these surveys & interviews & do not express the opinions of either PwC or ULI. Interviewees & survey participants represent a wide range of industry expert-investors, developers, property companies, lenders, brokers, & consultants. PwC & ULI researchers personally interviewed 310 individuals, & survey responses were received from 386 individuals.
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Sources: - PwC & the ULI: Emerging Trends in Real Estate® Europe
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