Market situation at the beginning of February 2023
Turkey's real estate market has been growing continuously over the past two years. Prices for buying and renting housing broke records, especially in the regions popular with foreigners - Istanbul, Antalya, Alanya, Mersin.
The share of foreign investors in the whole country does not exceed 4.5%, but in coastal Mediterranean cities it is, of course, higher (in Alanya - about 25%). According to some Turks, it was buyers and tenants from abroad who warmed up the market and provoked an increase in the cost of housing. In Turkish politics, the leader of the opposition party Kemal Kilicdaroglu is considered to be the exponent of these sentiments. He even promised to ban foreigners from buying real estate in the country in case of victory in the presidential elections, which will be held on May 14 this year. We talked about why such a development of events is unlikely in the material "Turkey's real estate market six months before the elections".
Nevertheless, the current authorities, under the pressure of public opinion, are forced to introduce some restrictions for foreigners. In particular, it was more than a thousand districts in different cities have been closed for the initial registration of a residence permit. In addition, since the end of 2022, the migration service often refuses visitors to obtain a tourist residence permit, which previously could be obtained quite easily when buying or renting any apartment. As a result, many who planned to settle in the country for a long time had to leave or collect an amount (over $ 75,000) to purchase housing specifically for the second type of residence permit.
It should be noted that since April last year, Russians have always been in the first place among foreign buyers of real estate in Turkey, Ukrainians and Kazakhstanis are also in high positions. January and February 2023 are no exception. Moreover, many citizens of Russia, as well as Ukraine, consider the country specifically for moving. The share of purchases of exclusively resort housing has decreased.
Thus, by February 2023, political and economic turbulence was taking place in the country (inflation of 64% per year, depreciation of the lira), which, nevertheless, did not have a negative impact on the real estate market, sales and prices were growing, although the growth rate decreased slightly in the second half of 2022.
We discussed with the heads of Russian-speaking real estate agencies in Turkey whether the earthquake intensified the trends outlined earlier or vice versa.
Security questions
Do Antalya, Alanya, Mersin, which are popular with Russian-speaking buyers of real estate, belong to earthquake-prone zones? Is it safe to be in these regions?
Ksenia Baldzhi, executive director Liga Real Estate: Antalya belongs to the pink zone, the second most dangerous, as there is a fault line in the neighboring province. Accordingly, if an earthquake occurs, then this resort feels the echoes. It should be noted that in Antalya, construction control is carried out very, very strictly. In the last 15 years, mostly low-rise buildings have been built, with a maximum of 5 floors.
As for Alanya and Mersin, these regions are in the penultimate yellow zone.The only safer white zone is the central part of Turkey, which starts from the Black Sea, passes through Sinop, Giresun, Trabzon, and then goes through Ankara and Konya to the town of Karaman, which just borders with Alanya.
The echoes of large earthquakes can be felt in the yellow zone. How do they feel? You seem to be swaying a little, the chandelier may be swaying a little. If you walk or drive in a car, you will not notice these earthquakes. As a rule, we feel earthquakes in winter when they occur in the Mediterranean Sea. At the same time, someone always felt it, and someone did not.
Any destruction in the resort regions is excluded. Why? Firstly, they are built according to all seismic standards. The standards were adopted in 1999 after the great earthquake in Izmit, near Istanbul. In 2008 and 2018, new construction rules and regulations were introduced, in particular, laying the foundation, the amount of iron and concrete per square meter of housing. That is, the buildings erected after 2018 were built using the latest technologies, even in completely earthquake-safe regions.
All standards are monitored by independent commissions. In particular, three different organizations take a concrete sample, so there can be no corruption, no personal agreement. One sample remains at the concrete factory, the second is sent to the municipal laboratory, the third is analyzed by an independent organization, and all these three samples must correspond to the caliber of concrete. To such an extent, a serious check is now underway. Moreover, samples are taken at every stage of construction: laying the foundation, erecting the first floor, the second, and so on. They also carefully look at the iron – check the thickness of the reinforcement and the laying technique. Everything should be clear on the project. The last control is done already at the commissioning stage before receiving the so-called iskan (commissioning document). Once again, an independent commission arrives and checks the entire building for compliance with the project.
The second point is about the safety of Mersin and Alanya. It is no coincidence that this region was chosen for the construction of the Akkuyu nuclear power plant. If you look at the map, the station is being built about halfway between Alanya and Mersin, but still already belongs to the province of Mersin. Naturally, the safest places are chosen for such strategically important objects. The second power plant will be built on the Black Sea coast in the city of Sinop, which is also marked on the map of earthquake-prone zones in yellow. By the way, a contract has already been signed between Russia and Turkey for the construction of this nuclear power plant.
Sergey Volchenkov, Development Director Tolerance-Homes: Recently, the authorities have carried out a clarification of all earthquake-prone zones. According to the updated to the list, Antalya is in the second zone out of five (in descending order of the danger level), Mersin in the third, Alanya in the fourth. In Alanya, since it is an extended region, some settlements belong to the third risk zone, although the city itself belongs to the fourth.
There have been no major earthquakes in the resort towns recently. No wonder they decided to build a nuclear power plant here. Is it safe to be there? Yes, if your house is qualitatively built according to new building standards.
Anastasia Kezik, Marketing Director Alanya Property Sales: If you look at the map of earthquake-prone regions of Turkey, you can see that Alanya, like Mersin, are located in the white zone, that is, they are safe regions. Aftershocks can be felt, but there was no actual destruction. From Alanya towards Gazipasha and from Mersin towards Anamur – pure white, and then green, that is, zones that have no prerequisites for earthquakes.
With Antalya, the orange zone is more difficult from Alanya towards Antalya (on some maps it is pink), that is, theoretically there is a risk, practically the strongest earthquakes are usually in the sea, and only echoes reach the cities. There has never been any destruction in the memory of the locals throughout the Antalya region.
It is known that there is a large Russian-speaking diaspora in Turkey, many moved to this country in 2022. How did the earthquake affect these people? Did they help the victims of the disaster? Were there those who left?
Sergey Volchenkov: Many foreigners moved to Turkey in 2022 and earlier. But they all lived in uninjured regions. Only a few lived in the eastern provinces. Many actively helped the Turks, collected clothes, food for those who lost their homes, money, and thus participated in the general pain of the Turkish people. I do not know anyone who would leave.
Ksenia Baldzhi: Foreigners really impressed me! Assistance from Russians, Ukrainians, and people from the CIS wasincredible, without exaggeration! People collected the necessary things, many volunteered in disaster zones. Since my husband hails from the disaster zone, from Khatai, he has been there since the very first day. Our company collected help and sent cars with food and things for the victims. None of the foreigners said, they say, it's not our business. Someone helped financially, someone carried boxes, someone packaged help so that it was convenient to distribute.
Anastasia Kezik: Foreigners have helped and are helping. We were called and asked where to give things, transfer money, even those who are currently outside the country. In Avsallar (near Alanya) there are many volunteers helping in hotels where the victims were brought.
Those who have lived here for a long time, at least five years, know that we have peace in Alanya. If it shakes, then not for long and not much. Mostly tenants left and are leaving after the new year, simply because there was a wave of refusals from a residence permit. Of the apartment owners who live in Turkey, of our buyers, no one has left. Some people who have settled in Turkey recently called and asked if they should be afraid, or if they can move on. We calmed everyone down. Although there was enough panic in Russian-speaking groups on social networks.
In your opinion, why did so many houses collapse in the affected regions?
Sergey Volchenkov: Most of the destroyed buildings are old foundation. The second reason is connivance and corruption. Developers could build houses of poor quality and put them into operation using an administrative resource. We are talking about regions in which construction was not carried out for foreigners, that is, unfortunately, according to the principle of "simpler and faster". In Antalya, Alanya, there is no such thing, so here the property is designed, including for foreign buyers, and they know how to understand the quality of construction.
Another negative factor is that about 3-4 years ago an amnesty was declared in Turkey, which legalized many illegal buildings. That is, buildings that did not pass inspections were legalized.Ksenia Baldzhi: According to statistics, 98.5% of the destroyed buildings are the old stock of houses built before 1999, before the introduction of earthquake resistance standards. As for the remaining one and a half percent, the reasons for their collapse are different. Proceedings are underway, and more than 200 people are already under investigation. These are both developers and tenants of commercial real estate on the ground floors of houses. There were cases when tenants, in order to expand the space, demolished the supporting columns, as a result of which the buildings sagged.
Anastasia Kezik: The scale of the disaster is large for two reasons. Firstly, the old houses built before 2000 were destroyed. Secondly, unfortunately, the buildings that were built bypassing the requirements could not withstand the loads. According to the law adopted in 2000, houses made of reinforced concrete should be built, but this type of construction allows you to create boxes that are difficult to decorate. For example, TOK housesİ – state housing for low-income citizens – are created using this technology. As far as I know, none of them were injured.
How to make sure that a high-rise building is built in compliance with seismic safety standards?
Ksenia Baldzhi: You can request an expert examination at the city hall or order an independent expert examination. There are special offices that can do this for a fee. In general, if the developer has received yapıruhsatı, that is, a construction permit, he has already provided a priori a project of the foundation and frame of the building, which meets all the standards of 2018. You can double-check this by requesting data from the mayor's office. You can eventually contact the developer to tell him-show him what kind of foundation he is making.
Sergey Volchenkov: First of all, it is necessary to pay attention to the iskan (technical passport of the house, certificate of commissioning). All construction standards are now controlled by the municipality at the place of construction of the facility. Thus, iskan confirms that the building was built according to the norms.This document contains all the technical specifications.
The second very important point is the expert report. If a foreign citizen buys real estate in Turkey, then by law he must receive an expert report before buying. This document contains information about which zone the region belongs to, how the house was built, when the construction permit was obtained, when it was commissioned. The expert report will give an idea whether the object was built qualitatively or not.
Of course, a professional with an engineering and construction education can determine whether a house is built in good faith or not, even visually.
You can order additional expertise, as well as request a photo from the developer, if he has one, about how your house was built.
Anastasia Kezik: Unfortunately, there is no way for the layman to visually check the quality of construction. As a rule, large developers perform work in accordance with the norms and indicate this necessarily.
It is quite difficult to check whether ready-made, especially secondary, housing meets the standards. You can contact a real estate agency. They will find information in the mayor's office about which company handed over the project and which firm Yapı Denetim (those who check the building for compliance with the project and readiness to live) was responsible for the examination, and will request information from them. But this applies only to those buildings that were built after 2000.
Is there real estate insurance in Turkey against destruction due to an earthquake? Who can issue it and how?
Anastasia Kezik: Turkey has mandatory earthquake insurance, introduced just in 2000 after the Izmit earthquake, – DASK. Without it, it is impossible to purchase real estate, issue a subscription for light and water. This insurance is state-owned, but, unfortunately, covers a maximum of 640,000 liras. The amount of insurance depends on the area, the age of construction and the area of housing. In Alanya, since this region is in the white zone, the insurance premium is a penny. For example, for an apartment of 140 sq. m. m in a house built in 2007 is paid 300 liras per year.
You can apply for additional insurance against fire, sewer breakout, theft, and enter an earthquake there, indicating the real amount you want to receive, that is, the cost of the apartment.
Ksenia Baldzhi: All real estate owners, future and present, must make DASK – earthquake insurance. This insurance is included in the required package of documents for registration of the certificate of ownership, and then it must be updated annually. The presence of DASK is mandatory, regardless of whether you have purchased real estate in a seismically safe or dangerous region. Insurance is inexpensive. It is issued in any insurance company, and you can do it online.
Sergey Volchenkov: There are 2 types of earthquake property insurance in Turkey. The first type of – is a state, mandatory – DASK. It should be issued by every buyer of an apartment or house. Many people underestimate the value of real estate in order to pay less insurance premium. If you specify the full cost of your apartment, then, if something happens, the insurance company will refund you this amount. You can also apply for non-state earthquake insurance in any private company for any amount.
Questions about the market
How has the demand for real estate in Antalya, Alanya, Mersin changed from foreigners over the past month? What is the situation with local demand? How do these events affect real estate prices?
Anastasia Kezik:Demand for real estate has fallen. This is due to the panic that is even more taking place outside Turkey.
I did not notice a sharp increase in objects for sale. The interest has shifted slightly, for example, the buyer wanted only a high floor with a panoramic view, and now switched to searching for a villa.
The situation has almost no effect on prices. On objects in "closed" areas, they are slowly creeping down, and in "open" areas they are climbing up. This is about the acquisition. It's more interesting with rent – only the rates began to drop slightly due to the outflow of foreigners, as they went up again due to the influx of people from the eastern regions. It is clear that those who have the opportunity will bring relatives here and will pay rent. Those who have more opportunities can pay rent to several families. Do not forget that there is a clan system in Turkey, and "5 handshakes" work even faster, so help went from all the cities to the affected regions the very next day.
Ksenia Baldzhi:To be honest, there is no demand right now. And this is absolutely normal, absolutely understandable. Of course, no matter how much we talk about seismic safety, about standards, people just need time to understand and accept it... I repeat, no one has left, there is no panic,but the people who are abroad now are thinking. A similar situation was, for example, in Thailand after the 2004 tsunami, when tourists were initially afraid to go on vacation to this country. Not really, though. Turkish tour operators said that no one cancels their vouchers, everyone comes to rest, but as for buying real estate, people took a break.
For our part, we try to inform those who have already purchased housing and who are going to. We do this so that people are calm, especially those who have already trusted and invested.
Prices do not fall and do not rise. We observe stagnation. If we talk about investors or owners who wanted to sell their real estate, they also put the question on pause. No one reduces prices in a panic. We can recall the situation at the end of 2015, when relations between Russia and Turkey deteriorated. Then – yes, there was indeed a panic. There's not even close to that right now. Everything is on pause. And investors, and owners, and our potential customers.
At the same time, we remember that when demand falls, sellers always offer sweeter conditions for buying real estate. This is not advertised. There are no posters for sale, but if you enter into a deal during such a period, you can make a purchase on more favorable terms.
I will add more about the reduction of external demand. It is also conditioned by the upcoming elections. The opposition said they would cancel the sale of real estate to foreigners if they won, and this affected the behavior of potential investors. Of course, many people understand that it would be stupid, especially now, to refuse foreign investments, but, nevertheless, the word is not a sparrow. Although the opposition party has nominated a rather unpopular candidate, the outcome of the election is unknown. While the risk that this election promise may materialize remains, people refrain from investing, especially in new buildings at the initial stages.
The fact is that the TAPU (certificate of ownership) is issued only when the house is almost ready. At the same time, it is TAPU that can give the feeling that you are already a reinforced concrete owner, since this is, first of all, a land document, and only then a real estate ownership document.
Sergey Volchenkov:The demand from foreigners has fallen, this is understandable. Information about the earthquake is in the news and leaves a certain negative response. It takes time for people to digest it a little.
Demand from the locals, on the contrary, has risen. Many Turks move to Alanya or Mersin, as these regions are considered safer.
I have not encountered an outflow of foreigners. There is no such thing as people selling apartments and leaving. This is not surprising, because, again, the resort areas were not affected by the earthquake.
In your opinion, after the earthquake increased the risk that foreigners may be banned from buying property in Turkey? After all, now the Turks themselves need housing more than ever.
Ksenia Baldzhi: There is certainly no risk that foreigners will be banned from selling real estate due to the earthquake. On the contrary, Turkey now more than ever needs an influx of foreign capital, as it is necessary to restore the housing stock for earthquake victims. There is even talk that they will open a tourist residence permit, but so far this is just a rumor. As well as the fact that restrictions will be lifted from "closed" areas.
Sergey Volchenkov: There is no such agenda yet. Now people are still thinking about how to help those who have suffered. All forces are directed at this.
On the one hand, there is less housing, and the Turks themselves need it. But, on the other hand, the earthquake also had a negative impact on the economy, and foreign investment is needed. Here the government will choose the golden mean. I don't think this issue will be solved in a hurry. The government will have to weigh the pros and cons.
Anastasia Kezik: I think we are talking about different categories of real estate. For those affected by the earthquake who do not have the opportunity to purchase housing, the state is building TOKİ. According to this state program, an installment plan is given for 20 years, the price is fixed in lira, and the initial payment is feasible for everyone. Participation is usually played out in the form of a lottery. But for earthquake victims, such construction starts out of turn and out of the lottery.
What would you recommend to those who planned to buy real estate in Turkey? What types of housing to consider? What, perhaps, should be refrained from?
Anastasia Kezik: I recommend that you first look at the map of earthquake-prone areas and give preference to less risky ones.
If you need an apartment in Istanbul, then you should choose the districts: Arnavutkey, Ethiler, Besiktas, Machka, Nisantashi, Shishli, Taksim, Kagytkhane, Gaziosmanpasha, Levent, Maslak, Pravdye, Tarabya, Saryer, Karakey Gultepe, Emirgan, Bagcylar, Harachchi, Tashokagi.
Ksenia Baldzhi: I recommend paying attention to new buildings, because absolutely now they will further strengthen control over the construction of buildings. Of course, seismically safe regions should be considered. And one more thing – it is worth investing in objects from proven developers who have been on the market for years and value their reputation.
Sergey Volchenkov: I would recommend earthquake-safe regions and high-quality construction. Ideally, of course, not a high-rise building, up to a maximum of 5 floors. Preferably, if the housing is new, with a high-quality foundation on stilts, and built by a good company. I advise you to contact professionals who know the developers.
Summary
- The resort Mediterranean regions of Turkey are relatively safe. Alanya and Mersin are located far from the faults and lie, according to different interpretations, either in the white zone, that is, completely safe, or in the yellow zone, that is, with a low degree of risk. Antalya is located closer to the site of the lithospheric plate fracture, and it is classified as an orange (or pink) zone, but building regulations at the most popular international resort are strictly observed, and the buildings here are mostly low-rise. Istanbul is a separate topic. In this region, it is necessary to pay attention to the area (the further away from the Anatolian plate fault, the better), as well as the age and quality of the house.
- If you have bought or are going to purchase real estate in Turkey, then in order to feel more confident, you can request photos of the installation of the foundation from the developer (if available), contact the mayor's office (through a real estate agency) for information about who the developer of your house is (if the apartment is on the secondary market), and which company Yapı Denetim did the check. In addition, there are firms that will conduct an independent examination on your order.
- If you are at the stage of choosing an apartment in Turkey, then you should give preference to new houses built after 2018 according to the latest standards, from developers with a good reputation. Those developers who are currently conducting projects or are just entering the site understand that there is tenfold control over them, both from authorized bodies and from the public. You can use this and buy housing from them (but remember that you can get a certificate of ownership only closer to putting the house into operation).
- If you are considering an alternative to Turkey, then you should pay attention to whether earthquakes occur in the countries that you have chosen. For example, the Balkan Peninsula is considered an earthquake-prone region. If there have been no serious aftershocks in recent decades, this does not mean that there have never been any.
- After the earthquake, the demand for real estate in Turkey from foreigners fell. Local demand for housing in Alanya and Mersin, on the contrary, has grown, as many residents of dangerous regions seek to move here. The rise in apartment prices has stopped, but there is no obvious decrease either. Nevertheless, today is a buyer's market, and you can count on favorable conditions.
- The reason for the drop in foreign demand, firstly, is that people are impressed by earthquakes, which is quite understandable. Gradually, emotions will settle down, and common sense will take over. Secondly, investors have switched to a waiting mode while there is a risk that the opposition candidate will win and fulfill the promise to ban foreigners from buying real estate in Turkey. If such a scenario comes true, which is unlikely, even if the opposition wins, it will obviously lead to a correction in housing prices in Istanbul, Antalya, Alanya, Mersin. If there is no complete ban, but only any new restrictions, then the market will adjust, and growth will follow the recession again.
