In Istanbul, housing prices are relatively low – when compared with other major cities in Europe. But they are growing very quickly, in particular in connection with the mortgage law that came into force in February 2007. According to experts, Istanbul is an ideal place to invest in real estate. Those who do not want to stay in this market for a long time can buy apartments at the off-plan stage and sell them upon completion of the project. For those who are interested in long-term investments designed for renting out real estate, combined with high capital gains in the future, buying in Istanbul will be an ideal option. By the way, the fact that in 2010 Istanbul will become the cultural capital of Europe, and it will surely attract even more attention of tourists and foreign investors to the city.
A city with a perspective
The demand for Istanbul real estate from foreign buyers is growing today. Having assessed how profitable it is to invest in resort houses and apartments on the Mediterranean and Aegean coasts of Turkey, investors then turned their attention to the Istanbul real estate market. It is unlikely that this city is considered by them as a likely place of residence – rather as a direction that allows you to get a good income from real estate transactions. Turkey's intention to join the European Union increases the attractiveness of Istanbul.
According to the experts of Turkish Estates Link, one of the most significant engines of the Istanbul real estate market is the continuous growth of the population. "The population of the city is 13 million people, and it is growing by 2% annually," says Ufuk Yumratus. – Besides, Istanbul is a very young city, and about 70% of its population is under 35 years old, therefore, the demand for housing is great. This opens up great opportunities for investors if they enter this market right now."
Ishik Haskavus from Headlands International agrees with this opinion: "Although the construction industry is currently booming throughout Turkey, statistics show that even if it continues to develop at the same pace, it will take at least another 5 years to meet the demand for real estate. And it's also good news for investors."
Among other important factors influencing the growth of Istanbul's popularity among foreign investors is the opening of a new Sabiha Gokcen airport in the eastern part of the city, where flights of many European airlines, including budget ones, are already heading. Among other implemented projects that are designed to attract tourists to the city is the Formula 1 track, which has already hosted the Grand Prix since 2005. Even more is in the works and in the plans, for example, the construction of a yacht marina for 1000 yachts, new shopping complexes, office buildings and an opera house building.
The new complex from the Turkish Estates Link company is located 20 minutes away. from the new airport. Apartments with 2 and 3 bedrooms are for sale here at a cost of approximately 60,000 euros. Apartments with 3 bedrooms and 1 bathroom in the same area can be bought for 105,000 euros.
Mortgage – green light
Until very recently, there was no affordable mortgage in Turkey. This, of course, limited purchasing power – Turkish residents are usually limited in cash or cannot take out a bank loan for a short period at high interest rates. This situation favors the development of the rental housing market. "Turks, as a rule, do not think about buying a home, as they cannot afford it. Only 35% of residents own their homes, – says Ufuk Yumratus. – However, with the entry into force of the mortgage law in Turkey, long-term bank loans for the purchase of real estate have become available."
Experts are already predicting a rapid rise in real estate prices across the country, which will be caused by natural, solvent demand. It is very important that the new law grants the right to get a mortgage loan not only to Turkish, but also to foreign citizens for whom the situation is favorable right now. The real estate market, as you know, has considerable inertia, and it will take a long time before the demand for buying a home will be saturated. And if so, investors buying housing right now could rent out their property for 4 years (the minimum period of ownership required for exemption from capital gains tax), and then find a buyer in the growing domestic market.
Even in the absence of affordable mortgage programs in 2005-2006, according to the Chamber of Real Estate Agents, the average increase in the value of real estate in Istanbul was 22%. Approximately the same growth is expected over the next five years. At the same time, the current state of the rental market is such that real estate brings about 8% of the cost per year, and some predict even higher rates.
Opportunities for rentier
Those who want to be sure of making a profit from rent, it makes sense to invest in real estate with a guaranteed income. For example, such schemes are offered in a large-scale complex under construction in the Istanbul suburb of Beylikduzu, 35 km from the city center, and consisting of 858 apartments. In the company Headlands International you can find offers for the purchase of apartments with 1, 2 and 3 bedrooms. The estimated rental income for two years will be 6%. When buying apartments with 5 bedrooms or more, the possibility of obtaining rental income is extended for another 2 years. The complex is located directly by the sea and the beach, next to the bus station. Its infrastructure includes a communal swimming pool, garden and underground parking, as well as playgrounds and a small shopping center. Each apartment has a balcony. Apartments with 2 bedrooms cost from 300,000 euros, a penthouse with 4 bedrooms – from 525,000 euros.
Fatih district, one of the oldest in Istanbul, deserves special attention. It is located near the Grand Bazaar area, as well as the old airport. There is a university, a metro station and a highway. Turkish Estates Link company offers apartments in this area with three bedrooms, a spacious living room, a kitchen and one bathroom. The cost of such apartments is about 90,000 euros, and the estimated monthly income is about 600 euros.
The Ottoman-style house in Kadikoy district, which is located in the heart of Istanbul, has been completely renovated by the owner. It can be bought for about 250,000 euros through the Turkish Estates Link company. The house has 5 bedrooms and 3 bathrooms, and the living area is 220 sq. m. Many of the original features of the house have been preserved during reconstruction. Beautiful houses in the Ottoman style can be purchased in the vicinity of the Bosphorus, often with beautiful views of the sea and the strait. One of these villas on the beach, with an area of 110 sq. m, with 2 bedrooms, a private garden and a fully equipped kitchen, is offered for 300,000 euros.
But for those who purposefully plan to buy real estate for further rental, Ufuk Yumratus advises buying apartments, not individual houses, and not spending extra money on luxury finishes. Since the average salary in Turkey is not very high, you should not assign too high a rental price, otherwise you may be at a loss due to the downtime of the property.
Although it is difficult to find housing in central areas, Yumratus does not advise buying real estate at the off-plan stage far from the city center. Land for construction in the center of Istanbul is very scarce, we can say that there is practically no land here. Therefore, developers are creating projects of elite complexes with swimming pools, satellite TV, gardens and parking lots at a distance of 80-90 km from the center. But since there are no commuter trains or metro in Istanbul, and many work in the city, it will be very difficult to rent such a property. Many Turkish families are not rich enough to have 1 or 2 cars. In any case, proximity to the city and convenient transport links play an important role in choosing housing for subsequent rental.
When buying a property in Istanbul, buyers should also take into account a number of additional costs: the cost of notary services in the amount of 1.5% of the purchase price, the purchase tax in the amount of 3%, as well as transaction support fees. The annual property tax is paid in the amount of 0.1% of the value of the property. For example, 75 euros should be paid annually for housing worth 75,000 euros.
