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The year of the pandemic could not but affect construction sector condition in Turkey. But if for developers it became a difficult challenge - in the sense that developers had to adapt to new conditions and reorient themselves to significantly changed customer needs - then for those wishing to invest in Turkish real estate, the current market situation is extremely successful. And it is better to hurry up so as not to waste time, as prices may rise very soon.
But first things first.
WHAT HAVE DEVELOPERS FACED FOR THE PAST YEAR?
Сonstruction industry, which is struggling economically due to the coronavirus pandemic, is worried about rising prices for everything from materials to equipment use and project preparation prices, especially recently. Several months of the past year were especially difficult for developers.
Dilek Günger, a columnist for the Sabah newspaper, notes that companies operating in this sector are deeply concerned primarily with the rise in tariffs for raw materials. Obviously, this will affect the cost of housing in terms of its rise in price.
Thus, the cost of iron increased by 124%, concrete - by 64%, aerated concrete - by 77%, cement - by 42%, PVC products - by 207%, sheet metal - by 258%, copper - by 130%.
The price rebar reinforcement amounting to 2 776 Turkish lira (TL) per ton last year, more than doubled: to 6 227 TL. Cement has risen in price from 250 to 355 TL, a cubic meter of ready-mixed concrete - from 201 to 330 TL, timber - from 4 000 to 12 000 TL.
Add inflation to this: rising prices for imported materials is a major challenge for the entire sector.
What does this mean for a prospect? The cost of housing construction, calculated earlier, in fact, almost doubled.
Actually, here are the options that are opening up for developers: either suspend the launch of new projects on the market, selling the housing stock available for free sale (which is quickly washed out for the same reason); or re-calculate housing complexes cost regularly that are still being built, considering inflation, adjustments in raw materials prices, etc.
But in fact, and in another case, real estate will begin to rise in price even faster than in previous quarters.
And if we recall the recent lockdown that coincided with Ramadan, then literally from day to day, deferred demand can begin to be realized which, experts believe, is capable of being explosive.
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HOW HAVE 12 PANDEMIC MONTHS AFFECTED OTHER PERFORMANCE?
COVID-19 has provoked the so-called license record. We bear in mind that many developers, having assessed the demand for housing in resort regions, ultimately decided to reorient themselves to them: to launch new projects there. And they began to apply for construction licenses - despite the fact that six months or a year ago they were waiting, not knowing the consequences of the epidemic.
Thus, 32 000 new houses are on the way: according to the statistics of building permits provided by the Turkish Statistical Institute (TÜİK) in January-March 2021, the number of buildings for which the relevant permits have been applied for increased by 131.8% in the first quarter of 2021 compared to the same period in 2020 and amounted to 32 832. The number of housing units in these houses increased by 105.6% compared to the same period last year, reaching 168 447 units. The total area of buildings planned for early delivery is determined at 33.2 million square meters.
Prices are growing not just quickly, but rapidly due to a combination of the reasons mentioned above: this is the washing out of the remaining vacant housing stock, and the rise in construction costs, and inflation.
Thus, housing prices increased by an average of almost 40% over the pandemic year in Turkish megacities.
To be precise, the average cost per square meter of housing for sale in Turkey rose by 38.4%, reaching 3 829 Turkish Lira (TL). As for the key cities, in Istanbul this growth was 31.7% over the year, in Ankara - 37.5% and in Izmir - 36.5%.
The average price per square meter has reached:
- 5 104 TL in Istanbul,
- 2 637 TL in Ankara,
- 4 571 TL in Izmir.
As for the budget and the most expensive housing, 1 square meter of the cheapest apartment in the country will now cost the buyer 2 073 TL, and one “square” of elite houses - 11 684 TL.
In resort regions, prices for apartments and houses have jumped during the pandemic year as much as 68%. We discuss it below.
CORONAVIRUS SWITCHED THE ATTENTION OF DEVELOPERS TO RESORT REGIONS
Due to the outbreak of COVID-19, many chose to give up life in megacities (and just large settlements) and leave for coastal areas and villages. Thus, the finest hour has come for traditional summer destinations: the demand in the coastal provinces has grown so much that the prices for both rental and sale of houses have increased dramatically, 2-3 times in some places.
As a result, prices for apartments on the coast have been even higher than in the largest cities in Turkey in recent months. Thus, applications for housing construction licenses in coastal areas came to the fore.
The province of Muğla has become one of the undisputed leaders: now it ranks third after Istanbul and Izmir in terms of the number of license requests filed. In the period from January to March 2021, licenses were successfully obtained for 2 199 buildings and 4 939 houses in Muğla. In the same period of 2020, respectively, it was 692 buildings and 1495 houses. As we can see, the demand for licenses here has grown by 220-230%.
The demand for building permits is also quite high in the provinces of Antalya, Balikesir and Bursa.
As COVID-19 has made many people prefer freestanding buildings to stay away from the crowds and have a comfortable time under constraints, interest in houses with gardens has greatly increased. Contractors seeking to meet this demand have accelerated cottages construction. In the period from January to March, the share of so-called “isolated entities” (with one housing unit in the building) among the buildings for which licenses have been obtained increased to 7.1%. The total area of such buildings was 2.4 million square meters. And, we note, compared to 2020, the number of licenses for individual housing increased by 201.8%.
As for the iskans: in the first three months of this year, the number of buildings that successfully received iskans increased by 12.5% compared to the first quarter of 2020; their total area increased by 4.4%, and the cost - immediately by 34.5%.
The number of occupied houses was 20 900, and the number of apartments - 159,294.
Sales statistics in recent months: the industry was slightly in a fever last year. As a result, less housing was bought in winter than in the previous 4-5 years in the same period. However, in March, not only a “recovery” of demand began, but its obvious revival. March exceeded the indicators of April 2020 by 124.1%. As of the end of April 2021, the annual increase in house prices in Turkey was recorded at 31.7%.
The average price per square meter in Turkey has reached 3 113 TL, and the average price per housing unit is 404 690 TL. In Izmir, it exceeded half a million lire.
Here are the data for the largest cities:
- The annual increase in prices in Istanbul, where most of the residential real estate is sold (about 20% of all sales in the country), amounted to 23.4%. The current average selling price per square meter in Istanbul is 4 564 TL in the spring of 2021, and the average price per housing unit is more than half a million TL (to be precise, 520 296 TL).
- In Ankara, the annual increase in price was 26.4%, the average selling price of 1 sq.m. is now 2385 TL, and the average price of housing is 310 050 TL.
- In Izmir, the annual growth rate is 34.5%. One square meter will now cost an average of 4 128 TL, and housing – 516 000 TL.
As for the districts, one of the central regions in Ankara, capital of Turkey, Çankaya has risen most in price over the past month (+ 2.7%). It was followed by Gölbaşı (+ 2.6%), Polatli (+ 2.2%), Sincan (+ 1.4%) and Mamak (+ 0.6%).
In Izmir, the already mentioned Foça region is in the lead: + 12.7%. Further in descending order - Dikili (+ 9.1%), Narlidere (+ 8.9%), Güzelbahçe (+ 7.3%), Balçova (+ 4.3%).
In the resort capital of the country - Antalya - the most significant increase was shown by Alanya: + 9.4%. It is followed by Deshemealti (4.1%), Muratpaşa (3%), Konyaalti and Kepez (2.8% each).
By the way, about Antalya and not only: today the cost of apartments and houses there is already higher than that of housing of a similar type and area in the three largest cities of the country.
Thus, the increase in prices in Muğla - Aydin - Denizli location turned out to be the largest: 45.77% per year. Not much less it is in Antalya-Burdur-Isparta: 41.9% per year.
As we can see, even megapolises give way to summer cities.
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RECOMMENDATIONS FOR THOSE INTERESTED IN HOUSING
The situation following the results of the coronavirus year whispers: seize the moment. Moreover, the pace of sales was temporarily falling, and in order to sell the remaining fund and start working closely with new projects, a number of developers are going to discounts.
Well, mortgage interest rates are still low. Although higher than last year, when, due to the pandemic, the authorities lowered them to a record low. And if you need a small amount, you can take a consumer loan: the current interest rates for this service are much lower than in the Russian Federation.
The most popular real estate - and the one that brings in the most money - turns out to be two categories:
High-quality housing in branded residential complexes, built considering new technologies and equipped with the latest technology, in the largest cities of the country, primarily in Istanbul. In this metropolis, according to recent data, Tuzla is among the most requested areas, as well as locations near newly laid metro lines and major infrastructure facilities, especially those under construction.
Resorts with proven characteristics are meeting current demand. After all, if earlier buyers sometimes sought to take small apartments for investment purposes but in a larger quantity - two or three, now there is a great demand for spacious apartments with balconies, as well as for detached houses with gardens, villas and other comfortable residences, including the possibility of year-round living.
If you focus primarily on the speed of funds and profit return, then the most successful choice at the end of April 2021 will be the provinces of Ankara, Şanlıurfa and Gaziantep, where housing will pay off in 18-19 years.
The list of provinces where residential real estate grew in price in April the most is here.
The pandemic also affected in the sense that interest in land plots acquisition has noticeably increased over the past year, especially in resort regions, where you can fit several houses or villas on the site at once. Well, the rent for cottages and villas is growing everywhere. In some places, land plots have risen in price by 2.5 times - for example, in the vicinity of Izmir.
The Mediterranean coast is still in great demand. According to the results of the pandemic year, every fifth housing purchased by foreigners is located in Antalya region.
But all records this year are beaten by the province of Muğla. The prices for villas here have already reached the level of European ones. The popular resort of Bodrum remains undisputed leader inside Muğla. It is interesting for those who plan to buy and rent housing: rental rates for the year have increased by 24% here and reached a million Turkish lira per season (in the case of luxury villas). However, a new favorite, a potential future champion is also emerging: Çeşme. After a year of the pandemic, housing in this resort, not too well known to Russians, is becoming more expensive especially quickly.