Istanbul, Izmir and Mugla are the three investment pillars of 2024

Despite the turbulence in Turkey's rapidly changing real estate market, it continues to attract the attention of both local and foreign investors. Experts are confident that this sector will flourish in 2024.

Megacities remain in high demand, alongside tourist regions like Antalya, which continues to be a favourite among overseas buyers. However, foreign investors are having a closer look at Mersin.

Despite this, based on the 2023 statistics, Property Turkey İstanbul revealed the three most sought-after provinces for investing in real estate in Turkey. Experts recommend considering these locations as they represent the forefront of investment prospects for the next 12 months.

These provinces are Istanbul, Izmir and Bodrum. Let’s focus on these three pillars in more detail.

Content:

• Istanbul
• Izmir
• Bodrum (Mugla)
• What should be considered?
• Rent – prices and prospects
• Istanbul
• Izmir
• Mugla
• Rental rates in the largest and most sought-after provinces

Istanbul

The Turkish metropolis, with its rich heritage, remains the largest and most economically active city in Turkey. On the Asian side, Kadıköy, Üsküdar and Ataşehir stand out as the most in-demand districts with significant investment potential. On the European side, Beşiktaş, Sarıyer and Bakırköy emerge as the most investment-attractive areas of Istanbul.

Residential and commercial real estate in these locations are expected to yield high profits. The initiatives of local authorities to urbanize and implement new transport projects further enhance the value of such assets, not only in these six districts. It has been proven that residential properties in the green suburbs near the city centre, where new metro stations are planned (many new lines are being laid in Istanbul), experience a price increase of 25-30% within a few days after the stations are operational.

Izmir

Foreign and domestic investors are focusing their attention on this gem on the Aegean shore. The demand for real estate in Izmir is especially high in areas such as Alsancak, Karşıyaka and Bornova.

Local housing stands to quickly recoup investments and generate net profit by developing infrastructure and transport networks. As you may already know, Izmir boasts its own metro, with one of its branches extending to the airport.

For example, Alsancak and Karşıyaka present ideal opportunities for investments in both residential and commercial projects. Meanwhile, Bornova and Buca draw attention due to their proximity to universities (including year-round rental demand) and a young, active population. By the way, young people are often wealthy (we mean potential buyers choosing apartments in Turkey for themselves).

Additionally, tourist spots in Izmir’s coastal areas are highly sought-after for purchasing holiday homes and resort housing.
So, given the rapidly growing demand, developers prefer launching their projects in Çeşme, Alaçatı, Urla, etc. Moreover, these are not standard residential clusters, but rather expensive villa complexes.

Bodrum (Mugla)

There are several sought-after areas and resort towns in Mugla such as Bodrum, Marmaris, Fethiye, Göcek and Ölüdeniz.

The Turkish Riviera has been holding the lead for more than a year or two. Such regions as Yalıkavak, Gümüşlük and Türkbükü on the Bodrum peninsula are famous for their luxury complexes and villas in Turkey, offering breathtaking views.

After closing European beaches to most foreigners, Yalıkavak has transformed into a sort of  Cote d'Azur with its entertainment venues, marina and luxury shops. Gümüşlük entices visitors with its natural beauty and calm atmosphere, while Türkbükü is renowned for its first-class restaurants and beaches.

Therefore, Bodrum is an excellent place to capitalise on tourism and the rental market, even if the demand is not as high during the colder months, as the summer season compensates for the winter downtime.

What should be considered?

• Investment costs and expected returns in Istanbul, Izmir and Bodrum vary depending on regions, property features (including views, location, housing class, etc.) and market conditions. Meanwhile, Istanbul demands substantial initial investments due to its year-round and steadily growing demand, as it is an economic, financial and tourist hub. Bodrum and Izmir have broad investment opportunities and offer more affordable prices, although the return on real estate may not be as high here.

• By type of property: Istanbul is a favourite destination in the commercial real estate and year-round rental housing sectors, while Bodrum and Izmir are more suitable for holiday homes.
• 

Rent – prices and prospects

Many people purchase real estate to resell it and generate more income. In addition to the fact that Turkish housing is increasing in price, within a few years from purchase to resale, you will be able to rent it out. This will speed up the return on investment and increase the net profit.

The property can be rented both for a long term (based on annual contracts) and a short period. However, short-term or so-called tourist, rental has become more complicated in terms of requirements and the list of documents since January 1, 2024. Competent specialists can help you comply with all these rules. As for long-term leases, the ban on increasing the rental rate by over 25% per year will be in the summer of 2024. This restriction has significantly hindered the owners over the past 2 years.

Here are the latest data and up-to-date rental figures for Istanbul, Izmir and Mugla.

Istanbul

The Istanbul Planning Agency (İPA) has published a report on the rise in housing prices throughout the metropolis.

An interesting fact emerges: while the average rent worldwide grew 1.6 times during the pandemic period, from 2020 to 2022, in Istanbul, this figure was 5.2 times.

Housing prices in Istanbul increased by 84.14% last year alone, while rents rose by 75.56%. When measured not in housing units, but in square metres, the price per square metre rose by 82.54% and rent increased by 84.33%).

The average rent in the province is 17,594 TL (USD 576) and the rental rate per square metre is 176 TL (USD 5.8). It should be noted that the cosmopolitan nature of the metropolis is also evident in the rental market. Despite fluctuations in the industry and rising rental prices in many regions of the province, there has been a slight decrease in rates in some of Istanbul’s areas. For example, the cost of renting a home in Şile dropped by 3% to 165 TL (USD 5.4) per square metre in December last year. The rates in Başakşehir and Küçükçekmece decreased by 2% to 181 TL (USD 5.9) and 168 TL (USD 5.5) per square metre, respectively. However, the rental price per square metre in Beşiktaş, one of Istanbul’s central and most popular districts, increased by an average of 6% to 331 TL (USD11), while the growth was 5% in Beyoğlu (267 TL (USD 8.7)) and Sarıyer (382 TL (USD 12.5)).

When considering the longer analysis period, certain areas stand out where rents have surged over the past 4 years, including the leading Üsküdar, which added up to 961% during this period.

Here are the districts of Istanbul where real estate rental rates have risen the most since 2019:

• Üsküdar - 961%
• Kağıthane - 954%
• Beykoz - 889%
• Başakşehir - 879%
• Küçükçekmece - 861%
• Eyüp Sultan - 804%

As Turk. Estate wrote it’s almost impossible to find the most miserable apartment for less than 10,000 TL per month (USD 327) in these locations. Meanwhile, the upper limit of the monthly rate is about 150,000 TL, equivalent to USD 4,910.

Moreover, Istanbul leads in demand for tourist rentals year-round, unlike resort areas.

Izmir

Rental rates in Izmir grew by 119% in 2023 and by 4% in December alone. The current average rent for housing in the city is 15,926 TL (USD 521), while the rental cost per square metre is 145 TL (USD 4.75). It should be noted that Bergama has become a leader in rent growth: housing here rose in price by 6% in December. The average rental price per square metre is 100 TL (USD 3.27) and the average monthly rental rate for a residence is 12,200 TL (USD 399).

Based on statistics collected by the Endeksa portal, analysts anticipate an increase of another 30-40% in May 2024. This is for the province of Izmir. On average, annual price increases in the districts can range from 80 to 130%.

Mugla

By the end of 2023, Mugla (considering the data summarised by Endeksa, including for December) became the second province of Turkey after Istanbul in rental costs.

The average monthly price of accommodation was 16,399 TL (USD 537) at the end of the year.

The average price per square metre in a typical apartment is 164-186 TL (USD 5.4-USD 6). By the way, 164 TL is in the off-season, as Mugla is a resort destination with beaches in Fethiye, Marmaris, Bodrum, etc.

Speaking about the current situation in the rental housing market, Görkem Öğüt, Founding Partner and Endeksa.com CEO, described the prospects of the rented property: "As of December 2023, we are seeing a slowdown in rental price growth in many regions. Based on the data received, it’s anticipated that this emerging trend will settle down, leading to a more balanced market in terms of supply and demand. However, it will take time for this trend to be reflected in rental values and one should not ignore the fact that the market is the cumulative result of several factors."

Rental rates in the largest and most sought-after provinces

We’ve mentioned Izmir, Istanbul and Mugla with their coasts above.

However, it would be remiss to omit Antalya, Turkey's resort hub, which ties with Istanbul for the top spot in foreign property sales, occasionally surpassing it.

The stagnation accompanying the onset of winter also affected Antalya, one of the busiest cities in the Mediterranean, given its resort status. However, rental prices here continue to rise steadily, with some areas experiencing faster growth than others. The only area in Antalya that recorded a marked decline, most likely temporary, was Gazipaşa (Gazipaşa-Alanya International Airport is located here), with a decrease of 5%.

Overall, the average price of rented housing is 145 TL ($4.75) per square metre and the monthly rental rate for a typical residence is 15,038 TL (USD 492).

What about Ankara, the capital of Turkey? It ended December with an average rental price of 118 TL (USD 3.9) per square metre and an average apartment price of 14,188 TL (USD 464). As this city is the capital and one of the country’s largest financial, economic and educational hubs, the dynamics here do not depend on the holiday season. For example, the cost of rented housing in Ankara jumped by 21% in February 2023 and the price per square metre rose from 52 TL (USD 1.7) to 63 TL (USD 2). Rent fell by 2% in November but grew by 4% in December. This growth has slowed down, but it continues.

Bursa is the fifth largest metropolis in Turkey: rental rates here rose by 2% in December and the annual increase was 125%. Renting 1 square metre of residential real estate in Bursa costs 111 TL (USD 3.63), while the average rental price for an apartment has reached 13,309 TL (USD 436).

The student district of Eskişehir stands out as one of the provinces that completed 2023 with impressive dynamics: rents surged by 152% in the past 12 months alone. The change in value was +3% in December. The average rental price in Eskişehir is 10,162 TL (USD333) per residence and the average rent is 103 TL (USD 3.37) per square metre.

Another of the fastest growing in price is Trabzon, one of the largest cities in the Black Sea region. The rental housing price has increased by 146% over the past year. As of December 2023, the average housing rental price in Trabzon is 11,046 TL (USD 362) and the price per square metre is about 78 TL ($2.55). Moreover, this figure was 85 TL (USD 2.78) in September.

Here are the statistics in the table based on Endeksa data for easy comparison: