Two events have had the most significant impact on real estate in Turkey: the February earthquake centred in Kahramanmaraş and the presidential elections in May. What trends emerged during this period?
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Let’s focus on the trends in Istanbul and its surroundings, as this area is one of the most sought-after. Despite the events in February, the Istanbul metropolitan area remains a focal point for both local and foreign investors in residential real estate.
Seismic activity is characteristic of Turkey, and this fact continues to influence housing prices. Seismologists and other experts in the field suggest that further earthquakes are possible, but their magnitude will not exceed 7.6.
Modern buildings in Turkey are designed to withstand this load, and the state ensures strict adherence to all technologies. Concerns of residents and buyers are mainly related to the old housing stock, which is largely dilapidated and is unlikely to be completely renovated in the short term.
Therefore, proponents of a preventive approach have reassessed priorities. Currently, two key trends have emerged: first, internal migration (some residents have moved from the centre of the metropolis to the outskirts, while others have moved to neighbouring provinces); second, a shift towards new construction. It is essential to consider the cost of relocation: moving to another province with family, furniture, and belongings is very expensive. Recently, prices for such services have increased significantly. Therefore, many prefer to move to a new building in the same area or rent temporary housing nearby. This allows them to spend significantly fewer resources and reduce the time required for relocation. As a result, housing in safer areas has become more expensive not only for sale but also for rent.
Changes in prices by district: Sale and rent
For comparison, data was taken from two snapshots: housing put into operation from zero to four years ago and properties older than 16 years, i.e., built in 2006 or earlier.
From September 2022 to April 2023, the change in the cost of newly built housing for sale was +48% in the Arnavutköy area, +43% in Ataşehir, +34% in Avcılar, +57% in Bağcılar, and +41% in Bahçelievler. In another popular quarter of the metropolis, on the Princes’ Islands (Adalar), the increase was expressed to a much lesser extent and was sometimes absent altogether. However, the peculiarity of this area is that it does not have high-rise buildings—only mansions.
In the sought-after Istanbul district of Beşiktaş, the annual change in the cost of buildings aged zero to four years was +80.60%. As for rental properties, the average rent per square metre in newly built areas in Beşiktaş is 228.88 Turkish lira (TL), with a yearly rental rate increase of 92.37%.
In Beşiktaş, the difference in prices between new and old buildings is particularly evident: in houses older than 16 years, the average rent per square metre is noticeably lower—205.36 TL.
In Tuzla, the gap is also significant, partly due to the fact that even within Istanbul, this area is considered more seismically hazardous: residences in buildings constructed no later than four years ago increased by 150%.
As of April 2023, the cost per square metre of housing up to four years old in Avcılar reached 19,428 TL, with a yearly price increase of +111%.
In Arnavutköy, one square metre of property cost 18,688 TL at the end of spring, with a yearly change in cost reaching +135%. In Ataşehir, it is 36,034 TL with +103%; in Bağcılar, it is 19,055 TL, and the yearly change in cost is 169%.
In Beyoğlu, newly built housing increased in price by 179%, with the average cost per square metre reaching 40,749 TL.
Let’s compare the above figures with prices for homes built 16 years ago and more: in Arnavutköy, the cost per square metre in such housing was 17,652 TL in April, in Avcılar – 13,490 TL, in Bağcılar – 13,780 TL. The difference in cost is especially noticeable in the last two districts.
Çekmeköy is another area that attracted attention by April 2023. The rent in local newly built properties is 107.77 TL per square metre, with a yearly cost increase of 172.22%.
The rent per square metre in new developments in Sarıyer is fixed at 259.35 TL, with a yearly change in cost of 97.63%. Homes older than 16 years have the following indicators: the price per square metre in Çekmeköy is 88.08 TL (approximately 20% lower than new builds), and in Sarıyer, it is 156.86 TL (almost 40% lower).
Görkem Oğut, partner-founder and CEO of the popular real estate valuation platform Endeksa, clarified that the so-called “seismic migration” in Istanbul has reached its peak in the last 20 years: people want to move to new structures, and demand for housing aged zero to four years is increasing. Furthermore, “...the recent earthquake has created a significant wave of migration from east to west, and we anticipate that this wave will continue in the future.”
Impact on sales
Due to the fear of a recurrence of what happened in Kahramanmaraş and neighbouring provinces, home sales have significantly declined in the districts of Beyoğlu, Beylikdüzü, Bakırköy, and Fatih. According to the Turkish Statistical Institute TÜİK, in the year from March 2022 to March 2023, transactions in these locations dropped by 24% (compared to an average of -12% across Istanbul). Moreover, a reduction of more than 24% (!) was recorded in the districts of Ataşehir, Avcılar, Bahçelievler, Bağcılar, Esenler, Eyüpsultan, Gazi Osman Paşa, Kağıthane, Zeytinburnu, Ümraniye, Üsküdar, and Şişli.
However, in Beykoz, Çatalca, and Şile, sales have increased significantly. According to research by IPA, the most risky zones regarding potential earthquakes in Istanbul are concentrated in the area between the Golden Horn and Lake Küçükçekmece, as well as in the districts of Bakırköy, Zeytinburnu, Fatih, Bahçelievler, Güngören, Bağcılar, Esenler, Bayrampaşa, and Küçükçekmece.
On the other hand, the districts of Sarıyer, Başakşehir, Şile, and Çekmeköy are the most resistant to seismic activity.
In conclusion, “when we examine housing projects, the growing demand after the earthquake is mainly directed towards low-rise standalone houses and housing projects positioned as earthquake-resistant; in all these projects, there is an evident increase in prices," explains Eylül Helin Gül, an expert at the real estate appraisal company EVA Gayrimenkul.
“The Election Effect”
Let’s add a few words about the impact of the results of the recent elections on real estate sales in Turkey. This primarily affected international transactions, as foreign investors often choose residential properties in Istanbul to qualify for citizenship through investment. It’s worth noting that there are hardly any listings for sale below 10.84 million TL in popular districts of the metropolis. Therefore, acquiring practically any real estate comes with the pleasant bonus of obtaining citizenship.
However, the opposition had threatened to significantly curtail the rights of foreign buyers if they came to power. There were many rumors circulating, including speculation that the minimum investment threshold would increase to one million US dollars or more, and that the purchase of property by citizens of other countries would either be prohibited altogether or allowed without citizenship or even without obtaining a residence permit.
Since it is now evident that these concerns were unfounded, analysts are predicting a sharp increase in the number of transactions and anticipate the realisation of the so-called pent-up demand: many who have already decided on their choice of residential property but delayed the deal until the election results are expected to return to make their purchases.