For investments in residential real estate to be profitable and pay for themselves as quickly as possible, keep in mind the characteristics (square footage, etc.) as well as the location.
There are areas in Turkey where the property and different locations are rapidly becoming more expensive because of their proximity to different types of infrastructure. This is especially true for property still under construction but is likely to become key within the province or even the whole country.
This is noticeable in Istanbul where housing prices have increased from 30% to 70% in the last year alone in different areas because several projects are ongoing in a rapidly growing metropolis that can completely change the face of the city.
So, former factory areas are turning into «new centers» of this metropolis. What’s the best choice when you invest in real estate?
Here are just a few examples of new significant infrastructures that’ll breathe life into nearby areas.
One of these is the Istanbul Canal, a colossal project that will turn Turkey into a logistics superpower. Artificial Strait is a future alternative to the «natural» Bosphorus Strait. After the authorities finally approved the zoning plan, housing, offices, and land plots have noticeably risen in price and continue growing.
The surroundings of the 1915 Canakkale Bridge, which will connect the metropolis with Canakkale, are also «developing». The impressive bridge (the largest medium-span bridge on the planet) will be put into operation in early 2022.
Even though the former Ataturk Airport no longer operates as an international air hub, a National Garden with a large-scale entertainment and social infrastructure has appeared in its place, including a new ambulance hospital which is also important for people living in nearby areas.
The commissioned new airport has already reached the second line of TOP-10 best in the world and housing in the areas on its route is also noticeably increasing in price. Also the underground to the New Airport is being laid at a rapid pace and the line from Gayrettepe is already being tested.
This is in short. Now, for potential investors, let’s talk about the importance of certain areas near key infrastructure facilities in Istanbul, surrounding areas as well as price dynamics.
Gigantic transport projects increase the value of any kind of real estate near them. So, prices for land plots – not just for residential construction – along the route of the newly built Northern Marmara Highway (Kuzey Marmara Otoyolu), around the Izmir-Istanbul highway and 1915 Canakkale Bridge are growing exponentially. The cost of land for development around these 2 highways has already increased to 45% for fields/vineyards/orchards – up to 94%.
EVA Gayrimenkul CEO Jansel Turgut Yazidzhi explained that when investing in land, you need to remember 3 key points: the first is to determine the right place (location), the second is to wait to purchase at the right moment, and the third is to sell the plot at the optimal time. Remember that you should never buy «blindly» no matter how little you understand the issue. And even if you enlist the advice of a consultant and check all the documents and cadastre data, you must see the site yourself. The smallest details are important, especially the landscape, slope and lighting.
Istanbul Canal is attracting a lot of future attention for the «population of the surrounding area». The Minister of Urbanization and Environment Murat Kurum at a recent meeting in the Planning and Budget Committee said, «Istanbul Canal is the freedom project of our Bosphorus, the most environmentally friendly project in the framework of the urban transformation program in Turkey». 52% of its area will be covered by green zones and residents of former emergency houses will be relocated here under the renovation program. So, about 1,500,000 people will live near the Istanbul Canal. Also, the Channel will «prepare the ground» for the future transformation of the surrounding more remote areas in Istanbul.
The Istanbul Canal project has only recently started but the 1915 Canakkale Bridge is already nearing the final stage of construction. The President of the Republic of Turkey Recep Tayyip Erdogan announced its commissioning on March 18, 2022, at the latest. With the opening of 1915 Canakkale, traffic through the Dardanelles Strait will be reduced to just 6 minutes which will «rebuild» the logistics of several provinces at once.
«Now we are entering a period when all land, sea, rail and air routes from continent to continent will pass through our country», the President explained. Turkey is becoming a logistics superpower and Istanbul is becoming a «global» metropolis, which will affect housing prices.
What can I say, costs have already soared.
1915 Canakkale, where work is already underway on the final flooring assembly, hasn’t just increased but «inflated» housing prices nearby. From October 2021, the lowest cost of an apartment in the areas adjacent to this future «blood vessel» of Turkey is already 275,000 Turkish lira (TL).
Here are the updated average rates for nearby areas:
- Ayvajyk: 658,696 TL (+48.37% over the last year);
- Bayramich: 274 120 TL (+18%);
- Biga: 284,200 TL (+28.42%);
- Bozdjaada: 1,987,920 TL (+37.67%);
- Ejeabat: 448,890 TL (+31.27%);
- Ezine: 517,440 TL (+44.67%);
- Gelibolu: 362 040 TL (+33.56%);
- Lapseki: 380,875 TL (+37.1%);
- Merkez: 427,680 TL (+31.3%);
- Vat: 278,740 TL (+27.82%).
So, the areas around 1915 Canakkale Bridge have been under the gun of real estate investors for the last year. After all, the land alone in Medzhidie, Shevketie and the Attic (Lapseki) has already risen in price by 150%. This is partly due to the pandemic when the demand for land with sea views and green areas increased sharply; the surroundings of 1915 Canakkale meet these needs.
So, the price for 1 sq.m, even on sites not yet open for construction increased in Lapseki (locations where the foot of the bridge is located) to 40 TL and on land under construction – at least up to 100 TL.
Hakan Erilkun, Chairman of the Management Board, explained that now the number of people who want to invest their savings in land near 1915 Canakkale, «Instead of buying apartments or houses and receiving rental income, which is still limited and is accompanied by a lot of hassle for housing maintenance, people prefer to squeeze the maximum out of investments by investing in assets that double in value by themselves».
So, in the vicinity of Istanbul, 1915 Canakkale has already come out on top in popularity for land plot investments. The expert also said that soon after the installation of the bridge supports, potential investors became interested in the ancient Greek villages of Gureji, Chardak, Medjidiye and Gazi Suleiman Pasha. Just 15 months ago, land could be found in Gureji for 25 TL and today this figure is at least 65 TL. Also, many investors are trying to buy different plots in the neighborhood and combine them into one. Especially those that have at least some kind of sea view. Real estate agents say that transactions are now being closed in this area at lightning speed – «... at a speed more characteristic of the stock market».
Even un-zoned lands, which a year ago cost 35 TL, are now being sold for 60 TL. But, specifically in Canakkale, there are restrictions on the foreigners buying land plots.
Hakan Erilkun points out that after the president confirmed the upcoming opening of the Canakkale Bridge on March 18 next year, land prices jumped by at least 20% again. «Many plots previously bought by large investors and put together into larger-scale areas are being re-evaluated and changing hands - there are almost none left. But, the real estate market here will really boil after the moment the bridge is officially commissioned and the work on the Istanbul Canal progresses as these projects can’t be separated from each other.»
Here's another future project that isn’t too well-known yet - the railway «connected» to the Istanbul Canal.
The Minister of Transport and Infrastructure, Adil Karaismayloglu announced the creation of a railway «to help this alternative to the Bosphorus»: «We already had the foundation laid for Sazlydere Bridge on the way to Istanbul Canal. The channel will need an accompanying railway and automobile «support» in terms of logistics».
By 2050, it’s planned that the canal will pass through up to 78,000 ships annually. They all need to be unloaded and the cargo somehow sent. So, the surroundings of this future railway will also «come to life» very soon.
Dozens of gardens and parks are also being built in Turkey as part of a nationwide urban transformation project. In Istanbul, considering the scale of the megalopolis, there’ll be many of them. Because of the densely populated population and the ongoing pandemic (which caused an increased interest in housing in oxygen–saturated areas), apartments and houses near green areas are more in demand. Even if an area was previously unpopular. 13 of the planned 43 gardens are already ready and open to visitors. Its total area is 17,700,000 sq.m.
The pace of construction of the Istanbul underground is also speeding up with new branches stretching further and further. Every year, the city is «replenished» with about 20 km of new underground lines, which makes former residential and industrial areas new «centers of attraction» and attractive for investment.
We recommend that investors pay attention to the districts and neighborhoods near lines under construction:
- Mahmutbey-Esenyurt;
- Dudulla-Bostanji (it’s planned to be one of the first commissioned in 2022);
- Gayrettepe line is a new Airport: 8 stations will appear on the route from Halkala to the air hub;
- the second stage of the Atakey-Olympic underground line. The first stage (12 stations) is already open. The second stage is also due to be completed in 2022 with 12 more stops on it. The line of Attack-Ikitelli will simplify the movement of residents of the districts of Bakyrkey, Bakhchelievler, Bagdzhylar, Kuchukchekmedje and Basakshehir;
- Kaynardzha-Pendik-Tuzla (Tuzla is one of Istanbul’s districts gaining popularity with foreign buyers
And finally, here are some statistics on price dynamics in Istanbul, mostly because new social and transport infrastructure is emerging there.
MINTLAB, a company that has recently prepared an updated report on the housing market in the metropolis, said that in Istanbul, the total income (capital gains and gross rental income) was 3.22% per month back in July 2021. The annual rate has «grown» in some places (depending on locations) up to 34.22%. Compared with the profitability of other financial investment instruments, investments in housing construction have reached the highest level of profitability over the past year.
MINTLAB also says that detached houses in Istanbul turned out to be quite profitable as an investment tool.
In particular, 2,729 units of real estate were sold to foreigners in Istanbul in August – this is the highest figure for the month in the entire history of observations.
And, since the end of October 2021 – after the announcement of the campaign to reduce the interest rate on housing loans by state banks – housing prices in Istanbul immediately increased by 5-10%.
Remember that on October 25, 2021, Ziraat Bank, Vakıfbank and Halkbank announced a reduction in interest rates on loans to 200 basis points, depending on the product and maturity structure. Now, the rates are equal to 1.29% on a housing loan of less than 1,000,000 TL and 1.34%. The rates came into force on October 26.
The President of the Istanbul Chamber of Realtors Nizametdin Asha explained that since these reduced rates, demand in Istanbul has been on areas and neighborhoods with relatively low prices, «Old, low-quality houses located far from the center are in demand like the north of Esenyurt, Gaziosmanpasha, and partly the Bayrampasha district».
So, housing in Istanbul remains one of the most profitable options for investing in real estate in Turkey – especially considering how the city is taking on a new look and what kind of future looms for it. And it’s still not even the most expensive. So, to search and choose property, contact professional consultants.