2023 was a challenging year for the Turkish economy. The country faced numerous difficulties: rising inflation, fluctuations in the national currency exchange rate, and the aftermath of the February earthquake. However, in April, the International Monetary Fund published a forecast predicting Turkey's GDP growth to be 31% in 2024. The country remains an attractive destination for international investors, whose activity is recovering after last year's slowdown. The development of resort areas and the opportunity to obtain citizenship through investments make Turkish real estate a sought-after asset among foreign buyers.
Content:
- Current State of the Market
- Historical Dynamics
- Popular Resort Areas for Investment
- Market Prospects
- Investment Outlook
- Conclusion
Current State of the Market
The challenges of 2023 affected the country's real estate market. It began to recover in July when the number of transactions, according to the Turkish Statistical Institute (TUIK), reached 109,548 – 142% more than the same month last year. However, a new decline followed. The highest number of transactions was recorded in December – 138,577, which was 334% less than the previous year.
In 2024, the market began to stabilize:
- 80,308 deals in January (178% less than the previous year);
- 93,902 in February (178% more than the previous year);
- 105,394 in March (0.01% less than the previous year).
The number of new projects is increasing. According to TUIK, 321,000 new residential units were issued in Q4 2023, a record for the past four years. Of these, 71.2% are multi-apartment buildings with a total area of 429 million square meters. Another 7.1% are private houses with a total area of 43 million square meters.
Senior Investment Consultant at Property Turkey, Alexandra Jihanoglu, spoke about the most in-demand cities for investments.
"We have been working and collecting statistics since 2001. Based on this data, the best investment destinations can be identified. Istanbul ranks first, where the highest return on investment (ROI) is observed. Property prices here rise faster, and it is easier to resell. Other cities with developing markets include Ankara, Izmir, Bursa, and Antalya. Among the resort towns, Bodrum stands out, where real estate generates income not seasonally but consistently, attracting both locals and foreigners," said the expert.
According to the Central Bank of Turkey, by Q4 2023, the cost of 1 square meter of real estate reached 30,036 TRY ($998 at the time of publication), 864.6% more than the previous year. However, accounting for inflation, the price increase was only 124%. In 2024, Turkish real estate is appreciating in the national currency, but prices are decreasing in dollar terms.
The number of transactions with new properties in Q1 2024 increased by 52% compared to the same period last year. According to the Turkish Realtors Association, by summer 2024, the total volume of foreign investments in the market will reach $15 billion.
Factors contributing to the increased demand from foreign buyers include the possibility of obtaining citizenship through investments in real estate from $400,000. However, according to Alexandra Jihanoglu, this process has become more complicated in recent years.
"The policy is changing under the pressure of the electorate, who do not like that foreigners can obtain a Turkish passport so easily. Therefore, additional steps are being introduced. Previously, investors could complete all operations online and issue a power of attorney through the embassy without coming to Turkey. Now the procedure has changed. It is necessary to visit the country at least 2–3 times and personally apply for a residence permit and citizenship," explained the specialist.
Another peculiarity lies in the property valuation for investors. Today, only one state-owned company can conduct it. The results of such valuations are not always fair, and sometimes they are carried out without visiting the property. The government recommends that foreigners purchase real estate in state-owned projects that are exempt from this procedure.
Historical Dynamics
The Turkish real estate market has been growing rapidly for years. From 2013 to 2022, over 1 million transactions were concluded annually. In 2020, at the height of the pandemic, the number of deals reached a record high of 1.49 million. Due to a significant reduction in mortgage rates, 38% of transactions during this period were made using mortgages.
The following two years reached near-record levels. In 2021, 1.49 million deals were concluded, and in 2022 – 1.48 million. Besides the cost of properties, rental rates also increased, showing a 100% growth in 2022.
The demand from foreign investors slightly decreased when it became known about the impending ban on the purchase of real estate for foreigners in certain areas. However, it was soon revealed that the ban applies only to 10 overcrowded districts of Istanbul and specific clusters in some other major cities. After this, the inflow of capital from abroad resumed.
"I would say this ban practically did not affect the market. It is very localized. Moreover, foreigners can obtain citizenship through investments and buy real estate in these areas already having a Turkish passport. Traditionally, foreign investors account for 3–5% of real estate transactions, the rest being locals. Therefore, the ban did not affect prices or demand in these areas," commented Jihanoglu.
In 2023, no new records were observed; a total of 1.22 million deals were concluded.
Popular Resort Areas for Investment
The economic obstacles faced in 2023 did not affect the resort industry. During this period, Turkey was visited by a record number of tourists – 49.2 million people, bringing the country a total of $54.32 billion.
One of the most popular locations remains Antalya. It is the only resort that entered the top three leaders in the number of transactions in 2024. In January, 5,250 deals were concluded here. More were only in Istanbul and Ankara, whose populations are several million higher. According to the Mediterranean Tourism Agency Federation, the city expects a record tourist influx of over 16.5 million people this year.
The same applies to Alanya. Analysts predict the cost of local real estate will have a 25% increase by early 2025.
Bodrum is another popular resort. More than 1 million vacationers are expected to arrive here by air and over 100,000 by sea. The profitability of housing in the city reaches 8–10% per year, with prices significantly lower than in Antalya and Alanya.
In 2023, Bodrum saw a decrease in the number of transactions, as did the whole country. However, starting from January 2024, this indicator grew by 32.52%, indicating market recovery.
"Among locals, Bodrum is considered the most luxurious resort, and it is also popular among foreigners. It is called the St. Tropez of Turkey. There is good potential for investment here. In Yalikavak, a neighboring town, any construction is prohibited, meaning no new properties will appear. Due to this, the value of existing properties is rising. And if you invest now, in a year or two, it will yield good profit," said Jihanoglu.
Market Prospects
According to experts' forecasts, the Turkish market will continue to grow in 2024 and reach $68 trillion by the end of December. In subsequent years, the growth rate will average 7.59% annually. As a result, by 2028, the market volume will be $91.1 trillion.
"Statistics show that prices will continue to rise. Perhaps the growth rate will not be fast due to inflation, refinancing rate issues, and mortgage availability. These factors slow down the market. Today, it is in a waiting mode, but as soon as mortgages become available again, the market will explode. There will be a sharp price increase, followed by a plateau for a couple of years. In the next 5–10 years, prices will rise significantly, and we will see prices in Turkey at the level of London, New York, or Singapore. The trend towards this is already evident," explained the investment consultant.
The main factors influencing the Turkish market include:
- Development of the tourism industry. The more vacationers visit the country, the higher the demand for housing in resort areas, its cost, and rental income.
- Rising construction costs due to the increasing price of building materials and higher wages.
- Foreign investments. Despite the difficulties of 2023, foreign buyers invested about $7 billion in the country's real estate.
- Inflation level. At the beginning of Q2 2024, it reached 69.8%, lower than Reuters' forecast of 70.3% but higher than the Central Bank of Turkey's target of 4.5%.
- Demographics and urbanization. The median age of the country's population is 34 years, and the working-age population is 68.3%. Locals move to large cities, increasing the demand for real estate.
- Government policies. The programme for obtaining citizenship through real estate investments has made the country attractive to foreigners.
"Price growth is driven by increased demand. Turkey's population has reached 85 million people and continues to grow. Istanbul's population is 20 million and increases by 4% annually. More than 500,000 couples marry each year, requiring housing. Additionally, everyone is interested in new earthquake-resistant properties. Another factor is the reduced supply. Due to the challenging economic situation, developers are cautious about new projects. As a result, real estate prices rise, especially for new buildings," asserts Alexandra Jihanoglu.
Investment Outlook
By the end of Q1, 40% of foreign investments in the Turkish economy were in the real estate sector. The most popular destinations were Istanbul and resort cities.
Analysts believe that amid declining mortgage availability, local activity will resume no earlier than 2025, when the country's economy recovers. This gives an advantage to foreign buyers: they can invest before the market faces a new wave of demand. According to experts, the most favorable conditions will be in the summer of 2024.
"Turkey is a growing market. In recent years, it has remained the world leader in price growth, and this trend will continue. There is no such high profitability as, for example, in Dubai or Singapore, but property prices grow by 10–15% per year in dollar terms. Therefore, Turkey ranks first for investments," believes the expert.
For investors who want to invest effectively in real estate and avoid common mistakes, the specialist recommends following these rules:
- Use the services of reliable agencies with licenses and many years of market reputation;
- Hire a lawyer to avoid legal complications;
- Do not analyze the Turkish real estate sector on your own, comparing it with markets of other countries (e.g., your own);
- Avoid fraudsters offering to obtain Turkish citizenship through investments for a smaller amount than set by the government program;
- Remember that high property cost is not a guarantee of good profitability.
Conclusion
After a challenging year for the country's economy in 2023, the Turkish real estate market is beginning to recover. The number of transactions is growing, and analysts predict this growth will continue until 2028.
The high tourist influx makes resort areas attractive for investment. In 2022, 44.6 million tourists visited the country, and in 2023 – 49.2 million. Among the attractive destinations are Antalya, Alanya, and Bodrum.
The possibility of obtaining a Turkish passport for investments from $400,000 attracts foreigners and stimulates the inflow of foreign capital into the local market.
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