Although resorts along the Aegean coast have been a popular investment choice for almost 2 years, even surpassing Istanbul in price growth, Istanbul remains the most popular destination. Also, Istanbul has the most demand for rentals in all of Turkey. The metropolis - a financial, economic and tourist center – has a stable demand for rental apartments all year.
And in recent months it’s been extremely difficult to find a vacant apartment for rent in Istanbul. Because of this, in October 2021, Istanbul’s housing profitability reached its maximum of the previous 12 months.
So property investment here is a safe choice with some exceptions, as all investments have. Turk.Estate recommends chatting to an experienced realtor about this. We can say that some of these exceptions or risks relate mostly to the district and the state the building is in. These can directly affect the return on investment. Also consider the traps and pitfalls in paperwork, etc.
2021 data shows that:
- In August 2021, prices for new-built houses in Istanbul rose by 34.7% compared to the same period in 2020. This was 30.1% for secondary housing;
- In September 2021, 28,000 housing units were sold in Istanbul and 179,000 in January-September. From these, about 70% of transactions over the previous 9 months fell for secondary housing and 30% for new-built houses;
- Sales in Istanbul rose in September by 11.1% compared to 2020;
- Most transactions were for homes in the European part of the metropolis (64.2%) and the Asian area accounted for 35.8%;
- Housing sales in the European area dropped by 7.1% compared to the first 9 months of 2020 and sales in the Asian-dominant area of Istanbul fell by 16.9%.
Now let's take a closer look at areas in the metropolis with the highest and lowest prices for homes. Whether you’re buying a premium or average, budget-oriented apartment all depends on your goals as a potential investor; each comes with different advantages.
There are 7 districts in Istanbul with an average residential property value of more than 1,000,000 Turkish lira (TL). These are Adalar, Bakırköy, Beşiktaş, Beykoz, Kadıköy, Sarıyer and Şile.
The data on the districts in Istanbul are listed below (the most expensive districts are highlighted separately):>
| District (ilche) | Average selling price per 1 sq.m (TL) | Average area (sq.m) | Average selling price per property unit (TL) | Payback period (years) | Increase in value per year % |
|---|---|---|---|---|---|
| Arnavutköy | 3527 | 103 | 341 548 | 25 | 29,62 |
| Ataşehir | 5835 | 111 | 631 812 | 24 | 11,38 |
| Avcılar | 4585 | 119 | 515 389 | 21 | 37,23 |
| Bağcılar | 4374 | 110 | 458 590 | 20 | 25,94 |
| Bahçelievler | 4392 | 105 | 440 475 | 22 | 24,03 |
| Bakırköy | 12 943 | 140 | 1 733 900 | 40 | 32,97 |
| Başakşehir | 7074 | 132 | 890 472 | 25 | 33,57 |
| Bayrampaşa | 5217 | 100 | 494 200 | 25 | 30,23 |
| Beşiktaş | 15 285 | 134 | 2 010 000 | 46 | 27,41 |
| Beykoz | 11 814 | 222 | 2 593 626 | 61 | 25,93 |
| Beylikdüzü | 4303 | 130 | 525 070 | 19 | 38,01 |
| Beyoğlu | 6462 | 96 | 623 040 | 24 | 18,2 |
| Büyükçekmece | 5314 | 150 | 768 150 | 27 | 38,28 |
| Çatalca | 4165 | 120 | 466 680 | 31 | 36,16 |
| Çekmeköy | 4341 | 100 | 414 500 | 26 | 28,81 |
| Esenler | 3935 | 100 | 381 000 | 23 | 21,56 |
| Esenyurt | 3248 | 106 | 327 858 | 15 | 28,18 |
| Eyüpsultan | 5751 | 109 | 626 750 | 24 | 23,36 |
| Fatih | 4894 | 90 | 432 000 | 20 | 12,32 |
| Gaziosmanpaşa | 4170 | 101 | 404 707 | 21 | 24,29 |
| Güngören | 4019 | 100 | 389 400 | 20 | 18,87 |
| Kadıköy | 13 062 | 135 | 1 610 415 | 40 | 43,33 |
| Kâğıthane | 5299 | 90 | 463 050 | 24 | 19,21 |
| Kartal | 5028 | 110 | 520 410 | 28 | 26,71 |
| Küçükçekmece | 5092 | 100 | 498 200 | 21 | 20,95 |
| Maltepe | 5835 | 110 | 608 520 | 26 | 28,89 |
| Pendik | 4054 | 110 | 424 490 | 27 | 23,07 |
| Sancaktepe | 3525 | 116 | 389 760 | 25 | 23,86 |
| Sarıyer | 17 252 | 163 | 2 667 332 | 55 | 40,84 |
| Şile | 6952 | 160 | 1 030 400 | 27 | 59,14 |
| Silivri | 3793 | 130 | 471 900 | 27 | 34,65 |
| Şişli | 7229 | 105 | 734 055 | 26 | 25,5 |
| Sultanbeyli | 3675 | 110 | 382 470 | 30 | 23,9 |
| Sultangazi | 3670 | 105 | 369 285 | 24 | 26,33 |
| Tuzla | 4472 | 110 | 475 640 | 26 | 25,51 |
| Ümraniye | 4989 | 100 | 478 400 | 26 | 23,19 |
| Üsküdar | 6290 | 110 | 672 100 | 29 | 21,9 |
| Zeytinburnu | 5644 | 100 | 545 200 | 23 | 21,98 |
The property valuation platform Endeksa says that the average selling price of 1 sq.m of residential property in Istanbul is now 5111 TL and the average price per home is 577,543 TL.
The payback period for investments in housing is about 22 years at the moment.
Pay attention to these points from the table:
- The shortest return on investment is in Esenyurt at only 15 years. So, it’s almost like Çeşme which has recently been breaking records;
- There are quite a few districts with a payback period of 20 years;
- It’s possible to buy housing for less than 0.4 million TL in several districts. These are Esenyurt, Güngören, Sancaktepe, Sultanbeyli, and Sultangazi;
- The maximum investment payback period is in Beşiktaş, Beykoz and Kadıköy but this is mostly because of the high property (and square meter) cost.
Buying a home in Istanbul means you could benefit from the possible lowered lending rates in the future., Görkem Oyut, founding partner and CEO of Endeksa, said: “Previously, state-owned banks offered an average rate of 1.37% per month for amounts less than 1 TL and about 1.41% for amounts above this. But now, these figures have changed to 1.29% and 1.34%, respectively. The last lending rate reduction took place in June 2020, was initiated by the authorities and is related to the pandemic. And now that sales in the construction market have revived, in the 3rd quarter of 2021, the real property sector has already shown a noticeable increase. We expect the number of sales to increase further as a result of housing credit interest rates reduction.”
If you’re interested in rental housing, Istanbul rents are very high at the moment and continue to rise. This is because students are returning to in-person study at universities and white-collar workers are going back to offices. This has meant a further supply-demand imbalance and a sharp drop in vacant apartments on the market.
Keep in mind things like people who left for their hometowns because of the pandemic are returning to work; there’s an increase in weddings after restrictions were eased; the urban transformation process underway across Turkey means that many are moving from dilapidated to rented housing before new buildings are developed. And, finally, don’t forget about the abundance of those who came from abroad: many people decided to “sit out” the pandemic in a country where the climate is milder and there are fewer restrictions. And many of these people came to Istanbul.
Over the past year, the rental prices have risen by 55% on average in the country but this is much higher in many places in Istanbul. Over the past year, rent increases were close to 100% in Beykoz, 90% in Sariyer, 85% in Tuzla and Maltepe, and 80% in Ataşehir.
The districts with the lowest increase in rental rates were Sultangazi (45%), Fatih (40%), Güngören (35%), Esenler (30%) and Bayrampaşa (25%). If these indicators can even be called low!
So lessors (apartment owners) benefit all around. After all, industry representatives think that the current market situation will continue for about 2 more years.
President of the TÜGEM Association of Realtors Hakan Akdogan, says that rental rates will continue growing because of inflation, the pandemic’s effects and an excess of demand oversupply. He also stressed that the highest rent growth in Istanbul is in the Beykoz, Sariyer and Beşiktaş districts (2 of them are among the most expensive). Also, rents have increased a lot in districts closer to the city center.
Emphasizing that high rental prices stimulate people to decide on the acquisition of apartments ownership - in order not to overpay more and more every month - Hakan Akdogan admitted that this makes sense. So if you want to invest in Istanbul’s real estate, make a good investment soon while there’s a wide range of homes to choose from.
Realtors say, “Until now, residential property payback periods in the metropolis have never been so short. Now it makes sense to buy; it’ll be more difficult in a year or 2. For instance, last year, a convenient apartment worth 600,000 TL was rented for 1,500 TL a month. Now, this same apartment’s rent is up to 3,000 TL. Just imagine the difference!"