Istanbul Real Estate Investment: The Risk of Another Earthquake and Choosing The Right Districts

After the February earthquake with its epicentre in Kahramanmaraş, concerns about the risks of buying property in Istanbul linger. A number of Turkish and international companies' representative offices are even moving key offices from Istanbul to Ankara.

Fears are greatly exaggerated. A large number of houses in the metropolis are in need of major repairs or demolition, h owever, the houses mostly affected are those built before 2000. Construction then was of extremely poor quality. Building codes were then revised and tightened several times. Buildings ' younger' than 20 years old are therefore much more reliable.

Moreover, there are less dangerous districts for real estate investment. Istanbul Province is very large, like a metropolis itself with all its surroundings.

Voluntary property insurance in addition to the compulsory DASK natural disaster insurance is another means of reducing risk. Everything including chandeliers, cookware, and other household items can be covered to receive full compensation in worst-case scenarios.

Content:

• On the diversity of the metropolis
• What income can you expect?
• Sales in January
• Sales in February
• Top 7 districts with increased supply
• Detailed data for all the districts of Istanbul

On the diversity of the metropolis

The oldest neighbourhoods are not the only choice. Sultanahmet, Beşiktaş, Kadıköy, the Taksim Square precincts, and other historical areas are far from the only option if you don’t need to live in the heart of the city itself. Diversity is one of Istanbul's greatest assets.

For example, if you want to live in a business-oriented district, consider Maslak. You won’t see old houses and tiny narrow streets here, but new buildings, skyscrapers, and business centres.

If you d on’t want to live in the Turkish equivalent of Times Square , Florya is on offer, where there are no skyscrapers and only low-rise buildings with four or five floors at most. In this neighbourhood, you will find a more peaceful, slower pace of life, while all requisite infrastructure, including the largest shopping centre and numerous entertainment areas, is within walking distance.

The district of Beylikdüzü is also very quiet, but more in keeping with urban standards. There are long, wide streets, beautiful skyscrapers and park areas. It is highly popular among local and foreign investors.

If you take a closer look at the Asian part of the metropolis, Bağdat Caddesi, its influence having spread to surrounding neighbourhoods, is an unofficial district of the city. It is here that the Turkish elite lives. TV productions and cinema films are often filmed on location here.

If you are planning to buy a villa or a mansion, consider Beylerbeyi. This neighbourhood is very atmospheric and has many detached buildings overlooking the Bosphorus, accentuating its rich history.

The attention of developers and investors has recently been riveted on areas around the Istanbul Canal, a new man-made waterway that will become a transport alternative to the Bosphorus. The land here is going up in price by leaps and bounds, and old buildings are rapidly being pulled down. There are already a number premium residential development projects, complexes and villas in this area.

What income can you expect?

Regardless of the district, Istanbul is very attractive in terms of property investment. The demand for real estate here has remained stable, despite February's events. Realtors predict a resale profit of 30% or more, and investments don’t have to be long-term. If you make an informed choice of property, reliable profit can be attained in a matter of months. Some locations or residential complexes can often net 50% to 60% profit.

If you opt for long-term rental returns , then the yield will be below 10% per year — about 5 to 6% — but the property will remain at your exclusive disposal. After a certain number of years, you’ll be able to sell it having earned a return enough for one or two more properties. The thing is, the prices for Istanbul real estate will continue to rise. Even now, an apartment in a popular district is nearly more expensive than a small house in the USA.

Let’s review the statistics for real estate sales in Istanbul for January to February 2023 and changes in the number of available properties on the market, taking into account the short-term panic caused by the Kahramanmaraş earthquake.

Sales in January

In January 2023, 17,415 residential properties were sold in Istanbul, which is almost one-fifth of all transactions in the country for this month (17.8%). Of these, 2,888 residences were sold on a mortgage (unfortunately, currently unavailable to foreigners). 14,527 units were sold outright.

Of the 17,415 properties sold, 4,253 relate to the new-build segment, and 13,162 — to the secondary segment. Istanbul consistently ranks first in Turkey for secondary property sales.

Foreign nationals bought 1,380 residences in January.

Sales in February

In the second month of the year, 14,980 residential real estate units were sold in Istanbul , or 18.7% of the transaction total in the country. Of these, 3,167 were sold with a mortgage, and 11,813 outright. The new-build segment accounted for 3,912 properties, while 11,068 apartments or houses were secondary units.

Investors from overseas purchased 1,133 properties in February (the month when the devastating earthquake happened).

According to preliminary estimates, we should expect higher figures in March. They will be published in the near future, when detailed statistics on residential real estate sales for this month have been collated.

The number of properties waiting to be sold in Istanbul increased by 49% (the districts’ average) in February 2023 , as reported by Endeksa analysts. The demand for property in districts that experts recognised as safer, i.e. more seismic resistant, increased after the earthquake.

Residential property prices in Istanbul have risen by 156% over the past year, with a 6% increase recorded in February.

In Istanbul, the average price per square metre of property for sale was TL25,882 in February 2023, and the average price per residential unit was TL3,105,840.

Top 7 districts with increased supply

According to the statistics obtained, the districts of Istanbul with the largest number of properties for sale in February were Büyükçekmece, Kadıköy, Adalar (Islands), Şile, Beykoz, Bakırköy, and Beşiktaş.

These districts are the most sought-after.

On the Islands (Adalar), the volume of properties for sale increased by 79%, while a decrease in prices is off the table. The year-on-year price increase is 119%, with an increase of 6% in February alone. The average cost per square metre of property in Adalar was TL43,946, while the average price per unit was TL5,712,980. This figure is almost twice as high as the Istanbul average.

In Şile, where residential property prices rose by 7% in February, the volume of properties for sale increased by 75%. The average selling price per square metre was TL31,431, while the average price per property was TL5,500,425, which isn’t much lower than in Adalar.

In Beykoz, the volume of properties for sale expanded by 72%, with a price increase of 6% in February. The average selling price per square metre was TL46,627, while the average price per property unit was TL9,418,654 — three times higher than the Istanbul average.

In Bakırköy, where the volume of properties for sale increased by 66%, the price increase in February was 3%. The average selling price per square metre was TL52,087, while the average price per residential unit was TL7,031,745.

The number of available properties in Büyükçekmece increased by 60%. The price increase in February was 7%, the average selling price per square metre was TL23,980, and the average price per residence was TL3,597,000.

The same increase in properties for sale, 60%, was recorded in Kadıköy, where prices rose by 5% in February 2023. The average price per square metre was TL55,779, and per unit, TL7,418,607.

In Beşiktaş, the number of properties available for purchase increased by 59%. The price increase in February was 6%. The average price per square metre of residential property was TL73,557, while the average price of a residential property was TL10,297,980 (the highest of the seven districts listed).

Detailed data for all the districts of Istanbul