Izmir, Turkey’s third-largest city, occupies an important position in the country's real estate market. Rapid urbanisation, population growth and economic advancement are driving up housing costs in the city. Let's take a closer look at the current trends in the Izmir market and what investors and buyers of real estate in Turkey can anticipate in 2024.
Content:
Growth factors
Izmir is one of the fastest-growing cities in Turkey, with a young and dynamic population. It serves as a significant hub for both internal and external migration. As per the Turkish Statistical Institute (TurkStat), the population of Izmir was about 4.48 million by the end of 2023 and this number is expected to continue growing. This growth is a major factor driving up the demand for houses in Turkey. The city’s economy is experiencing substantial expansion, with advancements in industrialization, commerce, tourism and services creating new job opportunities. Consequently, the population's rising income level is leading to an increased demand for housing.
Moreover, improvements in transport infrastructure are benefiting the market. In particular, the development of the Izmir–Ankara high-speed train route will significantly enhance the city's transport.
Izmir attracts numerous foreign investors due to its high quality of life, mild climate and well-developed infrastructure. They are particularly interested in new off-plan projects in Turkey from well-known developers, featuring sea views and high-quality amenities. To meet the growing demand, numerous new projects are underway in the city, especially in the districts of Karşıyaka, Bornova, Bayraklı and Gaziemir. However, the current housing supply may be insufficient, particularly in central areas and along the coastline, causing local properties to rise rapidly.
Price dynamics by region
House prices in Izmir have increased significantly over the past five years, rising by an average of 80% (in conventional units) between 2019 and 2023. They are expected to grow by an additional 10-15%.
When it comes to neighbourhoods, the situation looks as follows:
Karşıyaka
This elite coastal area boasts a high quality of life. The value of local real estate has increased by 90% over the past five years.
Alsancak
One of the most prestigious clusters in Izmir, Alsancak is in great demand due to its seaside location and diverse entertainment options. House prices have risen by 85% in the past five years.
Konak
A key historical and cultural centre, Konak sees high demand for real estate. The five-year price increase was 75%.
Bornova
One of the fastest-growing areas, known for its universities and shopping malls, Bornova has experienced a significant rise in housing prices, which have jumped by 70% over the past five years.
Buja
A popular student neighbourhood, Buja has seen considerable activity in its housing market in recent years due to population growth and infrastructure investments. Property values have increased by 65% over the past five years.
It’s also worth paying attention to areas such as Bayraklı, Gaziemir and Çiğli. Bayraklı is a new business and financial centre, featuring business complexes and modern development projects in Turkey. The old buildings in Gaziemir and Çiğli are being demolished as part of an urban transformation project, with new earthquake-resistant houses set to be constructed.
Rental yield
Izmir is one of the most attractive cities in the country for rental-oriented investors. As of Q2 2024, the ROI in housing in the province reaches 10% per annum. High profits are driven by new homes, particularly luxury properties The most appealing opportunities are found in Bayraklı and in urban transformation projects in Bornova, which offer impressive potential for profitability growth.
Prices in the province are rising steadily, although income varies depending on the location and features of the building. The top four areas where one can purchase housing and rent it out for a long-term investment are Karşıyaka, Alsancak, Konak and Bornova.
Applicants and students from Aegean University, the University of September 9 and the Izmir Institute of High Technology are common tenants. Rental demand increases at the beginning of the school year. Students seek housing near their universities in Bornova, Buja and Karşıyaka. They focus on more affordable options, choosing both furnished apartments in Turkey and unfurnished ones.
Tourists are drawn to the properties in the downtown and coastal areas. Please pay attention to Alsancak, Karşıyaka, Çeşme, Alaçatı and Urla, where daily and weekly rentals are widespread.
Results and forecasts
- Izmir, as one of the most dynamic and rapidly developing cities in Turkey, remains an attractive option for investors due to its high quality of life and economic potential.
- Demand for housing, especially in the downtown and along the coastline, will remain high.
- The rapid development of infrastructure is another factor influencing the housing market. Projects, such as the Izmir–Ankara high-speed train line and new metro lines, will facilitate urban transport and attract buyers to new locations.
- Promising, affordable projects can be found in Çiğli, Gaziemir and Güzelbahçe.
The latest statistics
As of July 2024 in Izmir:
- Real estate prices have increased by 43.48% over the year;
- The average price per unit of housing is USD 137,776;
- The average cost per 1 m² is USD 1,076;
- The lowest/highest price per 1 m² is from USD 612 to USD 2,588;
- The average real estate size is 128 m²;
- The return on investment period is 15 years;
- The fastest price growth is in the districts of Beydağ, Karaburun, Menderes, Tir and Bayındır;
- Real estate prices are rising the slowest in Selçuk, Buja, Menemen, Çiğli and Kiraz.