One may feel overwhelmed when researching the current situation in the global real estate market. Some note that Asia is leading the market, others encourage investments in the Spanish market, and some sway toward the markets of Arab and African countries.
Each one of these choices has its pros and cons, including the real estate market in Turkey. If you are reading this article, it means that you have thought (at least once), "Is it worth it?".
In this article, we will attempt to share basic information on the local market, why it is worth investing in, and why it makes sense to not delay.
We hope that this will help you make an informed decision and prompt you to contact a trusted real estate agency, well-versed in the nuances of the local market.
Content:
- How Turkey Attracts Consumers and Investors
- What you should know when Buying a Property
- Why it is worth Investing in Turkey’s Real Estate
- Why Consider Buying a Property or Relocating to Turkey right now?
- Conclusion
How Turkey Attracts Consumers and Investors
To begin, we suggest browsing through the points of how Turkish real estate can be attractive to the consumer or investor.
Fledgling Market
Modern Turkey, like its real estate market, is no more than 10 years old. Mass innovation and modernization are phenomena that only became commonplace around 2010.
However, a competent domestic and foreign policy, an advantageous geographical location, and an attractive investment environment allowed the local market to become world leaders within a short period.
Turkey has a way to go yet, but the younger generation is a force for change, allowing this country to actively develop opportunities and flexibly adapt to the requirements of a once turbulent market.
Affordable Prices
As the market entered the global race late, real estate prices are affordable compared to those of other countries. You can buy a small house or a two-bedroom apartment at an average price of $ 62,331, making it more affordable without sacrificing quality. This allows middle-income earners to purchase real estate without having to take out loans.
Various Properties on Offer
The rapidly growing real estate market requires many architects and engineers. They have migrated to Turkey from all over the world and created an amazing array of properties, using varied construction, layout, and design techniques. This eclectic mix of professionals has translated into the production of homes in an interesting range of styles.
Affordable Standard of Living
Turkey’s tax laws are not a heavy burden on its residents, compared to most countries. For example, you will not exceed $9 to $10 per month for water consumption.
As Turkey is located between the East and West, as far as consumer options go, it enjoys the best of both worlds. You can purchase quality products at branded retail chains and in local markets. Visitors are encouraged to try local products and produce.
However, fuel prices are high, on average about a dollar per liter.
Variety of Areas for Buying Real Estate
Turkey is a large country stretching from Europe to the Middle East. There are many areas to choose from, such as Istanbul (its western and eastern parts), the southern and northern coasts of Anatolia, and many cities on the shores of the Aegean Sea, among others.
There are so many options, there is always something available to meet everyone’s taste, needs, and desires (even with regard to climate).
Conditions of Long-term Investments
The country is well suited for long-term investments with large returns on investments. There are various factors within the market.
For example, the expanding populace of the younger generation means that more property will be needed shortly, promising good returns on investments. The country is actively developing, and mega-cities are rapidly expanding. Therefore, buying several inexpensive housing units in the suburbs, within 5-10 years, will translate into profitable assets in the city, with high demand and higher prices.
Another option is to bet on the increasing rates of inflation. Current events in the global economy (including the Covid 19 pandemic) have forced Turkey to follow global inflation. The higher the inflation and the quicker it escalates, the greater the return on your investment.
What you should know when Buying a Property
According to official data, in the second half of 2020, residential real estate sales increased by 4% compared to the second half of 2019, despite the effects of the pandemic and restrictions.
From January to June 2021, foreign buyers allowed the market to close the first half of the year with the best figures in history when over 20,000 properties were sold. By the first half of 2020, the growth was at 44%.
The affordability, adaptability, and accessibility of the young Turkish market allow it to actively resist the pressure of the coronavirus pandemic and crisis trends in the global economy.
It is also worth taking note of the internal process of buying, selling, and leasing a property. Whether you are an investor or a buyer, any real estate transactions always go through the main regulatory body, the Land Registration Office (Tapu Dairesi). Without its approval, no transaction can be considered legal. You will also need to pay 4% fees for registering a purchase and sale transaction of which the seller pays 2%, and the buyer pays 2%.
When buying a property, you should remember that you are allowed to sell it only after three years of ownership.
You will obtain a resident visa for purchasing real estate for a fixed amount, which you will receive once the transaction is concluded.
(Visas are issued from 1 to 5 years).
Turkey has no prohibitions on the purchase of real estate by foreign nationals. However, before buying a home, you need to get approval from the municipal authorities. Of course, there are areas of national or strategic importance where you will not be allowed to buy real estate.
Residential real estate is most popular in Istanbul, where 44% of all migrants choose to relocate. 21% of ex-pats live in Anatolia and the remaining 35% settle throughout the country.
Istanbul is the most expensive city in the market. The average starting price for buying a property is about $62,000. If you rent a home, you will probably pay up to $320 per month.
Foreigners are allowed to take out loans to buy real estate. Options are available where the loan deposit will not exceed 10-12%.
The Turkish market is dynamic, and changes in the number and value of transactions can range from 10 to 11%.
It is worth taking note of the low taxes. In the city, you will pay a property tax of 0.2% of the estimated value of the property and in the province, 0.1% of the cost.
Taxes are paid twice a year.
All types of residential real estate in Turkey can be divided into four main categories:
- Flats;
- Apartments;
- Condominiums;
- Villas.
However, there are many other options.
Why it is worth Investing in Turkey’s Real Estate
A brief overview of the factors that allow us to count on a high income from real estate in Turkey would depict the advantages (and high profitability) of renting out a property or flipping it. This can be applied to both residential and commercial real estate.
Important Trade and Economic Roles
Rates of employment and income are increasing in the country. Turkey, taking advantage of its favorable geographical and transport position, has extensive trade with Germany, Russia, Great Britain, Italy, the UAE, Iraq, China, and many others. This creates a constant flow of business-oriented buyers and tenants and a high demand for property, which can increase real estate prices in both the elite and commercial sectors.
Developed Infrastructure and Advanced Technologies
The country has low transport costs. Even though fuel prices are not cheap, the infrastructure in the country has developed over the past ten years and can compete with market leaders.
Of course, following the infrastructure, the need for high-tech support is growing (modern communications, innovations in the energy sector, etc).
All this creates an environment for the influx of many highly qualified emigrants, including engineers and IT workers. The public is wealthy and ready to rent expensive housing.
Young Population
Turkey is a country with a high demographic of a younger generation. The average age of residents is 25–35 years, therefore there remains a high demand for rentals within the population. This presents a great opportunity to earn money through housing in busy cities.
Busy Tourist Destinations
If you want to earn money from the tourist industry, the best choice of property is in Istanbul and the cities, cottage villages, and resorts on the coast of southern Anatolia (from Antalya and Belek in the east to Izmir and Kusadasi in the west).
Favorable Interest on Loans
The Turkish authorities focus on attracting potential buyers and investors in real estate to use various credit options.
Interest on loans is not the most attractive, but banks compensate for this with various programs, tax deductions, flexible payment plans, and low deposits.
Resident Visa for Investment
You can obtain a resident visa for a period of 1 to 5 years. It is renewable and will not be taken away if you sell the property for which it was issued to you. To achieve this, you need to invest at least $250,000 in the country’s property market, with the purchase of either one property or several.
Why Consider Buying a Property or Relocating to Turkey right now?
Firstly, it is necessary to assess economic growth.
The residential real estate market, when compared year-on-year in May 2021, increased by 16.2%. This allows one to feel confident of a good return on rentals when buying a property.
On the other hand, home sales remain low, due to quarantine restrictions. This translates to a buyer’s market of affordable prices and an opportunity for consumers to purchase high-quality real estate for future relocation.
Nevertheless, according to TurkStat, almost 60,000 properties were sold in May alone.
If you look at the general market trends, prices are increasing. So, it is most profitable to buy real estate even if you do not plan to personally occupy it at the moment.
In comparison with last year, real estate prices in Istanbul, Antalya, Trabzon, Bursa, Izmir, and Yalova increased by 23,16%, 48,97%, 2,89%, 1,09%, 1,58%, and 1.81%, respectively.
It is worth noting this unbalanced percentage growth. The first two cities are more diverse in the real estate sector. While the other four are focused on tourism, which was severely affected by quarantine restrictions in 2020 and 2021.
If we consider the real estate market as part of the country’s overall economy, which follows general trends, in the second quarter of 2021, the Turkish economy grew by 21.7% compared to the same quarter of 2020. This rate of increase does not diminish year by year.
Great demand comes from the wealthiest 20% of the population, who take advantage of the current situation when inflation is rising, but loan rates remain fixed. This allows you to plan earnings on the sale of luxury real estate to this population group.
It is worth mentioning the changes brought about by the pandemic situation, as the coronavirus has hit Turkey hard. Rising inflation is one of the manifestations of this process, but the economic struggle is gradually passing.
At the end of August, it became known that European countries, for example, the United Kingdom, will be ready to remove Turkey from the red list soon and allow regular thorough-fair.
Turkey is also beginning to widely apply regulatory methods, including "covid passports". Travelers and visitors to concerts, films, mass events, and other public places will be required to provide documents on a negative PCR test or confirmation of vaccination.
These measures ease restrictions and return broader commercial activities, which should have a positive impact on the overall state of the economy.
In general, all signs of intensive growth are present. Therefore, the best option is to enter the property market while it is low before it enters into the predicted rapid growth.
Conclusion
The COVID-19 pandemic and the global economic downturn have impacted Turkey harshly.
The prices on the market are affordable, and the credit and tax policy is flexible, meaning that a wide range of consumers and investors can enter the market. In addition, for investments, you can receive a resident visa, and in the future, citizenship.
All the signs of imminent intensive growth of the economy are visible (in general and in the real estate market in particular). Therefore, it is now more profitable than ever to study the situation and be ready to decide between buying a home or investing in real estate, to grab the opportunity at the moment before growth.
The surest option is in Istanbul. Purchasing a property for rent or a long–term investment in suburban housing (for 5-10 years) is a wise choice to see a profitable return. Buying a property for personal use while there is a low demand for it will also see future growth in investments. Although demand for flats and apartments is currently low, the demand for houses is even lower. Therefore, with predicted future growth in the sale of these options, now is the time to buy!