New Trends in Istanbul's rental housing market

Istanbul has been steadily leading in housing sales in Turkey for many years. It‘s the country's largest metropolis, where life does not stop for a minute. As per the official data, over 16 million people live here. Istanbul is one of the world's central attractions for tourists, businesspeople and other visitors.

This is why rentals will always be in demand and the same reason that rentals constantly remain on the agenda.

Regarding rental rates, Istanbul remains one of the most expensive cities in the country. A year ago, the average monthly rental exceeded TL 10,000 (Turkish Liras). Moreover, the annual rental increase in the metropolitan areas was 140-180% and this was only per the official data. 

However, in 2023, other issues have become more urgent in the metropolitan area and its surroundings. In particular, empty houses and apartments where the owners have no desire to live in them and no intention to sell or rent them, even though there’s a desperate shortage of housing for rent in Istanbul.

Legislative authorities are discussing sanctions for such owners. Last spring, they talked about once-off fines. Now the city's municipality is lobbying for an increased tax on idle residential property. They refer to the successful European practice of this kind - in particular, the "Spanish scenario". In Spain, the authorities have replenished the treasury by increasing tax deductions from those owners who do not rent out their homes.

Those wishing to buy apartments or houses in Turkey's Istanbul and earn an income from rent need not worry that the residence will be unclaimed and stand idle – as long as they don’t make the price higher than the market price.

Read about the trends and rental rates below.

Content:

• Dynamics of Rental Growth in Istanbul
• Rent and owners
• Rent and foreign tenants
• Istanbul's new trend: Daily rentals
• What is the cost of short-term rentals?

Dynamics of Rental Growth in Istanbul

The most practical way to trace the price tendency is to analyse the year’s dynamics.

Thus, at the end of February 2022, analysts recorded an average rental rate increase of 250% over 12 months. This figure was the highest in the whole country.

Kiaytkhane was the most expensive district, up by more than 251% compared to last year's rates.

It was followed by (in descending order):

• Shishli (+206%);
• Maltepe (+197%);
• Beyoğlu (+189%);
• Besiktas (+180%);
• Saryer (+165%);
• Beykoz (+163%);
• Uskudar (+153%);
• Eüpsultan (+134%);
• Atasehir (+129%);
• Kadıköy (+126%);
• Bakırköy (+123%);
• Fatih (+122%);
• Beylikdüzü (+95%).

What is going on at present? The Turkish real estate price analysis portal Endeksa.com published a report on what accommodation was available for rent for TL 10,000 in Istanbul in spring 2023.

Using advanced digital technology and artificial intelligence in the real estate valuation, Endeksa clarified that the average rent in Istanbul as at the end of March 2023 had already increased by 11% from the previous month, averaging 13.75 TL per square metre.

As such, based on a common area, one could rent a 119 square metre apartment in Avcılar, a 76 square metre one in Usküdar, or, for example, a 55 square metre residence in Şişli for TL 10,000 in Istanbul in the spring.

Here is more accurate data:

Rent and owners

At the same time, there’s been a significant shortage for a month now of available residences for rent. This happens when many landlords keep their apartments in Turkey's Istanbul closed, not selling, renting or residing in them themselves.

It’s  about far more than a few foreigners who come to Turkey and refuse to rent out their apartments to avoid getting involved with the hassle of renting. Often, those are the native Turks. One reason is the reluctance to sign long-term contracts with an annual renewal. Under such contracts, in case of prolongation for the next year, it’s only possible to increase the payment from the tenant by less than 25%. As we understand it, this is a drop in the ocean compared to the annual dynamics.

As a result, owners are waiting to rent out more expensive housing so as not to lose in their income or they wanting to sell it. Otherwise, they quietly bring their residences to the so-called "black market" of rent, hidden from the official statistics.

It makes more sense now as the first round of the presidential election is over and the second one is on the doorstep. Experts expect the prices of all residential real estate sectors to grow in the post-election period. Therefore, the owners of apartments and houses have "switched to a standby mode" and are planning to bring them back to the rental market again or for the first time.

At present, the number of empty residences in Istanbul alone exceeds... 400,000.

We can understand the owners to some extent. In this megalopolis, the rent per square metre of housing has risen by over 150% in one and two years - up to 474%. On the other hand, the 25% rental increase cap will expire by July 1, 2023, but government officials have already reported that it will be extended.

Rent and foreign tenants

Note that the owner has the right to charge the price on the newly signed rental contracts (not prolonged) and wait for an agreeable tenant.

Over the past year and a half, most of the local population complained about the inflated rates. Many families who have been renting housing all their lives suddenly found it to be unaffordable. On the contrary, the massive influx of foreigners and long-term tourists from various countries paid the requested amount, not delving into the finer points of the local economy.

However, less than a year later, protests also started in this client segment. Rental rates began to hit hard for the visitors from the former CIS countries and Europeans.

After the start of the summer season, even those foreigners who rent furnished accommodation for an extended period said that they were disappointed with the rising rates.

By the way, this trend has long been taking place in the coastal areas of Antalya, Alanya and the resort of Mugla in particular. To put it mildly, they were already not boasting the lowest rates,.

Prices here doubled over the year. The rates for renting accommodation with furniture rose from TL 750 to 1,500 per day for a 1+1 apartment and the rates for a detached house grew from TL 3,500 to 10,000.

Moreover, those are the average prices. For example, the real estate advisor Çetin Aksu, a public relations specialist of the Real Estate Consultants Association in Marmaris (one of the most popular resort towns in the province of Mugla), said that, as per the results of a study,  many owners have continued to raise the prices despite the rental increase limit set by the government,. Or, if they do not manage to rent out a property at the desired rates, they shut it up until a better time. A day and night in Marmaris in a 1+1 apartment already costs TL 2,000.

Why have we strayed from Istanbul and switched to the coast? That was purely a way to provide an example. This previously solely resort trend has fully spread to the metropolis. 

Specialised association representatives and economists say that the rental housing market must meet the needs of international visitors. There are numerous tourists and tourism is one of the "cornerstones" of the Turkish economy.

Istanbul's new trend: Daily rentals

A tip for those interested in buying property in Turkey, particularly in the province of Istanbul: the daily rental at present is far more beneficial than the long-term one. This is one of the most apparent trends in the metropolis in spring 2023.

This is especially true when it comes to premium locations overlooking the Bosphorus. There are currently hardly any empty lots of such properties in the city, so developers have stepped up and are trying to build new projects of this type as quickly as possible, i.e., with "views".

In the premium and elite segments, the switch to daily rent (and the purchase of high-quality residences with panoramic views, particularly for daily or weekly rent) is a very notable trend that is sensible to follow.

This is especially true for popular neighbourhoods such as Cihangir, Moda, Besiktas, Saryer, Bebek and Uskudar. In these areas, tourists and business travellers try to combine business with pleasure and get an unforgettable, unique experience in an apartment or house with a view of the Bosphorus and/or critical Istanbul attractions - and the prices do not deter them.

What is the cost of short-term rentals?

Given the specifics of short-term rentals, there needs to be clear statistics. However, we do know that the rent of luxury residences starts from TL 5,000 per night and the more luxurious the lot, the higher the price, which can reach TL 30,000 per night.

If you wish to rent an apartment with a view of the Galata Tower and the Bosphorus from the terrace, you can expect to pay TL 17,000 per day.

Prices are more reasonable in Besiktas, a little further away from the Golden Horn and the Galata Tower. However, they still start at TL 7,000 and the price can reach up to TL 20,000, depending on the residence's location and square footage.

One can find something less expensive on the Asian side. For example, luxury rentals in the Kadıköy area start at TL 8,000.

Although the much-loved Beykoz is far from being cheap, the prices here are the same as on the European side of the metropolis and reach 20,000 to 24,000 TL.

Another issue is that the housing prices for sale are high in these areas. You must invest a large sum to buy something for daily rent.

Some owners that are potentially considering letting their property for rent are worried about problems with cleaning, repairs, etc. Still, there’s a way to protect yourself from such issues with a guarantee. Moreover, you can choose apartments in large complexes of well-known hotel brands, where the management company handles all the problems associated with temporary guests. Yes, for a certain fee, those residences are more expensive than the apartments in the usual "sites". However, it’s one of the best short-term rentals for the owner, particularly for a  daily rate.

Istanbul always welcomes an infinite stream of arriving tourists and business travellers.

Here are a few more articles on the metropolis housing recently published on our portal:

Property market prospects and prices in Istanbul for 2023

Pros and cons of living in Istanbul for foreigners

Record holders of the year: among countries, Turkey; among cities, Istanbul; among districts, Esenyurt