Q1 of the year: results and critical real estate news

For obvious reasons, January–March 2023 was challenging for the Turkish real estate market. It faced unexpected and very large-scale internal migration caused by the earthquake. Therefore, the rental stock was reduced, rental rates increased, and investors reconsidered their real estate purchase priorities. Moreover, authorities and developers began imposing stricter requirements for buildings.

Let's review the latest facts and figures, which will be helpful to potential buyers of houses and apartments in Turkey.

Content:

• Changing requirements for construction work
• Adjustment of demand from foreigners. Focus on Antalya
• Istanbul is the leader in rents
• Conclusion

Changing requirements for construction work

The media report that the Ministry of Environment, Urbanization, and Climate Change is reviewing the construction requirements after the February events. And while preparing, agreeing upon, and approving the changes in regulations, they promptly introduced certain restrictions.

Namely, the Ministry has tightened the height limit of buildings. Previously, building houses in Turkey exceeding 3–4 floors was forbidden in some regions. Regardless of location, the height restriction applies to all objects designed and erected by newly graduated engineers. The maximum permissible height of the building is four floors (update: excluding the basement, it is considered zero in Turkey. In total, by standards of several countries, the maximum permissible height of the building is five floors. – Editor's note).

With the accumulation of experience, civil engineers may be allowed to design higher objects, but this permission will require proof of qualification.

Those engineers who have worked successfully in the market for at least three years and commissioned more than 10,000 sq. m of real estate will be allowed to construct buildings of 4 to 8 floors. Those having 5+ years of experience and a diploma of a certain level in the construction field (including earthquake engineering) will be allowed to build high-rise buildings.

New rules relating to public facilities and the architects who create them were introduced.

Architects in such projects should have at least five years of experience in the public sector or as a teacher in the university departments of architecture, have a doctorate, and be a member of a professional association confirming their qualifications. Also, they need a portfolio of at least four commissioned buildings.

The rule "I am an artist, I see it this way" is rapidly becoming obsolete. A panel of experts on architectural aesthetics will decide whether a project fits all the parameters, including how well it fits into the cityscape.

The chairperson of such a commission must be an architect with at least five years' experience or a degree of mastery.

New requirements are imposed on houses of "4 floors plus ground floor" height and higher and applied to the entrance, the surrounding territory (front gardens), and the distance of complexes from the neighboring plots, etc.

Changes have also affected non-residential real estate, primarily offices and commercial premises located on the first floors of apartment buildings. The ceiling height should not exceed 4.5 meters, and load-bearing systems will be checked for compliance with the requirements specified in the Building Code for earthquake resistance. Owners have to provide additional (emergency) exits. The lack of those increased the number of victims of the February earthquake in Kahramanmaras and its surroundings.

All measures taken are aimed at constructing as safe earthquake-resistant buildings as possible.

Adjustment of demand from foreigners. Focus on Antalya

The first quarter of this year showed the following statistics: 38 out of every 100 residential lots sold to citizens of other countries are located in Antalya.

As a result, although housing sales to foreigners in Turkey in January–March 2023 decreased by 24% compared to last year, they increased by 21% in Antalya. As a result, 38% sales of real estate in Turkey were in Antalya.

In Istanbul, the total sales volume for the first quarter amounted to 3,603 lots, 40% lower than last year. On the other hand, Antalya recorded 4,177 houses or apartments bought by foreigners in January–March.

According to the statistics, for several years in a row (since 2015), property in Turkey was primarily purchased by citizens of Iraq, Iran, Saudi Arabia, and Kuwait.

As to Antalya, its share in housing sales to foreigners in previous years amounted to 20%, but now this figure has doubled. Helmann Yapı, the Chairman of the Board of Directors, and a member of the Real Estate Investors Association (GYODER), Selman Ozgun, said that there is an influx of investors from many countries: “We are witnessing a demand for almost all coastal cities of Antalya. This interest is even spreading beyond other areas. The demand is concentrated in Konyaalti, Alanya, Serik, Muratpasha, and Kemer. Even when the flow of tourists is low, there are earthquakes and reduced number of international flights; we still see that sales of residences to foreigners in Antalya have increased by 21%.”

Selman Ozgun stressed that factors such as the start of the new tourist season, the increase in the number of international flights, and the continuing influx of immigrants would further increase the sales of residences in the coming period and that the continuity of demand from the citizens of European countries will remain.

While housing sales to foreigners have decreased in other provinces, the dynamics of sales in Antalya indicate the high interest of international investors.

Istanbul is the leader in rents

Despite the absolute popularity of Antalya, Istanbul remains a trendy place for buying and renting accommodation. Firstly, Istanbul is a so-called all-year-round destination, as the metropolis is the financial, economic, and commercial center. Secondly, in contrast to the resort areas, there are more projects where residences are sold as part of mixed-use and hotel complexes.

If you buy one or more apartments in the city and hand them over to the management company – which is often an international hotel operator – you can provide a stable income from short-term rentals while minimizing the hassle with the property. If you buy an apartment as part of a hotel complex, the management company will take control of on-time payments, cleaning, cosmetic repairs, etc. The cost in case of repair and renovation of the room stock is also the responsibility of the hotel operator.

According to Endeksa analytical portal, at the end of the first quarter of 2023, housing prices in Istanbul increased by 144% over the year, and the average cost per m² was TL 27,004 (Turkish Liras). Nearly 115,000 residential lots were available for purchase in the province by the end of March.

As for rents, Istanbul is in the top three for the highest rental rates, along with Antalya and Mugla.

According to analysts' calculations, at the end of the 1st quarter of this year, 45,535 vacant lots were offered for rent in the entire province of Istanbul. This number is 4.5 times more than in Antalya, not due to lack of demand, but to high prices.

Endeksa Portal recently published another index of the cost of residential real estate in Turkey. It specifies how many m² of housing tenants can afford to rent for the available budget.

Thus, by the end of March, the average real estate rental cost in Istanbul increased by 11% compared to the previous month and by 141% compared to last year, amounting to an average of TL 127,09 for 1 m² and TL 13,290 for one standard residence per month.

Also, experts have calculated what kind of housing one can rent in the largest Turkish metropolis for TL 10,000.

For example, this amount is enough for apartments of 119 m² in Avcılar, 76 m² in Uskudar, and only 55 m² in Şişli.

Have a look at a detailed table by neighborhood in Istanbul:

Saryer and Beşiktaş were the most expensive neighborhoods, where that amount is sufficient for only 36 and 39 m² of rentable residential property, respectively. They are followed by Beyoglu, where tenants can count on just 52 m², and Kadikoy and Şişli (53 and 55 m², respectively).

But in Silivri, you can enjoy spacious housing: TL 10,000 will cover the rent of an apartment of 167 m² – and it can even be a small house.

Conclusion

To summarize, if you are planning to rent out a property in Turkey but are still determining if you will stay in the country in person for long periods, it's worth considering buying a property in Istanbul. Real estate here is steadily increasing in value, and at the same time, the province remains “off-season,” unlike the resort areas.