After some winter stagnation, construction and sales sector of property in Turkey has entered a thaw. This was even more true after the March elections: some projects and new legislation directly related to housing were put on hold until after the elections.
Content:
- The construction sector
- Results in figures and facts
- Price dynamics by provinces with the highest number of searches (according to Emlakjet analytical portal)
The construction sector
In April, the Turkish Contractors Association (TMB) published construction sector statistics for the 1st quarter of 2024 year, offering its version of a comprehensive assessment of the future of the construction industry and the government support policies after local elections. Among the key aspects: the country's president, Recep Tayyip Erdoğan has confirmed that all municipalities 'on the ground' will be given equal support, and the next 4-year period —until the new elections — will be aimed at structural and infrastructural (including transport) changes to the maximum extent possible. New transport links will continue to be built: roads, railways, metro lines, tram lines, etc. A programme of urban transformation programme is in full swing, aimed, among other things, at minimising the effects of possible earthquakes, which are increasingly common in Turkey.
Results in figures and facts
- The construction sector output grew by 10.8 per cent in the 4th quarter of 2023 alone, and this momentum is accelerating in 2024.
- In January–March 2024 (1st quarter), the Turkish construction industry realised 40 projects worth $4.3bn outside the country, i.e. abroad. Thus, the size of the international project portfolio that the sector has achieved since entering the foreign market in 1972 (starting with projects in Libya) totalled $507.3 billion. A total of 12,164 projects have been realised in 136 states.
- In the 1st quarter of the current year, the most significant number of development projects launched or already implemented by Turkish companies was in Kazakhstan (for $892 million). In 2nd place, curiously enough, Gabon ($807.4 million), and in 3rd place — Poland ($643 million). It should be noted that Africa has become one of the areas where the Turkish construction industry is now paying particular attention to expanding its cooperation with the Middle East.
Construction cost index: In January, it increased by 15.7 percent compared to the previous month and by 67.87 percent compared to the same month of the previous year. Meanwhile, the materials index increased by 5.13%, and the labour index increased by 41.95% compared to the previous month. Relative to the same month of the previous year, the materials index increased 53.29%, and the labour index climbed 103.46%.
- Housing Cost Index: as reported by the Central Bank of the Republic of Turkey, it rose by 2.3% in January compared to December, or 68% year-on-year. By vital metropolitan areas, Istanbul, Ankara, and Izmir saw increases of 1.3%, 2.4% and 2.8%, respectively, compared to the previous month. For the year, it is +54.5% in Istanbul, +85.6% in Ankara and +70.4% in Izmir. In February, the housing cost index increased by 2.2% against January and 58.3% year-on-year. Istanbul, Ankara and Izmir saw increases of 1.5 per cent, 2.0 per cent and 1.6 per cent, compared to the same month last year — 45.6 per cent in Istanbul, 72.9 per cent in Ankara and 57.4 per cent in Izmir, respectively. For March, exact figures have not yet been released.
- Emphasis on sustainability: so-called 'green' cement has become mandatory in the projects of companies that have won public tenders. According to the 'Communiqué on Increasing the Use of Low Carbon Green Cement in Public Procurement Contracts' published by the Ministry of Environment, Urbanisation and Climate Change on 16 March 2024, this material is now mandatory. This is a good thing because this product is sustainable and efficient; its clinker/cement ratio will be a maximum of 0.8, and by 2030 it will be down to 0.75. This is important to buyers because, in the context of the sustainable development of the construction industry, carbon dioxide emissions from development projects in Turkey (thanks to this measure among others) will be significantly reduced.
- Economic factors and exchange rates. The continued depreciation of the Turkish lira and global economic uncertainty have also contributed to Turkey's housing sales decline. But not always to foreigners: exchange rate fluctuations have been considered. However, the lira depreciation against the dollar/euro has encouraged many buyers to close deals quickly. And some are still waiting, hoping for an even more significant depreciation.
- Prices and sales: while transaction volume fell by 2.0% year-on-year in January–February (totalling 174,210 units sold), by the end of March, the gap had minimised to just –1.3% compared to Q1 2023, totalling 279,604 units.
- Sales to foreigners by month: the volume of transactions with citizens of other countries in January 2024 decreased by 50.5% compared to January 2023; 2,061 units in total. The share of signed contracts with foreigners in the total volume of residential property sales is equal to 2.6%. In February, the decrease was 44.9%, totalling 1,846 units and a share of precisely 2% in the total volume. In March, the decrease corresponded to 47.9% to March of the previous year, totalling 1778 units, and the segment's share in the total volume of residential property sales amounted to 1.7% (by the way, the minimum for 2 years).
Sales to foreigners for the quarter: According to the results of January – March 2024, the volume of transactions with investors from abroad fell by 48.0% compared to the same period last year. A total of 5,685 units were sold. Analysts explain this decrease by the general market dynamics, economic factors, and events in foreign policy.
- The most sought-after cities by foreign investors are Istanbul, Antalya and Mersin. Although the distribution of places in the top 3 can be different: for example, in January, the 1st place was occupied by Antalya (747), only the 2nd — Istanbul (710) and the 3rd — Mersin (211). In February, Istanbul (691) came 1st, followed by Antalya (659) and Mersin (151). In March, Istanbul (652), Antalya (618) and Mersin (151 again).
- The countries are leaders regarding the volume of transactions: Iran and Iraq are stable next to each other, sometimes changing places. Ukraine, Kazakhstan, and Germany are sometimes lagging behind in several months. For the 1st quarter, the figures are as follows: January — Iran (208), Ukraine (127), Iraq and Kazakhstan (99 each). In February —Iran (200), Iraq (112) and Ukraine (105). In March — Iran (182), Ukraine (129) and Iraq (82). According to experts, this trend shows that Turkey's diplomatic and economic relations with international partners are deepening, positively impacting the property market.
- Looking ahead: Turkey has always been strategically important to foreign investors due to its favourable location. However, local and international economic conditions and political stability are some of the main factors that will determine the future of the property market. In the coming period, the government's incentives and policies may revitalise foreign investors' interest in the Turkish market, especially since measures have already been taken to help foreigners open bank accounts in Turkey without regard to plans to buy a home. There is also talk about simplifying obtaining residence permits, although there is no official date yet. Thus, the potential for market recovery looks high, given the country's opportunities and strategic advantages. Investors and analysts will continue to monitor the market situation closely.
Price dynamics by provinces with the highest number of searches (according to Emlakjet analytical portal)
January
| Province | Change in price per month (sale) (in %) | Change in price per month (rent) (in %) |
|---|---|---|
| Istanbul | +3 | +3 |
| Ankara | +2 | +4 |
| Izmir | +3 | 0 |
| Antalya | +1 | 0 |
| Bursa | +4 | 0 |
| Diyarbakir | -2 | -4 |
| Aydın | -2 | +8 |
| Mersin | -1 | +4 |
| Konya | 0 | 0 |
| Tekirdağ | 0 | +10 |
Summary of the month: Tolga Idikat, CEO of Emlakjet, stated that according to the results of the surveys conducted by the portal, 70% of respondents consider the high cost of houses and apartments in Turkey (rent and sale) to be the main problem of the high cost of living. Assessing the impact of the in-country migration process on the residential property sector, he explained that it is because of the increase in rental prices in recent years that 53% of users are considering moving from their current neighbourhood/city to other, cheaper ones. The rise in interest rates over the last 7–8 months has forced middle-income citizens who cannot afford to buy a home to turn to the rental market. So, as far as we can tell, there will be a supply shortage to meet this demand, which will only increase in the long term. Considering the existing imbalance of supply and demand for rental housing, this trend can lead to price increases of 60–70%.
February
| Province | Change in price per month (sale) (in %) | Change in price per month (rent) (in %) |
|---|---|---|
| Istanbul | 0 | 0 |
| Ankara | +3 | +7 |
| Izmir | +1 | 0 |
| Antalya | 0 | 0 |
| Bursa | +2 | 0 |
| Aydın | +5 | +7 |
| Diyarbakir | +2 | +4 |
| Konya | +3 | +4 |
| Mersin | +2 | +3 |
| Gaziantep | 0 | +2 |
Summary of the month: in the 2nd month of the year, Tolga Idikat said that 42% of Emlakjet users predicted a price increase in the property sector after the elections, which directly impact the situation in the country and in the individual provinces. In addition, the population mainly expected the local authorities to solve the problems of urban transformation and settle disputes between tenants and owners.
March
| Province | Change in price per month (sale) (in %) | Change in price per month (rent) (in %) |
|---|---|---|
| Istanbul | +3 | 0 |
| Ankara | +1 | 0 |
| Izmir | +1 | +7 |
| Antalya | +2 | 0 |
| Diyarbakir | +5 | 0 |
| Bursa | +3 | 0 |
| Aydın | +4 | 0 |
| Konya | +3 | 0 |
| Mersin | 0 | 0 |
| Gaziantep | 0 | –6 |
Summary of the month: Based on the March results and the elections held, 64% of Emlakjet users considered the measures for infrastructural transformation and improvement of life in Turkey's cities insufficient and hoped for more. Tolga Idikat emphasised that new communication strategies are needed to raise public awareness and promote social transformation.
In any case, the 1st quarter of this year was more active than the 4th quarter of 2023, and with the start of the summer season, sales should pick up, at least in the resort sector. Experts advise not to delay the purchase of property in Turkey. The reasons are here.