After winter stagnation, the construction and sales sector of property in Turkey has begun to thaw. This trend became more pronounced after the March elections, as some projects and new legislation 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 (as per Emlakjet analytical portal)
The construction sector
In April, the Turkish Contractors Association (TMB) published construction sector statistics for the first quarter of the 2024 year, providing its assessment of the industry’s future and government-supported policies following the local elections. Key aspects include President Recep Tayyip Erdoğan’s confirmation that all municipalities 'on the ground' will receive equal support. The next four-year period, leading up to the next elections will focus on extensive structural and infrastructural changes, including transport. New transport links such as roads, railways, metro lines and tram lines will continue to be developed. An ongoing urban transformation programme aims to, among other things, minimise the effects of increasingly common earthquakes in Turkey.
Results in figures and facts
- The construction sector’s output grew by 10.8% in the fourth quarter of 2023 alone, with this momentum accelerating in 2024.
- In the first quarter of 2024 (January to March), the Turkish construction industry completed 40 projects abroad, valued at USD 4.3 billion. Since entering the foreign market in 1972, starting with projects in Libya, the sector’s international project portfolio has reached a total of USD 507.3 billion. To date, a total of 12,164 projects have been realised in 136 countries.
- In the 1st quarter of the current year, the largest number of development projects launched or completed by Turkish companies was in Kazakhstan, valued at USD 892 million. In second place, curiously enough, was Gabon, with USD 807.4 million and in third place was Poland, with USD 643 million. It is noteworthy that Africa has become a key focus for the Turkish construction industry, which is also expanding its cooperation with the Middle East.
Construction cost index: In January, the construction cost index rose by 15.7% compared to the previous month and by 67.87% compared to the same month of the previous year. 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 rose by 53.29% and the labour index climbed by 103.46%.
- Housing Cost Index: As reported by the Central Bank of the Republic of Turkey, the housing cost index rose by 2.3% in January compared to December and by 68% year-on-year. In major 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, the index rose by 54.5% in Istanbul, 85.6% in Ankara and 70.4% in Izmir. In February, the housing cost index increased by 2.2% compared to January and 58.3% year-on-year. Istanbul, Ankara and Izmir saw increases of 1.5%, 2.0% and 1.6%, respectively, with year-on-year increases of 45.6% in Istanbul, 72.9% in Ankara and 57.4% in Izmir. The exact figures for March have not yet been released.
- Emphasis on sustainability: The use of so-called 'green' cement has become mandatory in the projects of companies that have won public tenders. As per 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 as green cement is both sustainable and efficient; its clinker/cement ratio will be a maximum of 0.8 and by 2030, it will be reduced to 0.75. This measure is important to buyers because, in the context of sustainable development in the construction industry, carbon dioxide emissions from development projects in Turkey will be significantly reduced.
- Economic factors and exchange rates: The continued depreciation of the Turkish lira and global economic uncertainty have also contributed to the decline in Turkey's housing sales. However, this has not always affected foreign buyers negatively. Exchange rate fluctuations have been a consideration, with the lira’s depreciation against the dollar/euro prompting many buyers to finalise deals quickly. Some are still waiting, hoping for even more significant depreciation.
- Prices and sales: While transaction volumes fell by 2.0% year-on-year in January–February (totalling 174,210 units sold), by the end of March, the decline had narrowed to just 1.3% compared to Q1 2023, totalling 279,604 units.
- Sales to foreigners by month: In January 2024, the volume of transactions with foreign buyers decreased by 50.5% compared to January 2023, totalling 2,061 units. The share of contracts with foreigners in the total volume of residential property sales was 2.6%. In February, the decrease was 44.9%, with 1,846 units sold and a share of 2% in the total volume. In March, the decrease was 47.9% compared to March of the previous year, with 1778 units sold and the segment's share in the total volume of residential property sales fell to 1.7%, the lowest in 2 years.
Sales to foreigners for the quarter: From January to March 2024, the volume of transactions with investors decreased by 48.0% compared to the same period last year, with a total of 5,685 units sold. Analysts attribute this decrease to general market dynamics, economic factors and foreign policy events.
- The most sought-after cities by foreign investors are Istanbul, Antalya and Mersin. However, the ranking in the top three can vary from month to month. For example, in January, first place was occupied by Antalya (747), second place by Istanbul (710) and third place by Mersin (211). In February, Istanbul (691) came first, followed by Antalya (659) and Mersin (151). In March, the first was Istanbul (652), the second Antalya (618) and then Mersin (151 again).
- The countries are leaders regarding the volume of transactions: Iran and Iraq remain consistently close to each other, occasionally swapping places. Ukraine, Kazakhstan and Germany sometimes fall behind in various months. For the 1st quarter, the figures are as follows: -January: Iran (208), Ukraine (127), Iraq and Kazakhstan (99 each.
- February: Iran (200), Iraq (112) and Ukraine (105)
- March: Iran (182), Ukraine (129) and Iraq (82).
Experts suggest that this trend indicates Turkey's deepening diplomatic and economic relations with international partners, 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, as well as political stability, are key factors that will determine the future of the property market. In the coming period, the government's incentives and policies may rekindle foreign investors' interest in the Turkish market, especially as measures have already been taken to help foreigners open bank accounts in Turkey, regardless of their plans to buy a home. There is also ongoing discussion about simplifying the process for obtaining residence permits, though no official date has been set 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 (as per 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 as per surveys conducted by the portal, 70% of respondents consider the high cost of houses and apartments in Turkey (both for rent and sale) to be the main cause of the high cost of living. Assessing the impact of domestic migration on the residential property sector, he explained that the recent increase in rental prices has led 53% of users to consider moving from their current neighbourhood/city to more affordable areas. The rise in interest rates over the past 7–8 months has forced middle-income citizens, who cannot afford to buy a home, towards 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. Given the existing imbalance between supply and demand for rental housing, this trend could 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 second month of the year, Tolga Idikat reported that 42% of Emlakjet users anticipated a price increase in the property sector following the elections, which are expected to directly impact the situation both nationally and within individual provinces. Additionally, the population primarily expects 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 recent elections, 64% of Emlakjet users felt that the measures for infrastructural transformation and improvements in Turkey's cities were insufficient and hoped for more. Tolga Idikat emphasised the need for new communication strategies to enhance public awareness and drive social transformation.
Overall, the first quarter of this year was more active than the fourth quarter of 2023 and with the onset of the summer season, sales should pick up, particularly in the resort sector. Experts recommend not delaying property purchases in Turkey. The reasons are here.