Turkey’s largest cities. Investments are justified as is their diversification

Coastal areas are popular but the country's major cities - apart from Istanbul and Antalya - also deserve attention as investment destinations as they have also shown impressive growth in housing costs over the past year, reducing the time spent on returns.

Turk.Estate has already explained the construction industry of the real estate market and statistics collected for the 5 largest cities in Turkey. Besides Istanbul, these are the capital of the country Ankara, «resort capital» Antalya, as well as İzmir and Bursa.

Furthermore, according to the results of October 2021 by the Turkish real estate expert platform Hepsiemlak, over the past 12 months, housing has risen in price in Antalya by 52% per year. From October 2020 to October 2021, the average price per sq.m. increased here from 3904 TL to 5947 TL.

Istanbul lags by 3%, having added only 49%. Ankara has added 40%, İzmir – 36%, and Bursa –32%.

However, the data for the most popular destinations is also important to consider.

Content:

• Istanbul
• Ankara
• İzmir
• Antalya
• Bursa
• Zeynep Tandogan, CEO of Hepsiemlak, comments on the dynamics of residential property prices in the 5m largest cities in Turkey
• What bets can we count on now?

Istanbul

In the city, Kadıköy, Ataşehir, Bakırköy, Üsküdar, and Beylikdüzü have attracted the most investment in the past 12 months. In these districts, the growth rate per sq. m. increased significantly during the year, from an average of 64% to 73%.

As one can see, Kadıköy and Bakırköy are the first to implement analysts' predictions that the average cost of 1 sq. m. is about to exceed 20,000 Turkish lire (TL).

Ankara

The capital of Turkey is rapidly becoming popular in housing investment and in October, according to analysts in Hepsimilak, the cost of 1 sq. m. rose in all metropolitan areas.

Nevertheless, the 5 most expensive districts are Pursaklar, Polatlı, Çankaya, Gelbashi, and Etimesgut.

As can be seen, the difference in growth between the 5 "top-rated" districts is small – a few percentage points from 40% to 46%. However, it is stable. Given the lower price per 1 sq. m. than in Istanbul, it is possible to buy a larger apartment for the same amount, for example, in the prestigious central district of Çankaya.

İzmir

İzmir is still popular with investors. In particular, detached houses detached houses more and more are being built in Turkey; the pandemic has increased the demand for isolated residences.

İzmir is convenient in this sense; its proximity to the sea and prestigious resorts are combined with all the advantages of living in the city. It is not surprising that construction activity is predicted to resume here in 2022.

In İzmir, the 5 areas with the highest per-square-meter growth over the past year were Foça, Dikili, Seferihisar, Urla, and Menderes.

It is difficult to find an increase as in Foça anywhere else in the country. The average percentage increase is about 70%. Thus, prices in Izmir will soon probably equal those of Istanbul – at least in the most popular neighborhoods.

Antalya

Here, prices for housing for sale have increased the most in 12 months in Döşemealtı at 73%. The following are Konyaalti, Muratpaşa, Alanya, and Kepez, with an increase in the cost of 1 sq. m. from 45% to 70%.

Muratpaşa remains the cheapest residential property to buy. Konyaalti, a district of Antalya, as well as Alanya, a favorite among foreign investors and tourists, are the most expensive.

Bursa

Foreign nationals know the least about this city; from Bursa, not far from Istanbul, and to İzmir. The city is a megalopolis and has comfortable housing, diverse infrastructure, as well as innovative residential complexes, such as Babylon Bursa and entire blocks of "smart homes".

In the 4 leading residential real estate areas in Bursa, the growth ranges from 17% to 51%. The list of "champions" includes Mudanya, Nilüfer, Yıldırım, and Osmangazi.

Compared to other megacities, real estate in Bursa is not getting more expensive rapidly but steadily. It is also low given the property prices in Istanbul, Izmir, and Antalya; the price per square meter is an attractive factor for some investors.

Zeynep Tandogan, CEO of Hepsiemlak, comments on the dynamics of residential property prices in the 5m largest cities in Turkey:

“We believe that the rise in housing prices in the center of Istanbul is due to the desire of residents to continue living in the city center. Despite the dense construction, it still minimizes contact in public transport - if we don’t use it, which is possible when we live next to work and with all the infrastructure.

And the Istanbul "traffic jams", despite the pandemic, have not gone away; it is still difficult to travel by car during rush hours. The pressure on public transport in the metropolitan area has also increased as a result of continued population growth.

At present, residents in Istanbul attach great importance to maintaining a habitual lifestyle without using transport. Housing prices in the central districts have increased significantly as a result of exchange rate appreciation, which affects the cost of construction, as well as a reduction in the supply of housing in the market and space for new projects. The demand for Beylikdüzü has increased, in particular, from investors from the Middle East.

The issue of selling housing to foreign investors continues to be actively discussed; there are complaints that the prices of houses to be sold to foreign investors receiving «accelerated citizenship» based on the purchase of real estate are unnecessarily inflated, although their value does not reach the required minimum threshold of $250,000. The construction industry can count on the impact of the latest innovations - the circula entitled “Procedures and Principles for the Preparation of Value Reports on Transactions involving Foreigners”, as well as prices of such housing may also fall.

Polatlı is becoming popular in Ankara with the construction of new buildings. Etimesgut also attracts increased attention with new complexes in Bağlıca and Eryaman. We expect that this district will become even more important as the offices of some important institutions of the capital will move to Bağlıca.

İzmir, Dikili, Foça, and Seferihisar were of great interest to employees who worked remotely during the pandemic. For example, there was also an increased demand for mansions.

Urla, which in previous years had been in demand mainly in the summer, has recently become an area with a growing population regardless of the season. The promotion of gastronomic tourism has also helped to popularize Urla.

Going back to Bursa, house sales prices in Bursa, Nilüfer, Mudanya, and Yıldırım have increased for various reasons.

Popular luxury housing projects in Nilüfer, the lack of zoning permits in Mudanya, and the growing demand of immigrants for inexpensive apartments in Yıldırım have led to higher tariffs in these areas.

In Antalya, where prices are rising most rapidly, Döşemealtı and Kepez have become the most popular districts. Due to the pandemic, Döşemealtı became a separate residential area and a shelter from the hustle and bustle of the city, an isolated and comfortable district easily accessible from the center of Antalya – real estate prices have increased here.

In addition, Kepez is in great demand; the area with active construction is now popular with those investors who are focused on buying affordable housing as this is particularly important in the context of rapidly rising prices."

What bets can we count on now?

The average cost of housing throughout Turkey is approaching half a million lire: according to the results at the beginning of November, this figure is 467,870 TL. The average cost per 1 sq. m. of the residential territory is 3599 TL and the average payback period of residential real estate is 20 years.

According to the Endeksa real estate valuation platform, the annual increase in house sales prices in Turkey at the end of October was 31% but it is much higher in the 5 megacities.

Of these 5 cities, Istanbul is the leader in housing sales (including to foreigners); 26,041 apartments or houses were sold in October 2021 alone. In Ankara, there were half as many (13,466) and in İzmir 3 times less (8,218). These 3 megacities together accounted for 35% of sales transactions during the tenth month of the year.

According to Endesa, at the end of October, the increase in housing prices in Istanbul was 30%, the average selling price per sq. m. of housing was 5092 TL, and the average unit price of residential real estate was 585,580 TL.

After Istanbul, the average price of housing units and sq. m. is in Izmir; +33% of the value of residential real estate per year, the average tariff per sq. m. is 4,564 TL, and 570,500 TL for a housing unit.

The average cost of housing in Ankara has increased by a third of a million lire, rising by 24% a year. A housing unit here now costs an average of 337,480 TL and a square meter is 2,596 TL (at the moment, it is doubly cheaper than Istanbul).

Of the 5 largest cities, only Bursa and Ankara have no access to the sea but have their advantages. For instance, their location in the continental part of the country means a low propensity for earthquakes. Both cities are also not too far away from each other, Istanbul, İzmir, and Antalya.