Accelerating the return on your housing investment through renting

The prices of residential property in Turkey continue to rise. As a result, fewer and fewer people can afford to buy flats in general, let alone make spontaneous purchases. Consequently, the percentage of the population living in their own residences is decreasing, while the need for renting, among the most diverse categories of residents (discussed below), is increasing. Hakan Akdoğan, President of the Association of Real Estate Consultants (TÜGEM), commenting on the situation by early September, said that while 61% of the population used to live in their own flats or houses, this figure has already dropped to 56.7% in 2022.

And this trend, to all appearances, will continue: construction costs are rising, developers are forced to raise prices, and the so-called social housing that is being built is not enough for all those who want it. Mr. Akdoğan added that, when compared to the same period last year, the number of houses that have been commissioned has noticeably decreased. In Q2 2023, the number of buildings offered for occupancy decreased by 22.1%, flats (lots) by 28.5%, and their total area decreased by 28.6% (again due to the minimum number of commissioned projects: the area is counted as a total).

Conclusion: While the housing bought in Turkey is already growing in price every month, if not every week, it is possible to increase passive income from it by renting. August–September in general was a golden time in this sense, but even now, the demand is high, largely due to the demand for vacant flats among students and applicants.

The Emlakjet portal recorded a surge in demand for both student housing and rentals in August statistics (2023): with the start of the academic year in universities across Turkey, housing prices rose by an average of 2% in the last month alone, while rental rates increased by 4% compared to the previous month.

Ankara and Izmir, as megacities with a particularly large number of universities, were the leaders in terms of the increase in property prices; they surpassed even Istanbul (this is to the question of where else you can buy a home if Istanbul seems too expensive or is not suitable for other reasons).

As for Ankara’s neighbourhoods, Cankaya and Kechiyoren were the most sought-after, while in Izmir it was Buç.

At the same time, Istanbul remains the most popular city in terms of buying property; however, the province of Konya in terms of housing for sale “rose” by 10% for the month in August, and Ankara by 9%.

As for renting, Konya is the leader: +16% to rental rates. While the sought-after resort destination Mugla (the territory of which includes Marmaris, Fethiye, Gödek, Oludeniz, Dalaman, etc.) fell in price by 10% in August, the prices of housing for sale there for the same period have not changed.

Let’s recall the general picture: housing sales across Turkey in August decreased by 1.1% compared to the same month of the previous year. That is, student rentals are something to bet on; after all, the demand for higher education in Turkey is not falling, and the country’s universities annually receive a lot of applicants from abroad, many of whom are wealthy enough to rent a flat instead of sharing a dorm room with someone. Especially since there is a significant shortage of places in dormitories, even private ones.

Content:

• The top 10 provinces with the most online housing search queries
• Top 10 districts where housing is most in demand (their share in search queries + price change)
• Rental amounts
• Buying
• Renting
• Age of those interested
• The most sought-after “student cities” in terms of rentals
• Top 10 “student provinces”
• High prices and joint tenancy

More about the dynamics:

The top 10 provinces with the most online housing search queries

Top 10 districts where housing is most in demand (their share in search queries + price change)

* Meanwhile, in Turkey as a whole, sales prices rose by 6% for the month and 102% for the year; rental prices rose by 4% for the month (according to other analytical companies, by 6% for the month and 175% for the year).

Rental amounts

Now let's get into more detail about who, what, and within what financial limits are looking for property so that owners, current or prospective, can navigate the price proposition.

Buying

• Potential property buyers pay most attention to the price or return on property (40.4%).
• 46.4% are looking for apartments to buy in order to live in them; 25.3% are for investment purposes.

Renting

• 50% of those interested in renting expect to be able to afford up to TL 8,000 per month without utilities. (Although the wish is unrealistic for big cities, where it was almost impossible to find rental accommodation cheaper than TL 10,000 in August–September 2023—editor's note.)
• 25.9% expect to be able to afford the rent in the amount of TL 8,000 to TL 15,000.
• 8% expect to pay TL 15,000–20,000.
• 9.7% of tenants are ready to pay even more than TL 30,000.

Age of those interested

40% – 25–40 years, 38% – 18–25 years, 19% – 40–55 years, 4% – 55+ years.

Emlakjet CEO Tolga Idikat explained: “With the announcement of university exam results, students who cannot find a dormitory or who want to live in more comfortable conditions, i.e., like at home, will naturally look for rental accommodation. For this reason, as indeed every year, we have seen an increase in residential property rental prices in August across Turkey. On the other hand, rates stabilised last month after searches for rental properties outnumbered searches for properties for sale; in August, queries with the word “buy” came to the fore again. It can be said that the slowdown in residential property sales prices in August had a significant impact here, provoking a number of investors to decide to buy. However, due to the current interest rates on loans, we predict that house price growth will be limited in the coming months”.

The most sought-after “student cities” in terms of rentals

These are: Istanbul, Ankara, Izmir, Eskisehir, Antalya, as well as Mugla (the capital of the province of the same name), and Bursa, where one of the city districts is also considered a university district.

The cost of rent in such “student cities” varies from TL 9,000 to TL 18,000. After the results of the entrance exams were announced, property analysts reported rental prices in the 10 provinces of Turkey with the largest number of students.

• According to the data obtained, among the 10 provinces, the highest average rent is logically found in Istanbul, where 13 public universities, not including private universities, are located: TL 17,742. This is followed by Antalya because of the large number of foreigners living there, where the average rent before the start of the 2023–2024 academic year is TL 16,303.
• Izmir is in third place, with an average rent of TL 14,820.
• Eskişehir is another famous “student city”: it is the province with the highest student population density, ranking below Istanbul, Ankara, Izmir, and Antalya in some respects, simply because it has a much smaller population than the aforementioned locations. By the way, there are three major public universities located here; the average rental price was TL 9,113.
• The most sought-after neighbourhoods in “student cities”
• The average rent in Tepebasi district, which includes Eskisehir Technical University and Anadolu University, was TL 6,285.
• In Istanbul, in the Beşiktaş neighbourhood, where campuses of such universities as Galatasaray University, Istanbul Technical University, Mimar Sinan University of Fine Arts, and Bogazıcı University are located, the average rent is much higher at TL 34,169.
• In Antalya, students are mainly concentrated in the Konyaalti neighbourhood, where Akdeniz University campus is located: the average rental price here is TL 17,682.

Erzurum is noticeably more affordable in terms of finances, where there are also, by the way, quite a lot of students. 

• In Yakutiye district, where the campuses of Ataturk University and Erzurum Technical University are located, the average rental price is TL 6,093.
• We have already mentioned Izmir: the favourite districts of Buça and Bornova are located here. In Bornova, where the Aegean University campus is located, landlords ask for TL 12,548, and the average rent in Buça district, where the Dokuz Eylül University campus is located, is TL 8,872.
• In one of Ankara’s central districts, Cankaya, where Middle East Technical University, Gazi University, and Hacettepe University campuses are located, the average rental price was TL 16,016. Which is higher than the similar indicator in the whole of Ankara.

Here are some more details.

Top 10 “student provinces”

Endeksa co-founder and CEO Görkem Öğüt recommends that students who do not want to spend every penny on accommodation but rather to be more free with the money they have should look at Erzurum, Eskişehir, and Kocaeli. In any case, he advises them to allocate a minimum budget of TL 10,000–12,000 for rent if they do not want or, for some reason, cannot count on places in the dormitories of their universities.

High prices and joint tenancy

All the above figures are averages, but in fact, in some areas of Istanbul, even studios (1+0) of 45 m² have gone up to TL 45,000. In Maslak, for example, a two-bedroom (2+1) flat will cost TL 85,000 per month.

What opportunities does this open up for homeowners who rent out their properties? Hakan Akdogan explains: “If two or three acquaintances – for example, student friends – live in the same house or flat with several bedrooms, they usually don’t mind the high rent; after all, they are dividing the amount among several people. And regular payments are no problem. Nor with eviction, because the rent is relatively short-term: until the end of the school year. That is why students have become the new “favourites” of landlords.”

In the most sought-after neighbourhoods, owners are ready to slightly reduce prices just to lure students, especially when it comes to those entering short-term (several months) courses, and even better if they manage to lure foreigners into renting. For whom, given the exchange rate of the dollar or the euro, the sums required are no problem at all.

Mr. Akdogan specifies that price “rent mobility” is fixed in such central Istanbul districts as Beşiktaş, Kadıköy, Şişli, Sarıyer, Usküdar, and in some other neighbourhoods close to universities on the outskirts of the city.

Ara Demir, a board member of the Entrepreneurs’ Association and a real estate consultant, said that the average increase in rental prices has already reached 20–25% since the beginning of the current academic year. The highest demand is for 1+0 (studio) and 1+1 flats.

The specialist commented: “For example, in Kyaithan, from July to August, the price of 1+1 flats increased from TL 13,000 to TL 17,000. Newly furnished apartments started to be rented for TL 25,000–30,000.

1+0 flats in Maslak district are rented from TL 20,000 to 25,000, new empty apartments for TL 35,000, furnished 1+1 flats for TL 50,000, and 2+1 furnished residences for TL 75,000.  

In the neighbourhood of Shishli, 1+1 flats rent at a minimum of TL 15,000 but more often for TL 22,000; 2+1 flats are offered for TL 45,000.

Finally, we would like to mention that students prefer new buildings and inexpensive flats near public transportation stops. The wealthier segment of students, on the other hand, prioritise flats with good renovations in new buildings and with a view. And those landlords in Istanbul who overestimated the price but decided to keep it and waited for 1–2 months—in the end, almost all of them successfully rented their property at the desired price. So we draw our own conclusions.