Investment opportunities in the Turkish real estate market

DEVELOPING REAL ESTATE SECTOR IN TURKEY

Turkey has gone through major changes in the recent decades both in terms of social and economic developments.

Housing has been a major topic as well and furthermore since the beginning of 2002, an organized and international property market has started to develop in major cities, Istanbul to be in the first place certainly. This has brought about a great interest from local and foreign investors in the property market in Istanbul, in specific.

RETURN ON INVESTMENT FIGURES

As for profits in this sector, peak figures were recorded between 2003 and 2004 with an average annual return of 12.5% in real terms for office investments, 10% for shopping centre investments and 11.5%  for logistic property investments.

In a survey report issued by ULI and PWC on “European real estate investment and development trends”, Istanbul was ranked as the third most attractive investment market in Europe after Munich and Hamburg. The report indicated that Istanbul was still one of the most attractive markets for investment professionals.

ALTERNATIVE WAYS TO ATTRACT FOREIGN INVESTMENTS

It was mentioned in the report that the real estate sector in Turkey attracted foreign investment in two ways;

1) property purchases of foreign real persons
2) foreign direct investments of foreign or multinational companies.

It was also stated in the report that the property market in Istanbul was rated highly and the office market was referred to as the strongest buy reason being “a class office supply in the central business district was not sufficient to meet the demand and the land supply was limited and expensive”.

KEY FACTORS TO ATTRACT FOREIGN INVESTORS

Key factors which attract investors to the real estate market can be listed as follows;

• Houses that are illegally constructed are to be demolished sooner or later (a reducing impact on supply)
• Many inferior quality houses will be replaced by new ones (if not be demolished)
• Turkey has just been introduced to the Mortgage loan system
• The growth prospect in property buy, promised by the immature retail market brings

On the other hand it is also noteworthy to know that that investment prospects have declined from the historical peak of 7.2 points in 2008  to 5.4 in 2009.

ISTANBUL AMONG TOP MARKETS

Nevertheless it can easily be said that Istanbul is destined to be the top investment market in Europe again, due to unparalleled developments lived through in this premium and most promising part of the world.

02.12.2011
compiled by editor, BTT