Recent research indicates that small investors in Turkey are increasingly turning to real estate. Under the partial withdrawal scheme for participants of the Individual Pension System (BES), which went into effect in July 2024, 92% of the withdrawn funds have been directed toward housing purchases. Additionally, a significant portion of savings from Currency-Protected Deposits (KKM) and bank deposits is being channeled into real estate investments.
Industry representatives point out that real estate demand has surged due to historically low property prices and declining interest rates. Projects with reduced prices are particularly attracting investors, and this momentum in home sales is expected to continue through the end of the year.
Transition from KKM to Real Estate Accelerates
KKM, which peaked at 3.4 trillion liras in August 2023, has started to decline following regulatory changes, with a considerable portion redirected to real estate investments. Last week, KKM balances dropped by 4% to 1.4 trillion liras, indicating that funds withdrawn from KKM accounts are being invested in the real estate sector as a “safe haven.” Experts suggest that as bank deposits are expected to lose appeal in 2025, combined with anticipated property price increases, investors are shifting their focus to real estate.
Downward Trend in Rental Prices
Rental price increases across Turkey are showing a decelerating trend. As of September 2024, the annual rental increase rate is 45.2% nationwide. Istanbul, Ankara, and Izmir have also seen slower rental increases. This shift indicates a rebalancing in the rental market following the removal of rent caps, with annual rental increases now aligned with the Consumer Price Index (CPI).
Strong Sales Activity in Istanbul and Surrounding Areas
According to data from the General Directorate of Land Registry and Cadastre, September 2024 saw the highest level of property sales in Turkey for the year. In Istanbul, areas like Esenyurt, Silivri, and Arnavutköy recorded high transaction volumes, while Pendik and Sancaktepe led the Anatolian side. Demand for real estate has also risen in nearby cities such as Kocaeli, Sakarya, Düzce, and Bolu.
Drop in Mortgage Interest Rates
The interest rates on lira-based mortgages fell to 41.41% last week, while there were slight fluctuations in dollar and euro-based commercial loan rates. These developments, coupled with banks’ zero-interest and long-term financing options, continue to support demand for real estate purchases.
