Keith’s Weekly Property News April 25-2021
All in all, it has been an interesting, but challenging few weeks. I finally got away for a short break to Alanya and have come back re-charged.
What have been the challenges? These are mostly on 2 fronts: property sourcing/deal closing and citizenship regulations for purchase + legal aspects.
First, on the property front. The unstable and deteriorating TRY is surely good news for foreign buyers, who might notice that 90% of what we offer is TRY based. On the surface, that is great, however, it does limit our moves while negotiating. In addition to that, it seems many sellers are hesitant to put their properties on the market, viewing their real estate assets as a safe haven during tumultuous times. Opportunities are coming up, but it is not really meeting the demand that we have at the moment, especially after a spike in interest on speculation that the CBI amount may be raised imminently.
This put me in a tough spot as a realtor. While the Gold Rush goes on all around me, with partner agencies doing huge business and making hefty commissions off nondescript new builds on the periphery of the city, or very overpriced projects in the centre of the city – all dubious in terms of yields and future growth – I am struggling to source properties that deliver what I have lad out as a de facto mission statement: properties that offer 5-6 % yield, where value can be added through tasteful renovation (10-30% initially) and where we can expect 3-7% YOY growth for the next 3-5 years in the targeted neighbourhoods where we observe favourable dynamics. We look for properties that are 8000TRY or less (unrenovated) and from 10.000-12.000TRY (renovated, with proper characteristics).
We have extended our search areas to include:
-Some parts of the Asian Side (Uskudar, etc…but only if there is a great view). We will search there for other kinds of properties, but only on client request)
-Macka, Besiktas. Very much opportunity driven and only in select micro-neighbourhoods.
-Our favourite locations strongly remain: Mesrutiyet/Bomonti/Kurtulus (all located in Sisli).
-Kagithane has some properties of interest and the prices can be quite low. I do not see much downside with a proper purchase here. My command of the rental market here is not strong, so it would take an investor willing to walk down that path. I am sure downside risk could be mitigated or we could go with a tenant ‘in situ’
We have yet to do any transactions in this neighbourhood.
-Taksim, Cihangir, Galata. Again, only if we see value for the investor. Prices are inflated and there is very little movement in the market. High prices have led to low yields. Most transactions are from local people who choose to buy in these areas for lifestyle. Investment opportunities are rare.
In sum, our criteria is opportunity driven and a bit restrictive. My new target is to come up with 2 ‘viable’ properties/week and 2 ‘possible’ properties/ week. The ‘possible’ category would include properties that I am not sure will meet the above lad out targets, but that still might be of interest to certain types of buyers.
Typically, we make calls on up to 30-40 properties/week. After we weed out all the issues – tenant issue, deed incompatibility, erroneous info provided in the advertisement, and much more – we may be left with 10 properties. We visit those; inevitably some disappoint, so we are left with a few in the end. Sometimes, I miss the mark and do not gage client interest properly. I have a beautiful 500.000TL loft office that I was sure would be snapped up. Still no takers. For me, it is about as safe an investment as you could make in Istanbul. It seems most of my current clients want residential only. Noted.
So, if you look at this all together, the supply of properties will remain limited. We are always considering new neighbourhoods, but those take time to understand. When I made the shift from Beyoglu to Sişli, I first invested there myself. Only after I saw it working, did I start encouraging others. Unfortunately, I cannot really do that with many neighbourhoods.
Deal closing/legal/CBI restrictions:
As I have reiterated in the past, timing is essential in deal closing. The pace of the lawyers, the preparedness of documents and the time between arranging POAs, negotiating, doing diligence on the deed, having valuations done, putting down of deposit and final closing all need to be coordinated in a timely and efficient manner. Days, if not weeks, can be lost when verification of documents from abroad is required. Account openings, transfers also take time. We are moving more towards the model of having all of that in line before we begin to negotiate on a property, otherwise it risks ending up with a higher percentage of broken deals. In such a volatile environment, we cannot realistically expect sellers to wait so long between negotiations and a deposit payment.
As a rough guideline, the absolute minimum to prepare all of the above is 2 weeks, but 1 month may be a more prudent timeline. We can begin the property search at any time, but we will be reluctant to enter negotiations unless we know that most of the steps above have been completed, for everyone’s benefit.
For CBI buyers, the pool of properties is further restricted by the fact that purchasing properties with mortgages attached is often frowned upon by the lawyers (usually a standard procedure, but complicated by CBI guidelines). In these cases, we will deal with it on a case by case basis and take into account the lawyer’s willingness to deal with the complexity, the size of the mortgage, etc.
CBI buyers cannot buy properties with other liens.
Finally, I will be collating all information from my past notes and putting it into one document (thanks to HK Sebastian). This will include almost everything: taxes, buying process, neighbourhoods, renovation, rental market, growth projections and more.
In the Press:
Some basic info about ‘tapu’ or title deed
Turkey ranks 14th among world’s most advantageous real estate markets for foreigners
And now, on to a few properties:
Property links distributed during weekly zoom session
Tagged: Istanbul property, buying property in Istanbul, central Istanbul, Istanbul apartments, Istanbul buildings, Istanbul investment, Istanbul property, Istanbul property sale, Istanbul real estate, Istanbul renovations, Property in Istanbul.
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