Keith’s Weekly Property News August 1-2021

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Keith’s Weekly Property News August 1-2021

Fiendishly hot days here in Istanbul as the pressure and thermostat climbs, and the number of client inquiries this week broke all records. Sorry for the shortened 1 to 1 zooms; it was hard to process a lot of it. Not to mention, I received about 10 inquiries from Julian’s YouTube…all in French!!! I got the general idea thanks to the Grade 12 French class with Miss St. Onge.

In spite of the frantic pace, we take time out for our weekly zoom, the highlight of every week for me.

We continue to source interesting properties and slog through the process of trying to tie them up and close. Multiple challenges, as always, but progress is being made and deals are getting done.

We will keep it pretty informal this week: analyse a handful of properties, give a few illustrations of a number of properties that recently went into rental – looking at purchase price, renovation costs, timeline, and rental figures.

We will also look at our ‘cookie cutter’ property; the budget ones, in good locations, that require full reno jobs. We have a lot of these and they usually follow a pretty predictable trajectory which I hope we can demonstrate to clients, particularly newcomers.

Finally, we will look at some new build projects that are now on the secondary market and touch on a few details of projects in construction.

Cookie cutter. 

We find this kind of property with some regularity; small, one to 2 bedroom apartments, in the 500-600.000 TRY range, good locations, poor condition, requiring full reno. Typically 70 sqm range. Renovation costs 150-170.000TRY. It costs approximately 700.000TRY. Expected rental return 3500-3750 TRY, perhaps jp to 4250 TRY if furnished. Time frame from purchase to tenanted, 3 months. Value added to assets right away 10-15%. Copy/paste/repeat.

We make it look something like this at end. Kitchen cabinet colour flexible (:

https://www.mybricksrealestate.com/listings/istanbul-nisantasi-flat-for-selling/

Here are a few real life examples from the past month of our recent projects:

 

Property 1

purchase price: XXXX

reno costs 260.000

size: 100 sqm

all in cost: XXXXX

current market value: 1.3 – 1.4 mil TRY

new lease: 5750 TRY (we could have achieved 6500 TRY 

if furnished…possibly)

time frame all: 4 months (3 week lockdown led to delay)

time on rental market: signed within 2 weeks

https://www.mybricksrealestate.com/listings/istanbul-kurtulus-apartment-2-bedrooms-renovated/

Property 2

purchase price: XXXXX

reno costs 170.000

size: 68 sqm

all in cost: XXXXX

current market value: 825-850.000

new lease: 4000 furnished

time frame: 3 months

time on rental market: signed within days

https://www.mybricksrealestate.com/listings/istanbul-kurtulus-property-newly-renovated-2/

 

Property 3

Property 3: XXXXX

reno costs: 170.000

size: 68 sqm (property is one floor above Property 2, different owners.

all in cost: XXXXX

Current market value: 825-850.000 TRY.

new lease: 3500 (unfurnished)

time frame: 3 months

time on rental market: signed within days

 

Property 4 (‘outlier’)

Currently negotiating with 2 potential tenants.

Expected yield 8-9%

all in costs: NA

Current market value: 2.75-2.9 milTRY

 

Property 5 (again, an ‘outlier’, Boss’ casa)

expected yield: 8-8.5% (9000 TRY)

size: 140 sqm

time frame: 3.5 months

It is the first property in the video. Property 2 and 3 are also shown in the video.

https://www.mybricksrealestate.com/listings/istanbul-sisli-bomonti-renovated-apartment/

https://www.youtube.com/watch?v=GZvboOb3D8s&t=260s

And now on to a few picks for the week.

New builds on the secondary market: Contrarian corner.

Last week we looked at the 3 categories of new build projects, luxury 5 star hotel-like towers, bespoke projects, still high quality but with less grandeur in terms of facilities and the ‘Mom and Pop’ small new replacement building, without facilities other than a lift and perhaps parking.

This week, we will answer the question, ‘Why might clients be interested in new builds on the secondary market?’ I certainly have no hard facts to answer this question, but I will put forward a few tentative propositions that make sense to me at least:

1-Construction costs have risen quite a bit in the past few years. Developers will be struggling to undercut prices of previous projects, especially in areas where land is scarce. They may be able to do so in far-flung areas, but not in more central areas.

2- Land costs have risen…DOH!

3- The ‘pain’ factor or, more colloquially, the GMTFO factor (Get me the f..out factor). Some owners, due to financial reasons, may need to get out fast. It is very easy for us to scan prices on these developments (when you have 20 properties for sale in the same project, finding the one that stands out as a good deal is not that hard. You are comparing apples with apples. 2 months ago we picked up a great office like that. 8 similar ones were for sale at 600-625 in the same project, one even next door. We got ours at 500. Done deal.

4- You do not have to wait for completion and you usually have an idea of the yields (you can scan the rental market to get an idea of that).

5- There are often other clues. Are there too many from the same project on the rental market? You have to look at the number of units in the project. If there are 200 units and a year after it has been delivered, there are still 40 units for rent, that indicates a problem, Houston. Abnormally high number of units offered for resale? Developer still has a lot of stock on hand after a year? The chatter on the streets, and so on.

6- You can see how the landscaping, social areas, gyms etc turned out. Has it turned into a ghost land (Bati-Sehir), where many Arab buyers bought and where the restaurants and markets all became very low quality because the flats lie empty? (The Starbucks to Star(f)ucks deal). Or is it a lively and dynamic living space as the CGIs promised?

Again, I am just pointing out the possible edge you may have in new builds on the secondary market. There are also many advantages of buying off the shelf new builds: early bird discounts, rental and buy-back guarantees, being able to select the more favourable units (best selection goes to first-ins)

Still, I believe it is a useful debate to have. 

So here are a few tips that keep in mind the above points

Not in our usual area, but it is a nice project. Decent field for new build, approx 4-4.5%. Maybe some room for negotiation. Nice, safe play. Ideal for CBI done on the fly. WYSIWYG. High percentage of Turkish ownership.

Property links distributed during weekly zoom session

 

Tagged: Istanbul propertybuying property in Istanbulcentral IstanbulIstanbul apartmentsIstanbul buildingsIstanbul investmentIstanbul propertyIstanbul property sale, Istanbul real estateIstanbul renovationsProperty in Istanbul.

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About The Author
keith-boyle

About Us: My Bricks is a unique real estate company in Istanbul. With over a dozen years of experience in downtown Istanbul, Keith has been involved in countless transactions. He tirelessly researches for the best opportunities for his valued clients. In addition, Keith has project managed over 50 renovation/restoration projects (see Keith in action on YouTube: https://www.youtube.com/watch?v=yLaLIjo9X-A&pbjreload=101). We source all kinds of properties, from budget properties up to luxury villas on the Bosporus. We give personal service to our clients; often doing zoom and WhatsApp sessions 1-1 and also webinars where clients can benefit from the wisdom of Keith’s other clients. In these webinars issues such as taxes, legal issues, design and renovation and identification of property opportunities are addressed. These sessions are typically run on Saturdays and Sundays. Come and join us; just contact Keith for details on: WhatsApp/telegram at +90 531 582 3876). Our living and breathing passion is real estate in the downtown area. We look forward to virtual sessions where you walk side by side with us along the streets or in real life when you arrive in Istanbul. We are fully equipped to help you with any logistic matters you may require, from obtaining citizenship through investment to managing your assets professionally here in Istanbul. At this point in time, the agency is transforming and we have investment coming in. It is an exciting time to purchase in Istanbul. I look forward to doing the ground-work for you and launching you on your way to a profitable and enjoyable investment. Kind regards, Keith Boyle

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