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Keith’s Weekly Property News August 14-2022

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Keith’s Weekly Property News August 14-2022

The past week went by without much production, mostly due to persistent supply side issues. As we head into the latter part of August, we expect activity to pick up on all fronts, and hopefully most importantly, on the number of new sales properties to hit the market.

Luxury Bubble?

The Istanbul skyline is replete with skyscrapers of every variety, from Bomonti to Levent to Atasehir to the far flung suburbs of Belikduzu. These are impressive structures that often come with even more impressive prices. Is there a bubble in the luxury segment of the real estate market? First of all, let us define luxury property as above 80 sqm and above 500K USD. This should put us firmly in the luxury category, but by no means at the top end of it. Anyone familiar with the Istanbul real estate landscape will know that the ultra luxury projects, such as Zorlu, soar beyond 10K per SQM. As I have often said, in many ways these projects are similar to 5 start hotels, or even 7 star. But there are an awful lot of them. The new ones coming in seem to have compressed in size and I see asking prices of 600K or 700K for pokey 2 bedrooms in locations that are not even downtown, but perhaps with a view. Are these realistic? To me, it signals danger. They are well beyond what any right minded Turkish individual will pay. Turks will lay out pretty huge bucks, but for a real luxury property. They will spend millions of dollars for a roomy penthouse in Zorlu. However, I have not seen many shell out 600 or 700K for an unprepossessing 2 bedroom in a non-prime location. It just does not happen. These are some of the many properties being directed to foreigners. There is almost no upside on these deals, but regrettably much downside.

Paying 8K per SQM for a property that is not in an absolutely prime area of Istanbul is a huge risk, even if it has a Marmaris view. These kinds of prices only make sense for true Bosphorous view properties and likely those in very cool areas. Paying 8K in Bakirkoy or Maltepe- no matter how great the view- is playing with fire. So, is it a bubble? Well, I do not think it will just pop like a bubble, but trying to liquidate properties in this range will be very hard indeed. You could be stuck with an incredibly low yielding property (think 1.5 to 2%) that really has nowhere to go in terms of appreciation. Also, consider that there seems to be these properties aplenty, sexy and sleek, but where will they get you. Kind of trophy properties. But I am guessing most astute investors will shy clear of these properties. Heck, I would love to throw on a tie and cavort in that world. But it just does not seem to go anywhere. Open for a challenge on my views of course.

Izmir continues to offer strong value. For those interested, contact me directly. We have cooled off on may of the other coastal areas as it seems Russian steroids have driven prices beyond reality. Advice is to hold off on most of coastal properties at this time. Wait for a mini-bust in a few years…perhaps. Or at least a slow claw back on some of the wilder pricing.

On downtown, unrenovated properties in good locations, we seem to be mostly in the 1.5 to 1.75K USD SQM range. Newer buildings minimum 3K USD min. New build projects downtown, minimum 4K to 4.5K per SQM. Areas include Sisli, Kagithane, Besiktas, and similar for desired neighborhoods on the Asian Side. Apologies for brevity of notes. Taking a few days with my daughter before she returns to Utah.

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My Bricks Istanbul is solely involved in the business of international real estate. My Bricks have over 13 years experience in negotiation, purchase, renovation, development of Istanbul property. My Bricks’s investment approach is opportunity-led as opposed to investment- led. When the property is fully researched and well sourced, only then will we suggest to clients.

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