Keith’s Weekly Property News August 18-2024

Keith’s Weekly Property News August 18-2024

Although it has been quite a while since the last zoom session, in many ways we can say that not much has occurred in the real estate market. It remains in a kind of frozen state, as the slump extends month after month, with no clear end in sight, Ultimately, this does trickle down to affect the prices. At the point where transactions actually occur – often not at internet list prices – prices are probably down 20% off their highs from a year to a year and a half ago.
Two statistics that stand out are the major declines in mortgage backed purchases and sales to foreigners, both seeing approximately 50% dips from January to June as compared to the same period last year. Those are rather significant plunges. Without doubt, the great Antalya purge has had a big impact on the numbers of properties sold to foreigners. It will be interesting to see how far down it goes there. It is probably still a long way to the bottom.
Obviously, locals are mostly engaged in cash purchases, with the math on borrowing rates making it nearly impossible to finance purchases through a mortgage.
In addition, the overall number of sales is down 17% Turkey-wide. Not much looks likely to change til next spring at the earliest. All in all, it is a good time to be engaging with the market, as there are plenty of properties to be had at fair prices.

Rental market/appreciation outlook:

The residential rental market appears healthy in the cities we cover; Istanbul, Izmir and Kocaeli. Occupancy rates are quite high and yields for incoming investors are also quite high. In Izmir and Istanbul, you can expect an average of 4.5 to 5.5%, and often higher, on budget properties. Higher end properties are in the 2.5 to 3.5% range. Kocaeli averages 5 to 6.5% on most classes of properties, whether they be new build or secondary market. Meanwhile, new build Istanbul is again in the 2.5 to 3% range, with a similar number in Izmir.
Appreciation outlook is muted for the time being, but if you look 3 to 5 years out, probably Kocaeli will outperform Istanbul and Izmir. I would be quite surprised if it ends up less than 30% inside that 3 year period and perhaps upwards of 50% over the full 5 year period. Izmir is the steady play amongst the 3 cities. I would expect something like 5% annual appreciation for the 3 to 5 year period. 2024, of course, being a write off year. Istanbul is a bit of the wild card in the picture. It is largely unaffordable in central areas, nonetheless, I expect it to at least get back to its previous highs and even eclipse them over the 3 to 5 year period, so that again means that we will likely see 30% or more appreciation over the next 3 to 5 years. Some of that appreciation will just be clawing back the 20% that the market has dropped in the past 18 months, but that is still a reasonably healthy prospect for incoming investors. I really have to stress, again and again, that numbers I am quoting are NOT based on internet list prices, but at the mark where transactions actually occur. A full 90% of the listings we review appear frothy and unlikely to sell near asking prices.
In short, the ball still remains firmly in the hand of the buyer.

Airbnb:

Although I have always been a reluctant Airbnb-er, there is more clarity on regulations now and if you are lucky enough to be able to obtain a license, on average the yields will be substantially higher than they were in previous years and that will likely remain to be the case for several years, barring any major legislative changes. We are slowly looking at ways to get more active there, engaging with building management and groups of owners, while also actively seeking Airbnb licensed properties, or properties with a higher likelihood of being able to obtain license, to purchase on behalf of clients.
I fully expect many buildings in downtown to convert to boutique hotels/self-serviced apartments.
A well-rounded property should get 10% yield. I think Izmir will produce something like 12%. The hard part is getting that darn license. The actual application process is pretty easy. Gotta get those owners to all sign to agree!!!!

A few remarks from Tiger (Arman)
“Turkey’s property market is fundamentally different from its western rivals It’s a time to see proof for the claim, the market here hasn’t been and is not super sensitive to monetary policy people generally decide to by properties using their savings and mortgages only help them to finish the job this must teach a lesson to those who are looking for bargains as there will be no sudden drop in prices and no dramatic decline in prices specially in upper middle class areas
In my eyes, generally speaking small buildings are the best refuge for money in Istanbul, good historicals also are a good parking option other than that there is always a better than average deal around but you need to manage the risks.
One short point to remember, at the time being Istanbul and Izmir can not beat Kocaeli in any term, but Kocaeli with no doubt if you’re a CBI”

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