Keith’s Weekly Property News July 17-2022
Market supply has been a real issue for the past year and it certainly has not abated. As the rental market has been experiencing seismic shifts in the past 6-9 months, buying properties with tenants becomes ever the more precarious. This is quite a new phenomenon and it has paralyzed a good chunk of the available properties. We used to be able to quite easily negotiate the departure of in situ tenants if we wished. Often we would offer 3 months free rent and in most cases that would do the trick. Now, it is a much more complex issue. Perhaps as many of 40 to 50% of the properties advertised on the secondary market have existing tenants in the properties. More and more it is getting harder to displace them.
The wild inflation also leads to confusion. People just actually do not understand what their asset is worth and many are over-estimating. These 2 factors make for inefficiency in the market. The property market has always been inefficient here for boatloads of reasons which I have related ad nauseum, to mention a handful…tax issues, lack of transparency on price history, realtors who really do not even engage in analysis and willy-nilly throw up ads of properties egregiously over-priced, developers looking to cash in on unaware foreign buyers, lately, abovementioned tenancy crisis – and believe me, it is a crisis – and much more. This is leading to a major supply issue.
Istanbul cheap or not?
Always a question I get asked.
To understand this market takes effort. You cannot just waltz in and ask for a sqm price in Kagithane, as I have said many times. There is, as with most things, an underlying logic and system to pricing and the market in general, but I would classify it as being far more opaque than, say, differentiating prices in the Paris Rondissements (hope I have the spelling right). The upside is that value usually has a way of standing out and people are able to discern it without being an expert in the market. However, points of reference are key. A young country boy from rural Nova Scotia might find Istanbul real estate prices eye popping, whereas, a homeowner in Hong Kong is likely to find the prices here very low. It really is why you have to take a global perspective. In the global perspective, I still think Istanbul stands out for its value, as well as a few other areas in Turkey, but there are many nuances that need to be understood. Joining the weekly zooms is a great way to get into that ongoing debate, as many past investors can weigh in on these subjects, not just me. I really dislike this idea that there can be an oracle on the mountain who deigns to release profound secrets. Members of this forum are incredibly international and often have real estate portfolios across the globe, not to mention deep understanding of economic policies, currency issues, etc that all affect global property prices. Hearing these views is educational to me as well. Keep coming back, it works, it works haha.
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