Keith’s Weekly Property News July 23-2023
Although the steamy July weather has been anything but refreshing, the property market seemed generous in its helping of actionable properties that emerged. I think its probably too early to call it a trend, but at the same time, it is not entirely unexpected. After months of lower than average sales figures, there was bound to be some trickle down to the pricing. And that is probably what is actually occurring. We will see if it gains momentum. Some of it might have to do with the fact that locals typically take a break from buying during this period, only to resume in late August. But news travels and realtors probably have been getting frustrated flogging properties the last 6 months. If you are not getting views or even calls for months, that should send a message. I certainly would not call it a full scale capitulation, but rather a pull back. Pull backs offer buying opportunities in my mind. We saw about at least 10 of such opportunities in the last 10-15 days and that is a very high number compared to the previous half year or more, which has probably been pretty evident by my whinging.
So, what constitutes a good deal in the current market? I will not go into a full analysis here, but just give a couple of illustrative examples. For those unfamiliar with the neighborhoods, it might be a bit vague, but let us first classify them as “central, and quite decent, but not prime, usually up and coming” in our view. Prime is a whole different ball game and you should easily double these figures for those areas. Prime areas, furthermore, tend to be limited to a small handful of streets in most neighborhoods. So, you are looking in a central area, which is quite decent, is popular locally and has a reasonably vibrant rental market, may or may not be suitable for short term lets. Yet may also attract expat tenants. What is the bang you get for your buck. If you can pick up a 2 bedroom apartment in an older building for 100-125K, I think you will have done quite well, in the 70 to 80 sqm range, in decent condition, likely holding out the prospect of a minimum 5% yield and hopefully 6-7%. Several of these appeared on the market in the past two weeks. 100K is still a lovely entry point for a decent central property in Istanbul. If you can find one that makes you feel good (in terms of its characteristics, location etc), I see no reason why to not pull the trigger. You will likely not find this in Bomonti, Mesrutiyet, Besiktas and almost certainly not in Beyoglu – unless Tarlabasi, or some other compromised location. It is increasingly harder to find in Kurtulus, but you can still find in Kagithane, Ferikoy and along the Golden Horn (but without the GH view).
If you are opting for a newer property and you are buying in “not prime, but near, and decent, you should expect to pay minimum 175-200K USD for a 2 bedroom with decent characteristics. Throw in a decent city view and reasonably good finish and you will have done well. So, having said that, let us wrap up by saying that 125K USD for an older, but well-built property in a low earthquake risk area, has an entry point of about 125K USD. For a similar property in a newer building, realistically 200K USD is a good entry level. Anything less and you likely will have done well. Of course, there are little patches of neighborhoods where prices, for good reasons, can drop off. Bottom of a hill. Gets a bit dodgy in parts. Known crime area. In our rough and ready price guide today, let us assume the absence of such negatives. If you are buying in brand new development with plenty of facilities, the cost would be between 3 to 4K USD per sqm in said areas. In areas such as Bomonti, probably you are looking at 5k plus. The luxury projects in areas like Nisantasi, Levent, and Beyoglu would start at 6K and go up.
If I compare the above newer and older properties with any European capital, we can see that there is still plenty of value to be had in this market. Im pretty sure the entry point in most European cities is minimum 3000 Euro (or 3.4K USD per sqm). Risk-reward, of course. These are staid and predictable markets and economies, hence less upside expectation. I have not touched on renovations. Usually, you will find at the bare minimum, you have to come in and spend a few K to “spruce” the property up a bit. It is pretty rare to just walk in and see a property in perfect condition, exactly to your liking and taste and optimized for the rental market. That few K does not materially impact the above numbers. A fuller renovation – if needed – should bump the below numbers down a bit, As always, a very good quality view will add to these numbers. Bosphorus? fogetta bout it. It will push the numbers up massively.
As for Izmir, the best deal recently has been a 90 sqm, new build with sea view for 125K USD. Surprisingly, was still on market last I checked, but surely will not be for long. Most sea views in newish buildings starting at 1750 USD now. For luxury properties in downtown with great views and facilities, expect 4500 USD and up. But very lovely properties.
These numbers are of course, necessarily, general and non-specific, which I generally dislike. However, as basic guidelines, they can be useful for someone entering the market. Pin me down to a face to face and I will offer lots of qualifications, amplifications, finer delineations. Just figure 99% of people don’t want to get into that granular level.
We continue our work on the dukkan (little shops), though the pace of it has slowed down due to other commitments. Definitely it is an area that warrants further exploration and exploitation. It allows the entry buyer to come in at a low level, relatively risk free, high yielding. Alternatively, for those portfolio building and focussed on income-generating properties, these are an excellent option. More to come on these. For sure.
Airbnb seems to be motoring along well enough, but less dynamic than previous years. The only conclusion is over-supply, as tourism numbers are very robust. The weeding out process likely has begun and the market should normalize over time, but higher vacancy rates and a shaving of a point or two on yields should come as no surprise. If its going very sluggishly for you, address the situation realistically. Review price settings. Have reviews been solid? Would you make more income off monthly or a yearly rental? I am always here to offer my opinion.
We are expecting a fairly large uptick in demand for longer term rentals starting from as early as August and peaking in September.
On the luxury side, we will be starting to pay some attention to what is going on there. We definitely expect some softening of prices, so it could be attractive for those who are more interested in the lifestyle projects or properties. We will be posting some of those in the group in August just in case there is interest. These would be properties in downtown high rises and prices likely to start at 500K USD. Our bet is that there will be a few owners in need of liquidation and they may be willing to settle for less than they would at the peak. Again, we are not expecting a flood of such properties, due to lack of over-leveraging, but there could be some flow, and maybe even 1 or 2 outright bargains.
I will cut it short here for this week as there is plenty to do here today and Im still feeling cheery about market opportunities. Sweltering Sunday here. At least Im in AC environment, not sweating bullets up in the Tiger’s lair.
Properties will be distributed in meeting. If you like, PM me and I will send them to you directly.
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