Keith’s weekly property News March 14-3-2022
War, snowstorms and glimmers of promise on the property market
Istanbul is once again paralyzed by a snowstorm, the second of the year. In total, it has probably more or less shut the city down for a full week. For those of you in country, it can be a bit challenging getting around. We will be commencing Istanbul viewings in full force from Wednesday.
The conflict in Ukraine rages on, with no end in sight. Pressure seems to be on the Lira and we almost passed 15 last week. So far, Turkey is maintaining its stance of strategic importance, but non-alliance. I suppose this will be the tell-tale week in the direction of this conflict.
Eye of the Tiger (Arman Al Fal something)
Arman works free lance on my team. A knowledgeable and shrewd property player, Arman is attempting to buy a record number of properties to reach his CBI mark. I lost count, as the king of the budgies is at, at least 4 or 5. Last I heard, he was bogged down on proceeding with properties because his lawyer stopped answering his manic texts lol. Tiger and I will also be holding a separate zoom session on the large building for 27 million lira that we talked about 2 weeks ago. It has been delayed, as I have been pulled in different directions. However, I do have a handle on the numbers now and I see plenty of angles on that property.
Here is his view of the current market.
TO BE ADDED
Sahibinden and hepsiemlak
As I have said before, you really only should be using these two sites for property searches. All other ones are likely to be out of date or misleading in some way or another. Especially avoid Propstar. Zingat if you must, but there really is no need. The above 2 sites will allow you to access easily 96% of what is on the market. Each site can be viewed in English and they are easily navigable. I feel all clients should be spending a few hours poking around, getting a feel for the market. Keep in mind a good 75% of what you see will not be actionable for one reason or another. Success in the search for property is underpinned by good research and an understanding of at least some of the nuances in the market. And Istanbul is indeed a very nuanced and asymmetric market. It takes some time to figure that out.
My feeling is that more properties are starting to trickle back onto the market. If so, that would be great news. I wish I had a way of verifying that. Perhaps one of our more tech savvy members can figure that out? It is actually an essential piece of data; understanding the supply side. We can deduce the pricing, no issues there. My expectation is that the less desirable neighborhoods may not have shown big dips in new entries from December til now, but that the more popular neighborhoods showed a big drop in new entries during that time, but slowly may be recovering. I think a big driver in this will be that owners who have tenants from a few years back, will be really suffering in terms of their rental yields, but will have done well in terms of appreciation. Some may be thinking to cash out. As always. Removing the tenant is part of the negotiation process and we are much more reluctant to get into a deal with a low-paying tenant without at least getting them to sign agreement that they will leave on such and such a date. These kinds of agreements need to be done during the overall negotiation phase.
We have a really full line up tomorrow for viewings and that will probably be it for this tour. We have a few deposits in and are actively negotiating on a few others. I will be holding another separate zoom session mid-week to wrap up my findings and consolidate my thoughts. In sum, I stand by my assessment that if someone wants multiple properties for CBI, Izmir is almost a must for one of them, both from the point of diversification and due to the fact that finding multiple good deals in Istanbul will be a huge task. A 1 shot CBI in Izmir also is a great idea, either on secondary market or new build. On secondary market, it would look something like as follows: 3.6-4 mil lira, huge sea view, 120-160 sqm, possibly in buy off the shelf condition or requiring renovation. If I were looking at a renovation project, I would try to hit near the 3.7 mark for CBI and allot 500.000 lira for renovation. Some might require far less, a few others, a bit more, depending on a range of factors, the most obvious being the size of the property.
My Izmir trip was interrupted this week, as I went down to Bodrum to try to find a villa for Russian client K. By the way, I found it very frothy down there. Even the developers would not budge one lira. That was surprising. It looks like something decent, with a view and in a reasonable but not prime location, starts from 3K USD per sqm. It goes way up for luxury properties in prime locations. I mean way up. I did not really feel comfortable with the prices I was seeing. Felt risky and was hard to see how rentals could produce good returns with what seems to be an endless supply and the spicy price to get in the door. Essentially, I am giving it the big pass. Maybe I was spoiled by Izmir, which in my opinion, still offers great value and has a fairly painless entry point. Not to mention, the yields seem far easier to calculate. Not eye-popping, but in the 3.5-5% range. You may very well do better, but that probably requires renovation and buying in cheap. In that case, you may hit 6. Anything above 6 would represent an outlier.
We have a really full line up tomorrow for viewings and that will probably be it for this tour. We have a few deposits in and are actively negotiating on a few others. I will be holding another separate zoom session mid-week to wrap up my findings and consolidate my thoughts. In sum, I stand by my assessment that if someone wants multiple properties for CBI, Izmir is almost a must for one of them, both from the point of diversification and due to the fact that finding multiple good deals in Istanbul will be a huge task.
Finally, a few more nice things about Izmir.
-On the secondary market, they are not raising the price every time I go to negotiate. I have been following the market closely since late December and I noticed that they are keeping the same prices, even though the USD has gone up roughly 8% in the past few weeks. On the other hand, prices seem to be fixed. They do not go in for much negotiation here. One agent even seemed very surprised when I offered minus 10 on a property. They usually just dismiss low offers and say the amount that the owner wants in hand. Here as well, as in Istanbul, the trend is for the buyer to bear the full stamp duty. For me, that is fine. I look at the whole number and if it makes sense, I am pleased to proceed. I would not say that we are in negative negotiation space, but usually if we can claw back a few closing expenses, we will have done well.
-Agents are very professional, courteous and knowledgeable and less prone to flights of fantasy when it comes time to crunch numbers.
-The new build market is roaring. Local demand is very strong. Iranians seem to be the dominant foreign buyers in the area. They prefer larger units with 2 washrooms.
-Budget, but not especially cheap hotels, are everywhere. Bookings in March even seem solid.
A few properties that are in closing process from last week.
1-The Bomonti Beast (Istanbul). About 350 sqm of real estate spread out over 2 units. All in about 5 mil lira. I wish I could just copy and paste that.
2- New build in Ingridstan (Merkez, Sisli), 2.9 mil lira, with terrace and Bomonti views. 115 sqm.
3- There are rumblings from Tiger’s corner that a multi level historical property is in process. I do not have all the details, but it is approximately 120 to 130 sqm spread over three floors, with a price tag of 1.5 mil lira. It is an old wooden house in the lower part of Kurtulus, very near the Osmanbey Metro and Ramada Hotel. We often refer to these properties as ‘collector’s items’…they are cute as a button once restored and hold value remarkably well due to limited supply.
4- Izmir new build. 85 sqm, full sea view with balcony 150 meters from Asansor (the historical elevator). Mostly renovated. There is some additional space (actually extra unit) in the back. 1.3 mil lira all in.
5- There are several others we are working on in Izmir. Will share those details next week as they involve some finesse to close.
This is one of those weeks where I feel I have a lot more to say. Alas, time does not permit.
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