Keith’s weekly property news May 29-2022
Again, I will keep it brief this week due to time constraints.
I will get right to the point. We are facing major road blocks in getting deals done on the secondary market. Below are the list of factors that are creating a kind of perfect storm of turbulence while trying to close down on a property. As some of the subjects are not ones that I really want to commit to paper, I will not go into detail about them, but make oblique statements from which you may infer what is happening.
In every deal, there are multiple components that must align to bring matters to a successful conclusion.
Valuation process
Receiving appointment at Land Registry and signing to take the deed
Sometimes additional paper work is required prior to the sale. Maybe permission from the Cultural Affairs office or the Historical Properties foundation.
These days everyone is well-aware that there is a bit of a rush to get citizenship purchases done. For all of the above, we have to navigate a complex web of demands and compromises. We are pretty used to this from the past, but the nature of the requests have fundamentally changed and it impacts us very negatively. We want to close the deals, but not at all costs. We want to get them done in expeditious manner, but that also leaves us prey to opportunism in the above 3 steps. That is about all I am willing to say on that subject. It is tough going. Time-consuming. Frustration meter running pretty high.
We have more compounding complications, which are:
1-The rising USD. Keep in mind that properties, by law, cannot be advertised in USD. So do not be at all surprised when you go to negotiate on a property, the agent tells you the price has been raised. Likely, this is a mirror reflection of dollar rise. As I have always said, look at the whole number, “all in” costs. Does it make sense? Is it favorable in comparison with the market? Do not worry about who pays what, in terms of stamp duty, etc. Focus on the whole number.
2-Intransigence of tenants. The new phenomena of the past year. Tenants do not want to leave. This issue is very different from past years. I have mentioned this at length previously.
3-Inflation. This is taking a heavy psychological toll on the Turkish people. It is also a real mind blower for me. I have never witnessed such an event, in any country. It creates a sense of fear and panic which is palpable. For many Turks selling their prized asset, it is potentially a life-changing decision and we have to be aware of that. It leads to indecision which can lead to the collapse of deals. It happened a few times last week and a few times the week before. Our ratio of deals gone bust has gone up meaningfully in the past few weeks. There is not much we can do about that. Say, you have successfully identified a property and have completed the negotiation. I give the odds of bringing it to closure at about 50%.
We have to assess the risk in each case individually, often trying to glean insights from our partner agencies regarding the seriousness or intent of the selling side, which is further compounded by the fact that the selling side might involve a family decision. Big brother might weigh in and squash the deal at any time. We have developed a pretty good “feel” for this process, yet still, at times, we get surprised.
Lack of supply. Even Property Turkey must be feeling this. They really do not even have any new build projects in the core downtown area at all. Most are in far-flung suburbs and the prices look pretty spicy. Of course, the secondary market supply is much less than what it seems when you skim through the real estate pages. As I have always maintained, at least 80% of what you see on the internet is not actionable, for a host of reasons.
For all of the above reasons, we are definitely considering June 3rd to be the cutoff date for signing deals on the secondary market to catch the 250K CBI. For the new project market, we can extend that to about June 8, so obviously our focus will shift to that in the coming week.
Having injected enough of my pessimism into the discourse on the current market, let me end on a high note. I think this summer will be very interesting and I am optimistic about opportunities cropping up. I predict that I will have more time to deal 1 to 1 with my clients. I imagine many fewer clients, but more quality time with those clients. That had always been my modus operandi prior to especially the last few months, but also back as far as a year ago. Stick around and I am sure we can do some good smash and grab jobs in this market, as we have done so regularly in the past. WE will be at more leisure to sift through the market and separate the wheat from the chaff. I will be contacting all of the clients who fit the above bill, one by one, in the middle of June, but feel free to reach out to me and confirm your intent to either move forward with general property investment or 400K CBI investment.
A short sampling of properties will be shared and analyzed in meeting tonight plus strategies on how to close with lightning speed. In these times, blitzkrieg approach can be most effective if you want to close out at 250K.
Properties will be distributed in meeting. If you like, PM me and I will send them to you directly.
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