Keith’s Weekly Property News October 16-2022
In the zoom notes from 2 weeks ago, I said I would finalize the FAQ, but I have not been able to. Hopefully next week.
So, just a very, very quick snapshot on the market as I see it at the current moment.
On the sales side, I feel prices have certainly peaked. It is normal after a sharp rise that there is a cooling off period. I have no doubt this is well under way. We will look at the data coming out next month. What invariably occurs is that first there is a great slowdown in the number of transactions and that gradually filters down to the pricing. In real estate, this is not an overnight phenomenon. I view this as an entirely healthy, and in fact, very welcome occurrence. There was definitely a lot of irrational exuberance going on in the past year and it will be nice to see some of that quashed on the head. I have already done my part in berating owners who try to get me to sell their over-priced stuff. I just simply tell them I do not even have the time to check their place out, as it seems way over market price. Doesn’t exactly win me a lot of friends, but…It does get the message across. The upcoming decline should be no cause for alarm with property investors who have bought in the past 12, 24, to 36 months. You will have locked in very decent, even exceptional gains. Yes, if you have to sell in the next 6 months to 1 year, you may have missed that golden opportunity to sell at the very peak. If you are not in that boat, just keep sailing, nothing of any real import to you. I certainly do not, nor ever do, predict a wholesale crash in the Istanbul or Turkish property market. There is hardly any leverage at play, so rather we can expect a re-alignment of pricing. Having said that, a 10 to 20% drop starting anywhere from now and running through the Spring, is entirely possible. Cold weather in Istanbul is a blessing!!!
The past few weeks have seen a pretty decent sprinkling of budget properties appear on the market. We were able to lock in on a few. A few still remain. I am always a bit surprised when I “telegraph” a place and no one jumps on it.
The higher end properties, say over 4 million lira, have been very challenging. I believe we have what we call in Turkish a lot of “Tok satici” (translated as “full sellers”), the kind I detest, I prefer to call them fishers. They put their property on the market and even if price is met, they often do not sell, hence wasting everyone’s time. No fun. We have 3 or 4 clients who have been looking at these kinds of properties for a while and we share their frustration. Again, I blame leveraging. They own the property 100%, with no rising mortgage payments, so it is missing that very real incentive to sell. The good news is that when they hear prices are receding, they may snap out of their reverie and come back to the real world. I hope so.
As for what we have locked in recently: all fairly typical deals for us. I often “telegraph” my opinion on a property. What does this “telegraphing” really mean? I guess, first and foremost, for me it means that this is a property that you are almost guaranteed not to lose money on. Low bar, I know. But add in that it almost certainly means that there is decent upside room for appreciation, and, naturally, a decent yield. To sum it up, it has the shape of a “winner”. Can I turn that “winner” into a gem? No, not really. We are not alchemists. We are trying to guide people into prudent investments. Will it make 12% on Airbnb? Do I have to make that call? Some of our properties from last year are doing these outrageous numbers but did I go out on a limb and call that last year? I certainly did not and actually would have found it hard to believe. Yet, in some cases it has. It would be exceptionally rare for me to predict a 10% yield on any property and I doubt I ever have. Yet, they certainly have occurred. So, when I telegraph a property, please don’t browbeat me into trying to knock it up to a 10% yield or guarantee meteoric rise in appreciation. I have basically said it is a good deal vis a vis the market and it is likely it will generate decent returns. If you feel under-whelmed by that…errr, there are lots of people ready to satisfy your appetite for the sensational.
The rental market, long, mid and short? Well, it just keeps going up and there seems to be under-supply. Where does it all end? No idea. Whatever the term, the premium prices go to well-located, perfectly maintained (or renovated) properties in downtown locations. We saw these prices in the 2010 to 2015 years. They are now fully back to those levels.
Properties will be distributed in meeting. If you like, PM me and I will send them to you directly.
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