Keith’s Weekly Property News September 15-2024
Due to a heavier than usual travel period, I will have to push back the next zoom session a few weeks. However, I will make some notes on the market here, to keep folks up to date. I will be attending the NC LIVE event and giving a short talk in late September. As always, we are just a click away if you have any questions or need assistance in Turkish property investment.
State of the market:
The rather long, yet relatively shallow slump slogs along, heading into its 18th month, with no clear end in sight. Borrowing rates continue to suppress real estate activity and there has been a concomitant steady, if unspectacular, decline in prices. It is hard to imagine much going very right on the RE market til next Spring. It will take time for the rates to get down to anything like normal. That is it in a nutshell; not really much to elaborate on there. Of course, Istanbul – and Turkey – being how they are, we can expect a surge of pent up demand spilling out onto the market when the rates finally do come down.
The benefit of this is that it is much easier to engage with sellers. There is also less pressure knowing that there is not much competition. We can float offers and let them sit and wait and see what comes back to us. The first offer is, generally speaking, a bit aggressive on the low side. That tactic was counter-productive 2 years ago, but seems to be back in play. In the end, as mentioned in previous notes, the market prices seem to be down 15-20%, in USD terms, from 2 years ago. As always, this is never uniform across all property types, nor all locations. Some, unfortunately, are probably down much more. I did a ‘mini-stress test’ of sorts over a small sampling of properties sold over the 2021-2023 period just to see where they stood. I was quite relieved that they all look to be in the black. Those from 2018-2020 enjoying a higher overall rate of return, often in the 50% range, not including accrued yield. If we factor that in, there are, indeed, some that have doubled in value over that time. Kocaeli and Izmir’s declines in the past 18 months have been relatively muted, if at all.
Below are a few quite representative examples from each year. These are not at all “outliers” or “cherry picked”, rather I have sought to provide examples that were more towards the norm.
2019. Mesrutiyet 80 sqm, 70K USD plus 25K USD renovation, all in 95K USD, current market value, 170-180K USD. Net rental income over period: 25K USD.
2020. Kurtulus. 100 sqm, 120K USD, minor renovation, 10K, total 130K USD, current market value 200K USD. Rental income over 4 year period, 24K USD.
2021. Kagithane. 35 sqm, 34 sqm, 92 K USD purchase, current market value 130K USD. Net rental income over 3 year period, 13K USD.
2021. Izmir. 80 sqm, 95 K USD, current market value 125-130 K USD. Net rental income over 3 year period, 14K USD.
2022. Bomonti, 150 sqm, 320K USD purchase, 60K USD renovation. Current market value, 475 K USD. Net rental income over 2 year period, 36K USD.
2022. Kagithane, 55 sqm, 120 K USD purchase, current market value, 135K USD. Net rental income over 2 year period, 12K USD.
2023 KOCAELI, 65 sqm, 95K USD purchase, current market value, 105 K USD, Net rental income over 1 year period, 5K USS.
2023. Ferikoy (IST). 95 sqm, 130K USD purchase, current market value 140-145 K USD. Net rental income over 1 year period, 6K USD.
Snapshot of the rental market
The rental market as a whole is functioning perfectly normally, without any big surprises. If the properties are priced correctly, tenants can mostly be found within 2-3 weeks, with a few exceptions for properties which might hold different than usual characteristics (Villa/commercial) We also have quite a glut in Kocaeli at the moment, but that is a temporary situation.
As purchase prices have softened somewhat in Istanbul, it has had an overall positive effect on rental yields.
ISTANBUL:
2.5-3.5% Luxury/new build
4-6% properties under 20 years old, but not requiring extensive renovation.
5-7% older properties, often requiring renovation.
Average cost of a new build in very decent, central location, but not absolute prime with parking and some selection of facilities (think non prime Bomonti, Kurtulus, higher end Kagithane) 4K-6KUSD/sqm
KOCAELI:
4-5% New build/luxury
5-6.5% properties under 20 years old, not requiring extensive renovations
Average cost of a new build in very decent location, but not absolute prime – with parking and some selection of facilities 1.5-2K USD/sqm
IZMIR:
3-3.5% Luxury/new build
5-6% properties under 20 years old.
6-8% older properties, often requiring renovation.
Average cost of a new build in very decent, central location, but not absolute prime – with parking and some selection of facilities 3K-4KUSD/sqm
In light of all of the above, I think it is going to be an interesting period coming up over the Fall and Winter in the market. Much more to discuss, but that will have to wait for the next zoom session. All the best.
Properties will be distributed in meeting. If you like, PM me and I will send them to you directly.
We invite you to join us for:
#IstanbulInsights with Keith
On Sundays at 20:00* Istanbul time
*13.00EST/ 19.00CET/
20.00TRT/ 02.00SGT (Monday)
Via Zoom:
https://us02web.zoom.us/j/7931208182?pwd=ZndocVNmbXAyTE5uMnNscC9sK0xSZz09
Password for logging in: 1234
‘Just Click’ the above link and be part of the Istanbul Insights with Keith’s property market updates.
About The Author
