Keith’s Weekly Zoom Notes September-3-2023
With September usually comes a time of transition for people in regards to their living arrangements. Students flood onto the rental market, expats are more in abundance as well. Turks, often back from summer holidays, are keen to look at what is happening on the sales front, some for investment, some for urgent need to secure a property and get out of rentals. All of this should lead to an uptick in activity in the market, but not likely to be enough to reverse the temporary trend of sales numbers declines, and ultimately, price declines. It seems we are about smack in the middle of that event. If I were a buyer, I would certainly be looking to get the purchases complete by the winter at the latest. I think pent up demand will come roaring back at some point, and any improvement in broader economic conditions would support an exit from the pull back by next Spring. Of course, if economic conditions worsen, we could see a deeper pullback, but not anything too drastic. The main reason for this is the primacy of real estate investment in the minds of locals.
City in focus: Kocaeli.
If you have been on the groups for a while, you have likely heard me mention this city several times. It is somewhere we feel clients looking for diversity, should definitely look into. A few things we have noticed that make it attractive:
– There tend to be higher yields on new build properties than in Istanbul.
– The new build projects that are not brand new are on offer at much lower than the newest new build projects (in delivery or to be delivered). We can attribute that to lower land costs a few years ago and lower costs on everything a few years ago. This will probably even out over the next few years, but what is means for you is a decent prospect of profit on appreciation if you purchase the former.
– In addition, where there is a higher yield, logic would dictate that the appreciation will catch up, So, while enjoying a very healthy yield, the likely appreciation will compound the positives.
– It is less than 1.5 hours from Istanbul. It has horse racing track, ski hill and various nature pursuits.
– Major industrial center.
– Home to several universities.
City in focus 2: Mersin.
Mersin is a large port city that also has access to beaches within the city, and many other options within a 30-45 minute drive. It is increasingly being seen as an alternative for locals to the Alanya and Antalya options due to the extremely high prices in those areas. In addition, a major new airport (Tarsus) will be operational in the next 18 months. It is about 45 minutes to Mersin center. The prices of new build properties are extremely attractive and secondary market even more so. Yields are similarly impressive to Kocaeli. You can find a very well-balanced property for as little as 100K USD. Expect to pay 20% more if you want a very good sea view. So, in summary, here are some real pros for Mersin.
-board walk area very extensive and well-developed.
-fairly easy to source properties.
-not in risky earthquake zone.
Mersin’s population grew several hundred thousand after the earthquake and has been the best performing real estate market in Turkey.
-major port.
-nuclear power plant being developed outside the city (think high paying jobs).
If you want Mersin options, usually we provide these on 1 to 1 basis rather than putting on the group as the demand is more limited, so you should DM us.
City in focus 3: Karaburun peninsula.
Again, a name that will be familiar to regular group followers. Out of all the coastal areas, Karaburun seems destined to be the one with highest growth in the coming years. As prices have skyrocketed in Bodrum, Seferihisar (to lesser extent), Urla, Fethiye, Antalya and so on, this remains one of the last great options for finding a villa on the cheap. We pretty regularly get requests for people looking for a villa in Bodrum with 500K budget. Unfortunately, you will not be happy with what you can get. I can almost guarantee that. For that money, you could get a mansion in Karaburun and watch the revenue on it grow steadily year on year, not to mention appreciation. It went up 30 to 40% in real terms since I started monitoring it about 1.5 years ago. I expect similar growth in the next year and then more gradual after that. So, this could be your last chance to benefit from a pretty decent pop. If you are really serious about looking at this, let me know. I can plan a trip there only when I have 2 or 3 people interested, or when I just happen to be checking something out already.
30 second run down on the rest.
-yields seem to be rebounding broadly in Istanbul, Izmir, etc. Rents seem to be modestly on the rise again.
-Short term market humming along ok, but not as dynamic as past years.
-Sporadically, we are seeing clusters of good bargains appear on the market. It is definitely not an environment for flipping, so curb that enthusiasm, but otherwise it is a market where you can find some fair deals. The usual aspirational pricing still clogs the arteries of the market, but if you scratch a bit below the surface, you will see there is some value there. We are seeing some loosening of conditions from the seller side, though rarely wholesale capitulations.
-renovation costs have stabilized and pricing visibility has increased.
A note on furnishings. Anything less than 7KUSD to fully outfit a 1 bedroom and it probably will not look great. Expect about 8K USD to get it right down to the cutlery etc. 9 to 10K USD for a 2 bedroom. If you are installing ACs that might add a bit more.
-We put in quite a bit of time looking at land. That all came up dry. At this stage, it seems like there is no choice but to wait for the winter to re-visit that. It is all very elusive. Just when we think we are closing in on something real, it evaporates. Pity.
Properties will be distributed in meeting. If you like, PM me and I will send them to you directly.
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