Keith’s weekly Zoom session October 1-2023
Current state of the market.
As always, a few comments here are warranted. There is no doubt now that we are in the middle of a downturn, slump, or “pullback”, whatever you want to call it. The only questions are how long it will last and how deep will it be. Likely there will not be much relief til next spring. Of course, this should be taken in stride if you are not in selling position. For the incoming buyer, this is good news. On a purely anecdotal level, properties where we just had to accept the asking price of the buyer a short 6-9 months previously, we are now seeing that at least we can make lower offers. We may not get the offered amount accepted, but there is more give and take. I expect when we see September sales figures they will be markedly depressed. There is nothing that leads me to expect a turnaround anytime soon. High interest rates, lack of affordability and economic uncertainty are all head winds. In addition, during the rampant inflation of 2022 and most of 2023, housing was seen as a port in the storm.
It is critical to remember that Turkish homeowners are very rarely over-leveraged. There is a lot of cash in the market and, personally, I seldom meet anyone who has anything higher than 50% LTV, so people have plenty of skin in the game and are unlikely to capitulate in an extreme way, and in big numbers. Yes, you can expect some distressed sales here and there, but this ain’t Florida in 2008. A healthy price correction can only be viewed as that; healthy. An end to a period of irrational exuberance. It looks like about a 20% dip overall being a likely scenario. If you want pure safety, be counter-intuitive. Anything in the sweet spot of around 100K USD is highly unlikely to fall much. “Luxury” properties in obscure locations could take a real beating, but still will not be a great deal.
As previously noted, we are many months into this already.
Short, mid and long term rentals.
Lots of rumblings about new short term rental legislation. Clients will be updated as information becomes available.
Mid-term is still a great route to go, offering flexibility, upfront payment often, and opportunity to block time for personal use. Demand seems pretty high, but it is a lot more work for your management team, so if you have a very marginal property, do not expect a whole lot of love from local agencies, or any agency for that matter. If you bought a “dungeon”, with persistent mold issues, mid-term will not be a magic wand and your management team likely will get pretty fed up of handling complaints. The take away? Do not go too low on the food chain if you are an international buyer. Again, mid-term rentals, to succeed, need to be in excellent condition.
Renovation costs and descriptors.
Renovations have been a main factor in putting us on the map and something we take pride in. As we deal primarily, but certainly not exclusively, in secondary market properties, we really feel this is a service that we have to provide in order to facilitate sales. Many of the properties we look at either need major work or some tweaking as the desired aesthetic is just not there. Therefore, we do our best to roll out projects with predictable outcomes, time frames and on budget.
So, what does an A to Z renovation cost these days in Istanbul, assuming a complete gutting of the property, with all new infrastructure (electric, natural gas, plumbing, and so on) and all new fittings? Well, to keep it simple, mostly we have 2 types of delivery.
1- A standard, very decent quality renovation that is optimized for the rental market, but may be less appealing than if you were designing a property for your own personal use. In most cases. I recommend this level of renovation. It is durable and the outcomes are highly predictable.
In these cases, we are looking at about 400 USD per SQM. We have countless examples, but here are a few representative projects. You will not get expensive hand made Turkish tiles or hardwood flooring and high spec kitchen finishes, but prospective tenants will be very happy with the overall look and, as I said, they are optimized for the rental market. Good, clean finish with slightly above middle grade Turkish materials.
https://www.mybricksrealestate.com/listings/istanbul-sisli-apartment-for-sale/
Residential Apartment In Kurtulus With Panoramic Istanbul Views
Newly Renovated, Fantastic Office 1 Bedroom Located In Sisli
Project completion time on average for the above properties is 3 to 4 months. Note that if you change your mind about products or design mid-way, this can lead to delays. It is best to start with a clear plan and stick to it. As this is primarily an investment property, with a view to generating income, work with the renovations team towards this goal. We all want to create objects of beauty, but in this class, you really should be conscious of costs. State your budget and stick to it. It is not that hard.
2- Luxury renovation. It is much harder to talk about costs here as we all know, the sky can be the limit. However, most of our “luxury” renovations come out to be in the 500 USD per SQM range. Expect good quality flooring, plenty of more bling in the kitchens and washrooms, stylish radiators, maybe a decorative bath tub or aluminium windows and sprinkling of hand made tiles throughout. You might gain some economy on price if it is a large property, say over 150 sqm, but conversely, if it is a 30 sqm studio, expect to pay above the 500 USD per SQM mark. Here are a few examples.
https://www.mybricksrealestate.com/listings/istanbul-aynali-cesme-apartment-for-sale/
https://www.mybricksrealestate.com/listings/istanbul-aynali-cesme-renovated-apartment/
All renovations referenced, except one, were were carried out by Angelina and her team (Tahsin and Huseyin).
Finally, of course, not every project is an A to Z. Sometimes it is easier to just gut the place. It is more likely that you will achieve a more coherent end finish, with all elements blending very well. However, it is always a good idea to see what can be recycled. This can often bring down the overall cost of a project. This should be analyzed on a case by case basis and likely needs a proper estimate to be able to pin point the overall costs.
That is it for today, folks. Another busy period, so I have to cut it short. Preview samples of properties will be given only in the zoom session as always. Hope to see you there.
Properties will be distributed in meeting…
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