Table of Contents
Is buying real estate in Turkey a good investment?
It has been known since ancient times that owning real estate is the safest and most sustainable type of investment, as it is not a commercial project whose era ends and is replaced by a new commodity, nor is it a digital currency that may double in value per month, but one day you can wake up to find everything you own is worth nothing.
Real estate represents a basic need for man, no matter how times change and technology develops, and it cannot be dispensed with or replaced. The shape of the property can change, but its basic value is protected, and today in the Turkish real estate market in general and in Istanbul in particular, foreign investors are increasingly interested in obtaining real estate in Turkey and benefiting from the law Turkish citizenship (when buying a property or a group of properties worth 250 thousand US dollars, the buyer, his wife and children under the age of 18 become eligible to obtain Turkish citizenship for free and within a period not exceeding 100 days).
But the investor, regardless of his field of work, will want, in addition to obtaining Turkish citizenship, to obtain a profitable real estate investment, especially since one of the conditions of Turkish citizenship is to pay the full amount without installments and pledge not to sell real estate for 3 years from the date of its purchase, and therefore this amount is frozen for a period of time and time is with the investor It means money and therefore if this period of time will pass without making profits, this means that this investment is a loser.
Returning to the title of the article: Is buying a property in Turkey a profitable investment?
Many investors in the Turkish real estate market (the percentage of Turkish investors in the Turkish real estate market compared to foreign investors from all over the world is between 98% and 99% of the entire real estate market) want to have a successful investment regardless of the law of obtaining Turkish citizenship in exchange for buy real estate worth 250 thousand dollars,
Therefore, this market is definitely vital and investment, but can we consider each property as an investment property in Turkey in general and in Istanbul in particular?
Of course not, because the investment property has specific and precise conditions that only the capable real estate consultant with long experience in the real estate market is aware of, and we will talk in detail about the conditions for successful real estate investment in Turkey:
We will discuss the foundations of real estate investment in Istanbul specifically because it is the backbone of life in Turkey and includes more than 20 million people, representing a quarter of Turkey’s population, overlooking both the Marmara Sea and the Black Sea, and the Bosphorus Strait includes this waterway of historical, strategic and political importance, and it is the only waterway that belongs to each bank From its banks to a different continent, it combines Asia and Europe at the same time, and leaves on each of its ends scenes that capture hearts and attract tourists from all over the world time after time each year to contemplate this unique divine creativity.
From this beautiful talk about the Bosphorus, we start with the most important foundations of real estate investment in Istanbul, which are:
1- The strategic location
a location that has unique characteristics that make it distinct from the neighboring properties, and this is the cornerstone that will make this investment a successful investment, whether when renting the property or when reselling it later.
The banks of the Bosphorus are strategically located in every inch of it, but the real estate near the Bosphorus, as we talked about in a previous article: What type of property should I buy in Istanbul?
They are rare first-row properties suitable for high budgets above a million dollars for the rows after the first row, but what about a property in Sisli, Maslak or Kadikoy with a view of the Bosphorus?
If we talk about a high and modern residential tower in these central areas with a view, even if far from the Bosphorus, then we are talking about a rare painting and therefore it is desirable, whether for rent with a high return or for resale later to an investor who loves to collect rare art paintings, contemplate this view:
Even if the view was not so close, but was in the Sisli area, for example, it would also be distinctive and desirable:
Now the important question comes to our mind, which is how much does it cost to buy an apartment for two bedrooms in the above project?
Prices for real estate with a partial Bosphorus view will start at least from 450 thousand dollars for a bedroom and a hall and from 650 thousand dollars for two bedrooms and a hall.
We know that this budget exceeds the expectations of many foreign investors, but these are the logical prices for these properties, as they overlook the Bosphorus and in the Sisli district in central Istanbul, in a modern, full-service tower building.
Do I need 450 thousand dollars to start a successful investment in Istanbul?
Of course, not necessarily. The strategic location does not mean only real estate near the Bosphorus. Let us explain the matter simply through the following rule:
“Any real estate in a strategic location (city center / near an important transportation station / near a highway / with a high rental return / distinguished from the surrounding real estate to make it easier to sell later with profits) is a valid investment property if most of the other investment bases are available”
We will talk in detail about the foundations of successful real estate investment
To take an example of a strategic location for a lower budget, we have the Kayethane area, from which a new metro will be launched in 2022 that will reach Istanbul Airport and thus be the first metro to reach the new airport and from it anyone who wants to go to the new airport by metro will have to cross in this area This is a sure sign that the demand for it will rise for rent and resale
So let’s go to Kait Hana and get any property close to the new metro station and thus achieve a profitable investment in a 100% guaranteed,,, I wish it was that simple, in fact in Kait Hana area itself there are many new projects and also there are a large number of old buildings and of course Most of them are not suitable for a successful real estate investment, why?
Because the strategic location means uniqueness, and therefore the property that you will buy must also have specifications that make it unique, and in this way it will be in high demand for rent and profitable when reselling it later. Follow the rest of the foundations of successful investment to better understand this point.
2- Lack of supply and anticipation of higher demand in the future
Kayaşehir area, which is an extension of the Basaksehir area, is considered one of the closest modern areas to Istanbul’s modern airport, as shown on the map below:
But it never constitutes an investment area. Why?
The answer is simply look at dozens of identical buildings that share the same features in terms of location, specifications and views. There are dozens of them in each neighborhood, and therefore the supply in this area is very high, and this in turn, according to the basic rule in the economy, will make the demand low.
Thus, rental prices and resale later will not achieve high investment feasibility.
And what is the alternative to that?
At the moment we write this article, the tempo city project is considered one of the best investment projects in the Kait Hana area in order to achieve the strategic location point and also the neighboring properties do not share with it the same features and this is the second important rule in real estate investment
Note that the project is opposite a very important mall in the area. On the one hand, gardens and green spaces, on the back are commercial buildings, and on the far side we have old buildings that do not share the same specifications with it, and therefore it achieves the principle of uniqueness and lack of supply, and therefore the demand for it will be high in the future.
3- Have a clear investment plan
If you want to resell your investment property after 3 years, how do you choose it based on the high rental return?!
And if you want to resell your investment property after at least 7 years, how do you buy it in a fully-developed area where there is no opportunity for development?!
And if you want to resell your investment property after more than ten years, how do you accept a property with a low rental return?!
If any investor asks the above questions, he will certainly say that these are self-evident matters in real estate investment and no one can fall into them, but in the reality of our daily experiences through which we witness the stories of dozens of investors, we notice that one of the above mistakes is often committed, especially if the investor’s primary goal is to obtain On Turkish citizenship without giving much attention to the type of real estate he buys, or even a careful informed investor is lured by the idea that there is no profitable investment in Istanbul and therefore he is advised to buy the least harmful real estate and this is in fact just a way to advertise bad projects The real estate consultant would like to sell In it, but the truth, through our long experience in the field, is that there are properties that have achieved more than 100% profits in less than two years. You can view them by communicating with us.
If your investment plan is long, you must exclusively obtain a high rental return, otherwise your real estate investment will not be ideal. The question here is how do I know that the rental return for a property is considered high?
We always advise dealing with a professional real estate broker because calculating the long-term rental return depends on many intertwined matters, including:
Preference for real estate with rapidly growing rental income based on real data from infrastructure development and general improvement in the region.
The high rental yield should not negatively affect the price of the property when reselling in the future.
That the property is easy to rent and that the investor does not have to keep his property without a tenant for several months to find a tenant who is able to pay the promised rental return.
A geographical analysis of the area chosen by the investor and what is the future expectation for it, according to the studies.
Is the neighborhood in which the property was chosen is promising for growth with time, or will it become obsolete?
What are the bases that will make your property in demand in the future when you finish the investment and want to sell it?
But if your investment plan is only short to obtain Turkish citizenship (3 years), you must buy a property that has the following specifications:
It is much better if it is under construction because the ready property provides a rental return at best that does not exceed 6%, while the property under construction if it is chosen correctly, achieves annual returns when sold not less than 25% and therefore it is at least 4 times better as an investment than the ready property
To achieve the law of high demand when wanting to resell it after the end of the investment period
The more the property achieves investment advantages, the higher the chances of reselling it and the possibility of achieving greater profits is more likely. At the same time, a property must be chosen so that the investment advantages do not conflict with it, for example if a property is chosen in a strategic location, which is a very important feature of the advantages of a successful investment, but After 3 years, when it was resold, the same area became full of similar new projects, and thus the second rule was violated, which is to maintain a small supply so that the demand is high.
No matter how ideal the proposed property seems to you to achieve your plan, there are secrets in the Turkish real estate market that are related to the past and the future, not only to the present, and therefore taking a decision based on collecting personal information is very dangerous for the security of your investment even if you resided in Istanbul before buying the property for several years, because the resident He is surrounded by many advantages for any area or property in it and he can estimate the price of the property suitable for this area, but he has not studied the past and will not be able to predict the future as long as he does not read all recent studies and closely follows the economic and political news along with the news of the Turkish real estate market.
4- The price per square meter in the investment property should be less than the neighboring properties with the same specifications
To ensure that your investment is made feasible to the fullest extent after fulfilling the above conditions, it is necessary to choose a property that includes an opportunity in terms of price as well, not just specifications, because the property you get at a price lower than the market price with a valid investment expectation, this means that you will earn twice as much.
We do not deny that many real estate consultants are able to offer you opportunities for real estate with a price per square meter lower than its neighbors with the same specifications, but the question is how many real estate consultants are able to choose a property that applies the above conditions combined?
Today, buying a property at a meter price less than the average price of neighboring properties is an important opportunity and every investor must find this property to ensure a high rate of profits. The properties that achieve all the investment advantages, but the prices per meter are high compared to the region will achieve a successful investment, but not conditional on time (ie. You can resell your property only when you find a buyer who is completely interested in him, and that could be after a year or after ten years).
As a practical example of this, the Serantepe Maslak area near the Istanbul Valley Mall at the beginning of 2020 included a few options of projects under construction such as the Avangart project, and the investor wishing to obtain Turkish citizenship was entitled to obtain two apartments, each with a room and a hall in this project. Today, in the middle of 2021, after the completion of the project, which is the last in this region, the investor can obtain one apartment (if available) in this project with a budget of Turkish citizenship of 250 thousand dollars, and thus the investments in this project have doubled by 100% in less than two years.
Is Avangart still viable for investment?
There is no doubt that today there are brighter opportunities in the Turkish real estate market, and this project remains a suitable option for investors in the long term, as real estate prices in this area are increasing due to the completion of new projects in the same area.
5- That the property in the future is desirable by the local market when reselling
We must write in detail in another article why the real estate market in Turkey in general and in Istanbul in particular is a local market par excellence, and foreigners do not represent it at best more than 3%.
In order not to prolong the day, we will not discuss this idea here, but we emphasize that a successful investment property must be in demand in the local market, and so you target Turks and foreigners when reselling means 100% of potential customers, but if you choose a property that foreigners want and Turks do not matter greatly, and therefore you will find When reselling yourself, you have to target only 3% of this huge market, and so the process will become more difficult.
Sometimes there is a well-planned successful investment to target the foreigners themselves when reselling, but we are talking in general to warn about the size of the foreign market from the size of the total domestic market.
Always remember that you can get a free consultation from our specialized team before you make any decision to buy an investment property (short or long term) or even a residential property in Istanbul.