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Everything you need to know is included in our Turkey Property Pack
Are you thinking of investing in property in the land of Ottoman Heritage? Are you thinking about when to take action?
People hold diverse opinions regarding market timing. The Turkish real estate agent you know might advise you that now is the perfect time to buy property, while your childhood friend from Istanbul may suggest exercising more patience before making a decision.
At Investropa, when we create articles or update our pack of documents related to the real estate market in Turkey, we use verifiable facts and concrete data, not just subjective opinions.
We have collected and examined all the official reports and statistics from government websites. Based on this extensive research, we have compiled a complete and reliable database. Here's what we discovered, which can assist you in deciding whether now is the right time to purchase real estate in Turkey.
Enjoy the article!
How is the property market in Turkey currently?
Turkey is, nowadays, a relatively stable country
Neutral
Stability should be the first thing you look at when you want to invest in real estate because it fosters steady rental income and potential capital gains. It is an information you need as a foreigner looking to buy a property in Turkey.
Currently, Turkey is somewhat stable as a country. The last Fragile State Index reported for this country is 78.1, which is a decent number.
Turkey has a strong economy supported by a robust manufacturing industry and a diversified export market. Additionally, the country has a well-developed infrastructure and a strong commitment to democratic values, which has helped to create a stable political environment.
We should now evaluate more data to see if the timing is right to buy property in this country.
Turkey is on track for significant expansion
Positive
Before investing in Real Estate, assess the stability of the country's economy.
In accordance with IMF projections, Turkey is likely to finish 2023 with a growth rate of 2.7%, which affirms the country's positive direction. Regarding 2024, the figure we're looking at is 3.6%.
Besides that, the economy will keep growing since Turkey's economy is expected to increase by 13.9% during the next 5 years, resulting in an average GDP growth rate of 2.8%.
The expected sustainable growth rate in Turkey is a positive sign for investors, as it indicates that the country's economy is growing steadily and is likely to continue to do so in the future. This makes real estate investments in Turkey a more attractive and potentially profitable option for investors.
Nonetheless, GDP growth is not the only metric to look at.
Turkish business owners are a bit less confident when it comes to market conditions
Neutral
How do Turks perceive their economy? The GDP forecast is not the sole determinant of their perception. Fortunately, in Turkey there is an official metric that is frequently communicated. We're lucky because this isn't true for every country.
The Business Consumer Index (BCI), which measures business leaders' confidence in the current and future economic conditions, is established using surveys and assessments.
The Central Bank of the Republic of Turkey reports that the Business Confidence Index has reached a value of 9 for Turkey. It can be regarded as a rather neutral score.
Nevertheless, upon closer scrutiny of the data, we uncover a potential negative development: the trend is heading downward. The BCI score, 12 months ago, was recorded at 11.
The current score of business confidence in Turkey alone doesn't provide enough information to determine whether it's the right time to invest in property in the country. Before making a decision, we need to look at more data points.
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Turkey is not really issuing more building permits
Neutral
The number of permits given for building houses can be a valuable way to tell if it's a good time to buy property in a country. When more building permits are issued, it reflects a positive stance on the property market's future.
Unfortunately, there aren't more building permits granted in Turkey.
In the previous 12 months, according to Turkish Statistical Institute, the number of building permits issued by the Turkish municipalities rose by 1.7%, from 701,509 to 713,196 units.
Is it a good time to invest in properties then? We need to look at more data.
Remember that there will be a bigger selection of properties available in the domestic market. Then, yes, it's possible that property prices will decrease in Turkey in 2024.
Exploding growth in house prices in Turkey
Negative
Turkey's home prices have increased by 691.2% in 5 years according to Central Bank of the Republic of Turkey.
It means that if you had bought a seaside villa in Bodrum for $625,000 five years ago, then it would now be worth around $4,945,000.
There are several reasons why house prices are soaring in Turkey. One of the leading causes is reckless interest-rate cuts, imposed as a result of the misguided policies of Turkey’s president, Recep Tayyip Erdogan, and a resulting surge in inflation. This has encouraged those Turks with access to sufficient credit to protect their wealth by investing in property. Foreign buyers, especially Russians, have also helped drive up prices in Istanbul and along the Mediterranean riviera.
Prices might be too expensive now to consider a property investment in Turkey.
You can find a more detailed analysis of the real estate prices in our property pack for Turkey.
Everything you need to know is included in our Turkey Property Pack
Turkey's population is getting a lot richer
Positive
When you're looking to buy real estate, population growth and GDP per capita deserve careful consideration because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Turkey, the average GDP per capita has changed by 17.2% over the last 5 years. Very few countries have achieved superior results.
This means that, if you purchase a spacious house in Istanbul and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, the demand for rentals is set to increase in Turkish cities like Istanbul, Ankara, or Izmir in 2024.
Rental yields are interesting in Turkey
Positive
Rental yield is a common tool used to evaluate real estate investments.
It represents the annual rental income generated by a property divided by its purchase price or market value. For instance, if a property in Turkey is purchased for 500,000 TRY and generates 30,000 TRY in annual rental income, the rental yield would be 6%.
According to Numbeo, rental properties in Turkey offer gross rental yields ranging from 4.1% and 6.8%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Turkey.
It means that a property will generate a high rental income compared to its purchase price.
As seen before, the supply of real estate will remain the same, and the pool of wealthy tenants will expand. Consequently, rental yields may increase in Turkey in 2024.
Everything you need to know is included in our Turkey Property Pack
In Turkey, there are projections of sky-high inflation
Positive
Inflation is the erosion of the value of money.
It's when your usual portion of börek costs 10 Turkish lira instead of 8 Turkish lira a couple of years ago.
If you're considering investing in a property, high inflation can bring you several advantages:
- Property values tend to increase over time, potentially leading to capital appreciation.
- Inflation can result in higher rental rates, increasing the property's cash flow.
- Inflation decreases the real value of debt, making mortgage payments more affordable.
- Real estate can act as a hedge against inflation, helping preserve the investment's value.
- Diversifying into real estate provides stability during periods of inflation.
In accordance with IMF projections, over the next 5 years, Turkey will have an inflation rate of 172.7%, which gives us an average yearly increase of 34.5%.
This data shows that Turkey is expected to experience strong inflation. If that happens, buying property now could be the right move.
Turkey's currency is currently very low
Positive
If you're using a foreign currency to finance your investment, this point is important for you.
The Turkish Lira (TRY) is greatly devalued: the currency is currently 38-42% over the past five years.
As a foreign investor, buying a property in Turkey is a good option due to the current low value of the Turkish currency. This means that the property will be relatively cheaper to purchase, and any returns from renting the property will be higher than if the currency was not as low. Additionally, the property may increase in value over time when the currency appreciates again.
Is it a good time to buy real estate in Turkey then?
Let's wrap things up!
The year 2024 holds considerable promise for property investment in Turkey, driven by a range of compelling indicators. The nation's trajectory toward significant expansion positions it as an attractive market for property buyers. With Turkey's population experiencing increased wealth and the allure of interesting rental yields, property investment offers the potential for both long-term appreciation and immediate income.
Projections of sky-high inflation can serve as a unique advantage for property investors in Turkey. Real estate often functions as a hedge against inflation, potentially preserving the value of investments amidst rising prices. Additionally, Turkey's currently low currency value presents a favorable opportunity for foreign investors looking to capitalize on currency exchange rates.
Despite neutral signals such as relative stability and moderately less confident business owners, the overall positive indicators, combined with the benefits of inflation and currency dynamics, make 2024 an opportune time for property investment in Turkey.
While the negative signal of exploding growth in house prices is noteworthy, the aforementioned factors might offer a counterbalance, presenting potential investors with a strategic entry point to navigate the Turkish property market.
We genuinely hope this article has provided you with helpful information.. If you need to know more, you can check our our pack of documents related to the real estate market in Turkey.
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This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
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