Growing Trends for Istanbul Property Investment in 2017
Istanbul is rising from a storm of urban regeneration which was put in place a decade ago to deal with the city’s rapid expansion. The programme aimed to redress these urban issues and turn Istanbul into a truly global and prosperous city. Property investment in Istanbul is considered to be low risk and high growth thanks to low supply and high demand, a steady population growth and availability of finance. One of the most modern cities in the world, Istanbul still manages to retain it’s rich history and traditional charm whilst emerging as one of the world’s richest cities, home to the fourth highest number of billionaires. The average property in Istanbul grew in value by 42% between 2011 and 2016 and buy-to-let investors in particular are now choosing to capitalise on the city’s rising rents and newly developing areas with a fast rental growth.
During the 1980s, Turkey saw a period of significant economic growth thanks to the privatisation of many public enterprises, a government policy which has been central to Turkey’s economy ever since. The importance of Istanbul as the business and finance centre of the country increased ten-fold during this time, attracting millions of people to the city. Istanbul’s population doubled to just over 5 million and this influx demanded an urgent need for housing across the city. A vast number of dwellings were built illegally, creating vast plots of small and narrow houses resulting in dense urban structures across the shorelines and in the suburbs.
Since then, the city’s population has tripled, putting pressure on Istanbul’s property market. Turkey has slowly but surely integrated itself into the global market, creating a fantastic platform for manufacturing industries and institutions looking to expand their business from Europe into Asia; Istanbul became the perfect location for cross continental business, attracting massive global investment. What has been implemented in the city since is a well structured, impeccably planned and sustainable urban regeneration programme to redevelop housing in the city’s shanty areas, replace illegal housing and to improve infrastructure.
New builds are to be safeguarded against earthquakes under the 2012 Anti-Seismic Law and around 6.5 million at risk buildings are to be demolished to give way to better, safer construction. Fifteen inner city areas are to benefit from massive housing projects, many of which are currently underway, such as the Fikirtepe area of Kadıköy, which will see 50,000 housing projects completed by 2018. Major new transport routes are being added to the city to create ‘Satellite Towns’ in the form of new overflow suburbs, which are set to become the future residential hubs of Istanbul with a range of luxury villas and apartments with fantastic lifestyle facilities. It is properties in these areas which are considered to offer prime investment potential this year.
Urban Regeneration in Istanbul Set to Benefit Investors
Urban regeneration in Istanbul has started in the centre of the city and is working its way out to the suburbs. Many central areas such as Kadıköy, Beşiktaş and Sariyer have already benefited from major redevelopment and investors are seeing a huge return for their money. As regeneration moves out of the city, new developments will attract a huge boom in infrastructure, of which some projects are already causing a stir. Major projects such as the third Bosphorus Bridge which opened last year, and Istanbul’s New Airport, are just a taste of the kind of investment the Turkish government are making in the city. Housing developments to benefit from this infrastructure will begin to attract upscale lifestyle facilities such as leisure centres, health spas, shopping centres and entertainment complexes, which will in turn push property prices up.
It’s not all about brand new housing developments though. Central parts of the city surrounding Taksim Square, historically a draw for wealthy investors, are also being restored, renovated and developed. The aim here is to conserve the city’s heritage and history while creating better infrastructure and cleaner, safer streets. Properties in these areas are elite and luxurious, attracting high end investors and more and more of these homes are selling for millions of dollars. In contrast, the shanty towns of the 1980s are making way for more modern and affordable developments in the city centre and in the suburbs which will create fantastic buy-to-let opportunities for investors.
The Asian side of Istanbul is becoming increasingly popular with investors and unlike the European side, construction projects aim to be more environmentally friendly. In contrast to the luxury tower blocks of the city centre and financial districts, the Asian side of the Bosphorus will see low rise properties, surrounded by lush landscaping and more green areas, creating a more family friendly neighbourhood vibe. Commuters here are looking for affordable housing as are the thousands of students who attend the universities of the city. Property prices here are rising and so is the lucrative rental market.
Istanbul’s Top Three Areas of Growth
The populous and cosmopolitan district of Kadıköy on the Asian shores of Istanbul takes the top spot for return on property investment in the past five years with a price growth of an incredible 96%. Kadıköy is an attractive residential and commercial area, known as the cultural centre of the Anatolian side of Istanbul. It has fantastic connections with the city centre as the transportation hub for people commuting between the Asian side of the city and the European side across the Bosphorus. It is also home to a number of university buildings and will also boast the new Ataşehir Financial Centre, said to become home to Turkey’s largest financial institutions, acting as a regional hub for a number of international companies. With this addition to the area will come 18,000 skyscraper condominiums which intend to house 80,000 people with higher incomes. The average cost of an apartment in Kadıköy rose from $162,500 in 2011 to $318,641 in 2016; a price growth of 96% with a rental yield of 5.9%.
Sarıyer, the northernmost district of Istanbul on the European side of the city, falls close behind with a high investment growth of 80% in the past five years. With a long shore along the water, the district boasts both a beautiful coastline and the lush Belgrad Forest. Once a rural fishing community, the district of Sarıyer has become popular with weekenders looking for more natural surroundings, as well as commuters who prefer to live outside of the city centre. It will come as no surprise that Sarıyer has become home to many expensive luxury villas which attract Istanbul’s rich businessmen, actors and musicians. With rich residents come high prices which have more than doubled in the past five years. The average cost of an apartment in Sarıyer rose from $149,375 in 2011 to $268,960 in 2016; a price growth of 80% with a rental yield of 4.8%.
Third in line is the historic district of Beşiktaş, home to some of the city’s most famous palaces. Located on the European shore of the Bosphorus, homes close to the water have become prime real estate with fantastic views across to Üsküdar on the Asian side. The shoreline includes a number of important sites such as Dolmabahçe Palace and the historic neighbourhood of Bebek. The district is well placed for access to Barbaros Boulevard, which serves as a feeder for the inner-city motorway on the Bosphorus Bridge and for those who need access to the city centre, or to the historic quarter of Istanbul. The average cost of an apartment in Beşiktaş rose from $187,500 in 2011 to $330,000 in 2016; a price growth of 76% with a rental yield of 5%.
Istanbul’s Top Three Areas for Investment Today
While Kadıköy, Sarıyer and Beşiktaş are still good bets on the Istanbul property market, you should look a little further out of the immediate city centre for huge returns in the future.
Eyüp is a central district in Istanbul which extends from the Golden Horn all the way to the shore of the Black Sea, encompassing some of the European side’s most established and historical neighbourhoods. The area is historically important for Turkey’s Muslims and the Eyüp Sultan Mosque continues to draw tourists visiting Istanbul, as well as larger numbers of Turkish religious pilgrims. Eyüp is one district that is set to see massive urban regeneration in the near future and is the area of Istanbul that is expected to see the city’s most favourable growth. The average cost of a a property in Eyüp rose from $81,619 in 2011 to $125,199 in 2016; a price growth of 53% with a rental yield of 5.9%, figures which we predict will increase.
A little further out than Eyüp, the district Gaziosmanpaşa is a developing working class area and is one of the most populous districts in Istanbul. This area is a prime example of the urban regeneration plans for Istanbul. Much of the housing here was built illegally and the area expanded rapidly in the 1980s. New housing developments are attracting middle class professionals in an area of which half of the population are under 20 years old, making it a potential gold mine in the rental market. One huge advantage to investing in Gaziosmanpaşa is the area’s proximity to the sea, offering a rare opportunity to purchase new build apartments with sea views. The average cost of a property in Gaziosmanpaşa rose from $80,000 in 2011 to $117,241 in 2016; a price growth of 47% with a rental yield of 5.6% which we predict will increase.
Bahçeşehir and Neighbouring Küçükçekmece
Bahçeşehir is located outside of the city centre on the European side and is popular with middle class professionals looking for reasonably priced, quality housing. The area has a fantastic proximity to Istanbul’s New Airport with excellent transport links. While property prices here are still affordable, the incredible new infrastructure plans nearby, including the airport, are predicted to have a knock of effect with property prices. The average cost of a property in Bahçeşehir rose from $75,625 in 2011 to $120,690 in 2016; a price growth of 60% with a rental yield of 5.9%. It is predicted that price growth in this area will increase once the New Airport is open and becomes a central transport hub.
Küçükçekmece is Bahçeşehir’s southern neighbour, enjoying the same excellent transport perks and airport proximity. The area is currently under massive development and is seeing millions of dollars poured into its urban regeneration and of course the infrastructure development around Media Highway, which is being developed as a business centre. Housing development in this area has only just begun, so huge growth is expected in the future. The average cost of a property in Küçükçekmece rose from $75,000 in 2011 to $117,241 in 2016; a price growth of 56% with a rental yield of 5.6%. This could be the area of Istanbul to produce the biggest returns on investment in the next five years.
Do Your Research Before Investing in Istanbul
Investing any amount of money in property is a risky business, especially if you are a foreign investor. It is so important to know that your money is being spent wisely, with the maximum potential for a return. Whether you are interested in investing in a buy-to-let property or in a second home, make sure that the company assisting you in your purchase is well recognised and well informed of your intended property market. Hundreds of real estate companies can be found on the internet, you need to make sure that you have faith in your agent and feel confident that they are doing the best by your finances.
Turkey Homes has been officially recognised by the government of Turkey via the Turkish Embassy in London and is widely recommended as the company of choice for citizens of GCC countries who decide to invest in Turkey. Founder, Tolga Ertukel, has more than ten years of experience in selling Turkish property to a global audience and bases himself at Turkey Homes head offices in London, overseeing branches in Istanbul, Fethiye, Bodrum and many other regions of Turkey. Here at Turkey Homes, we aim to offer independent and impartial advice alongside expert knowledge about the property market so that you as a buyer can make an informed decision before you invest.