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Global Real Estate Market Overview and Turkey’s Booming Property Sector.

JULY 31, 2023

The global real estate landscape has experienced significant shifts in recent times, driven by the COVID-19 pandemic-induced disruptions, supply chain challenges, and increased property prices. These disruptions, coupled with hiccups in the supply chain, have led to delays in property development projects and elevated initial building costs. Notably, the property development industry grappled with complications in steel, copper, and aluminum production in China and the U.S., exacerbating supply chain woes. Moreover, Texas endured a severe superstorm, forcing the shutdown of essential building product manufacturing plants, impacting the production of construction materials across the globe.

The pandemic’s effect on new home production has resulted in a decreased overall supply of available properties, a key driver for rising prices. Additionally, surging input and construction costs have further contributed to price escalations. Although the situation has now stabilized, price variations may persist among different countries.

The repercussions of these circumstances are evident in the global real estate sector’s overall value. In 2020, the sector was valued at $9 trillion, a figure that has grown to $10.7 trillion in 2023. Projections indicate that by 2030, the sector will expand further, reaching an economic size of $14.6 trillion (Graph 1).

Graph 1: Global Real Estate Market (Trillion Dollar)

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Source: Statista

Turkey’s Remarkable Performance: While real estate prices fluctuate from country to country, some have experienced price decreases between 2020 and 2023, Spain being a notable example. On the flip side, Turkey has outperformed many nations with a remarkable 35 percent increase in real estate prices measured in dollars over three years. Canada, Poland, and Belgium have also witnessed increases, but Turkey’s growth surpasses them all. Investors in Turkish real estate have reaped higher profitability, and data from the European Public Real Estate Association (EPRA) confirms Turkey’s exceptional growth. In 2020, the industry’s volume stood at $203 billion, which has now soared to $275 billion. By year-end, the sector is poised to surpass the $300 billion mark, signifying over 50 percent growth in just three years (Table 1).

Table 1: Real Estate Market Value (Billion Dollar)

Country 2020 2021 2022 2023 Rise (%)
Italy 887.7 886.8 910.7 908.9 +2.4
Canada 738.7 760.1 819.1 882.1 +19.4
Australia 612.5 622.8 662.7 713.4 +16.5
Spain 600.2 584.8 619.9 593.2 -1.13
Netherlands 382.1 405.9 427.7 438.5 +14.7
Switzerland 309.8 331.4 346.5 352.2 +13.7
Turkey 203.9 224.2 231.8 275.2 +34.9
Sweden 242.1 242.8 258.1 264.7 +9.3
Belgium 225.6 235.9 246.7 256.4 +13.6
Poland 194.5 216.1 227.4 241.0 +23.9
Denmark 149.6 157.8 166.8 171.7 +14.7
Source: EPRA

Despite challenges like the pandemic and global political uncertainty, Turkey presents significant growth potential. Driving factors for the Turkish real estate sector include its strategic geographical location as a “crossroads,” urban renewal and development projects, a thriving construction sector, and demographic advantages. Over the past five years, the Turkish real estate market, especially office and commercial properties, has demonstrated strong performance. Rental yields and selling prices for retail and residential properties have consistently risen during this period.

Between 2020 and 2023, the Turkish real estate sector witnessed rapid development, marked by the sale of nearly 1.5 million units, including new and second-hand properties. Foreign buyers have played a significant role in this growth, with over 170,000 houses sold to foreigners during this three-year period. Among foreign buyers, there has been a preference for new houses, with Istanbul and Antalya emerging as the most sought-after locations. German, British, Arab, Iranian, and Russian buyers have led the pack in house purchases in Turkey (Table 3 and 4).

Table 3: Real Estate Market in Turkey (Million Unit)

Year Existing Home Sales New House Sales Total House Sales Median Prices (USD)
2019 0.837 0.511 1.348 51,584
2020 1.029 0.469 1.499 42,920
2021 1.030 0.461 1.491 69,506
2022 1.025 0.460 1.485 103,802
2023* 0.336 0.145 0.481 115,000
Source: TUIK (January-May 2023)

Table 4: Foreigner House Stock by Country in Turkey (2015-2022)

Country House Stock
Iraq 48,446
Iran 36,743
Russia 34,550
Kuwait 14,394
Germany 12,290
Azerbaijan 8,934
UK 8,716
Ukraine 7,531
USA 4,706
Qatar 2,323
Others 137,582
Total 316,215
Source: TUIK

In conclusion, despite various challenges, Turkey’s real estate sector continues to shine, offering lucrative opportunities for investors. Its consistent growth, driven by a mix of factors, makes it a standout player in the global real estate market. As Turkey’s real estate market continues to thrive, both domestic and international investors should keep an eye on the potential it holds for further expansion and profitability.

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