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Investment Opportunities in Turkey: Porfitable Real Estate Markets in Istanbul

AUGUST 14, 2023

The Turkish real estate sector stands as a prime beneficiary of Turkey’s remarkable economic growth. With an accelerating pace, this sector has experienced an annual sale of 1.5 million houses, attracting over 67,000 foreign property buyers each year. Consequently, the total value of the sector is projected to approach the $300 billion mark by 2023. Turkey’s real estate sector has exhibited impressive growth, outpacing numerous developed and developing nations. With a total value of $208 billion in 2020, the sector maintained its momentum from 2020 to 2023. In 2022 alone, Turkey’s real estate sector garnered a substantial $6 billion in investments, driving extraordinary growth, witnessing an increase of over 50 percent from 2020 to 2023 (Table 1).

Table 1: Real Estate Value by Country (Billion USD)

Country 2018 2019 2020 2021 2022 2023
Spain 572.69 600.17 576.55 585.49 615.12 593.19
Belgium 216.60 225.58 233.65 236.25 246.72 256.43
Turkey 279.41 253.83 208.43 224.81 252.12 300.15
New Zealand 86.09 88.17 90.24 94.17 101.23 105.60
Chile 94.85 101.79 90.89 92.56 107.29 100.92
Portugal 86.27 93.65 92.75 95.08 99.87 99.66
Source: European Public Real Estate Association (EPRA)

Investing in Turkey’s real estate sector presents compelling reasons, including affordability, profit potential, and favorable property purchase tax policies. Turkey also boasts lower rental taxes compared to other European countries. The recent surge in real estate prices in Turkey has further heightened the sector’s attractiveness, garnering increased interest. The sector is set to receive investments exceeding $5 billion in 2023, with a substantial portion dedicated to investment funds. Mutual funds, a relatively new field in Turkey, are preferred for their risk mitigation capabilities (Table 1).

Istanbul: A Beacon of Investment:

Istanbul, often considered a nation in itself, plays a pivotal role in contributing over $300 billion to production and national income. This dynamic city surpasses several countries in the Balkans, Caucasus, and Eastern Europe in production, exports, investment, and income. Given its prominent status, it continues to attract substantial investments. In 2023 alone, Turkey anticipates over $15 billion in investments, with a significant portion, approximately $8-9 billion, flowing directly into Istanbul, particularly bolstering the thriving real estate sector (Graph 1).

Graph 1: Istanbul Real Estate Prices per Square Meter

One of the primary catalysts behind investments in Istanbul’s real estate sector is the substantial price appreciation. Post-pandemic, real estate prices in the city have skyrocketed, doubling their value in dollar terms. Looking ahead to 2024, this upward trajectory is expected to persist, further enhancing the appeal of investment opportunities in Istanbul’s real estate market.

Exploring Key Investment Areas:

Price surges in prominent areas like Beşiktaş, Kağıthane, and the Istanbul Financial Centers have caught the attention of investors. These regions have experienced price increases that surpass the city’s average, making them highly attractive investment hubs. Consequently, the soaring value of Istanbul’s real estate sector has enticed a growing number of investors, both local and international, looking to capitalize on the city’s flourishing property market. Additionally, distinctions between central and peripheral areas of Istanbul have become more pronounced, influencing investment decisions (Graph 2, 3, and 4).

Graph 2: Kağıthane Real Estate Prices per Square Meter

Graph 3: Beşiktaş Real Estate Prices per Square Meter

Graph 4: Istanbul Financial Center Real Estate Prices per Square Meter

In conclusion, Turkey’s real estate sector offers an exciting landscape for investors, with Istanbul leading the way as a vibrant and lucrative market. With remarkable growth and potential for further appreciation, investing in Turkish real estate, particularly in Istanbul’s key areas, presents a compelling opportunity for those seeking to diversify their portfolio and achieve substantial returns.

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