The Elements Of A Successful Real Estate Investment In Istanbul

Istanbul has witnessed a great momentum in the purchase of real estate by foreign investors since the beginning of 2012 after the Turkish government allowed foreigners to have a freehold ownership, and ever since then Istanbul occupied the first ranks in the major cities worldwide in terms of demand as well as the price increase within the real estate market based on large demand that rose significantly once more after the Turkish government launched in September 2018 the Turkish citizenship program through real estate investment with a value of $250,000, which has received great acceptance by foreign investors as this program is a great addition to the group of advantages and features that make Istanbul market one of the best markets in the world, where investment in Istanbul has the following advantages:

Istanbul advantages for real estate investment:

  1. The temporary decline of the Turkish lira exchange rate against the US Dollar gives the foreign investor the opportunity to buy real estate at a price lower than usual. After the end of the crisis and the return of life to normal, the investor can reap profits from improving the currency and increasing real estate prices at the same time, which is a big attraction To invest at the moment.

  2.  The high return on investment, as the return on investment in Istanbul is among the highest in the world where the annual price increase rate plus the annual rental return reaches an average of 18% annually.

  3.  Attractive urban development and reasonable prices, since Istanbul residential complexes are famous for their urban development and design elegance, as they mostly provide social facilities such as swimming pools, gardens, sports clubs, tennis & basketball courts, cafes and other facilities that give a high level of luxury to the lives of the residents of these complexes.

  4. Easy and reasonable payment plans, as most development companies make it easier for the investor to pay in the most appropriate way, for example, these companies allow the foreign buyer to purchase his real estate in comfortable installments or in cash at a large discount on the price, while most countries do not allow the foreign investor to purchase in installments and accept only cash.

  5. The large population in Istanbul, which makes this city the fifth largest city in the world in terms of population, which reached 15.5 million people according to 2019 statistics. For this reason, many investors prefer to buy real estate because of the ease of renting it and the large internal demand for housing and then re-sell it within a short period not exceeding 5 or 6 years to take advantage of the price increase that exceeds 12% annually due to the large internal and foreign demand for housing within Istanbul.

  6. Obtaining Turkish citizenship, if an investor purchases properties worth of $ 250,000, and is allowed to resell them after 3 years as a minimum with a good profit margin and thus Turkish citizenship becomes an advantage for the investor, especially since he is not obligated to hold this property for more than 3 years in terms of Turkish Law.

  7. Easy and fast legal procedures that shorten the time of the foreign investor and facilitate all his transactions clearly, compared to the difficult procedures that foreign investors usually face in many other countries.

  8.  The megaprojects that the Turkish government plans within the city of Istanbul, such as the upcoming Istanbul Canal project, which will be launched soon, which is considered to be one the largest upcoming projects in Europe, and the largest airport in the world that takes place in Istanbul, which opened its doors in 2019 and many other projects that contribute to raising the value of the city and are expected to impact the real estate prices positively.

  9. More than 13 million tourists visit Istanbul annually in normal conditions for its well-known tourist attractions within the city that attract tourists in large numbers annually.

  10.  The mild climate that characterizes Istanbul.

  11. The only city in the world that combines both European and Asian continents separated by the charming Bosphorus, which is distinguished by its beauty that gives this city a different value from any other city in the world, which is reflected in a positive way in the real estate value of this city and made the demand on its real estate at its highest.

  12. All services are provided to the highest standards, which usually attract the attention of foreign visitors.

 

4 Key elements of successful real estate investment:

But despite all the above-mentioned advantages, there are still some foreign investors who have not made convincing profits from their real estate investments due to poor selection and insufficient knowledge of real estate investment success factors in Istanbul, which we can basically summarize with the following points:

1- Location:

The correct selection of location is the first and most important rule within real estate investment rules in any city around the world, especially in a city that spans a wide area such as Istanbul, which includes many areas that make the investor confused during the process of selecting the appropriate area for his investment, and yet some investors resort their full focus on cheaper real estate within the city, ignoring its location and believing that they will reap a large profit from it, and here lies the error because location is the most important factor and the price in this case is an integral factor within the stage of making the purchase decision, knowing that the price is very important, but this does not mean that the best real estate for investment is the cheapest one as the importance of location outweighs the price of the property because the demand varies greatly between Istanbul regions, whether in terms of finding Turkish tenants or even those who want to buy an apartment from the investor when he wants to sell it with a profit margin. To achieve this equation correctly the investor must choose between locations with great caution while observing the points the following while purchasing a property:

 

  1.  How close the project is to the business center in the city, where most of the population groups work, and Turks are mostly keen to live within areas close to their work to avoid spending long times in transportation.

  2.  How close the project is to easy transportation, such as the metro, tramway, and Metrobus, which are transported within their own tracks and do not mix with the suffocating congestion in which the city of Istanbul is famous,  Turks mostly prefer to use fast transportations and to live within areas where such transportation is available and Turks usually don’t prefer to spend more than an hour to reach their workplace, as is the case in many areas where there is no rapid transportation, and for this reason, these areas are cheap due to the low local demand for housing in them, regardless of the beauty of this area or other features, the ease of transportation is the most important point for the general category of people, and here lies the error of some investors who are interested in the price factor before location.

  3.  The structure of the region should be geologically safe, as there are areas whose structure is better and stronger in the event of earthquakes, and this factor increases the desire to live within such areas known to the city’s residents.

  4.  Availability of schools and universities within the region or nearby regions gives the location great importance.

  5.  Basic services within the area, such as markets, banks, dry cleaners, libraries, etc. increases demand on living in it besides the previously mentioned factors.

  6.  Nearby attractions such as cafes, restaurants, gardens, seaside, family entertainment facilities, etc. are additional factors that increase demand to live in such areas with such attractions.

 

2- Concept:

The importance of housing project concept and  its distinction comes immediately after the importance of location, as in the same location many residential complexes may be available and certainly not all are suitable for investment as in general they are similar in terms of features, for example, most housing projects in Istanbul city contain a group of buildings and gardens in the middle, a swimming pool and several other facilities, they all provide a high quality of life but yet investors need to consider uniqueness in concept, since all complexes offer similar advantages, so what matters to the investor during the process of choosing between the complexes in the same region is the following:

 

  1. Housing complexes under construction in Istanbul are cheaper and have the possibility of installment payments, but it must be ensured that the construction company is among the reliable companies and has sufficient financial capacity to complete its project and deliver it on time without delay. And it is not always necessary to adhere to this rule because sometimes “not always” some special offers are available within the ready housing complexes.

  2. The housing complex must contain additional advantages that distinguish it from neighboring complexes, for example, there are some projects that are called multi-use complexes, such as projects that contain major commercial shopping centers in addition to residential buildings and luxury hotels, all within the same complex, and these complexes are few in Istanbul, and this factor of limitation provides the ability of the investor to quickly resell such unique property with high-profit margins due to the rareness in availability of multi-use complexes in the city of Istanbul. It is also possible to focus on other types of complexes with distinctive views or complexes nearby the tourist attractions, those are also turning in great profits most of the time.

  3. The exterior and interior design of the complex, where the facilities of the complex and the quality of the design of its buildings are among the important points that make this complex a landmark within its region or even within the city.

 

3- Price:

The price is considered a completion factor related to the previous points and an important element. After choosing the location properly and choosing the appropriate complex in terms of concept and design, the price of the property should not exceed the general average of the region’s prices because if price is higher than the average rate for region’s prices, it is difficult to achieve convincing profit margins, especially when wanting to rent or resell. It is important for investors to negotiate the price and the method of payment during the purchase process, as all Turkish real estate construction and development companies offer discounts according to the method of payment and other factors that the investor can benefit from.

 

4- Investment Objectives:

This point is considered as essential as all previous points while making a Real Estate investment in Istanbul, as the objectives of the investors differ when buying real estate, some investors prefer long-term investments with high rental returns and do not plan to resell it in the short or medium term. And among them are those who desire short-term investment by buying the property to resale within a short or medium period at a profit margin. Every investor must determine the type on investment he wishes to make and the objectives he wishes to meet before searching for the property because the investment mechanism is radically different and it is a mistake made by a number of investors who bought properties that do not serve their goals, knowing that they chose good sites and excellent residential complexes, but the error, in this case, lies In the type of chosen property, as residential real estate serves the goals of certain categories of investors and not all of them. The same applies to commercial, touristic, or hotel properties, etc. Each type of these properties serves specific investment goals and even the mechanism for selecting the right location varies based on the type of investment and the type of property that correctly serves the goals of the investor.

 

Author:

Sami Alnakib

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