Turkish real estate market: opportunities and challenges

Discover the opportunities of investing in the Turkish real estate market. From growing demand to government policies, find out what you need to know before diving in.

One of the most important factors driving the growth of Turkey’s real estate market is the country’s strategic location, which serves as a gateway between Europe, Asia and the Middle East.

This makes it an ideal location for international business and trade, as well as a popular destination for tourists.

• Growth and size

Turkey’s real estate market offers a variety of investment opportunities, from affordable apartments to luxury villas, commercial properties and industrial facilities. Istanbul, Turkey’s largest city, is a particularly attractive investment destination, offering a wealth of investment opportunities in a variety of sectors. Turkey’s real estate market has grown significantly over the last decade, becoming one of the largest and most dynamic markets in the world.

The market has experienced steady growth due to various factors such as increasing population, increasing urbanization and strong economy. According to official data, the real estate sector in Turkey accounted for approximately 8% of the country’s GDP in 2020.

Demand for properties as a whole is essentially stable. According to Turkish Statistical Institute data, total housing sales increased by 1 percent in the first eleven months of 2022 compared to the same period of the previous year, reaching 1.28 million units, following a 0.5 percent decrease in 2021. (TUIK) . After annual growth of 11.4% in 2021, 1.9% in 2020, 0.8% in 2019 and 3% in 2018, significant investment, production and exports are expected to increase the Turkish economy by around 5% in 2022. helped it grow.

Overall economic development is expected to slow this year, although the International Monetary Fund (IMF) forecasts a moderate growth of 3% this year, which is slightly more optimistic than the World Bank’s growth forecast of 2.7%.

There are also important regional differences, with smaller rural areas being more in demand in Turkey’s main cities. During the first eleven months of 2022:

Housing sales, which constitute more than 17 percent of all transactions in Istanbul, decreased by 6 percent compared to the previous year, falling to 222 thousand 910 units.

Housing sales in Ankara, which has a market share of approximately 9 percent, decreased by 10.5 percent compared to the previous year, falling to 109 thousand 801 units.

In Izmir, which constitutes approximately 6% of the market, housing sales decreased slightly compared to the previous year, decreasing by 1% to 72,626 units.

• Trends

The Turkish real estate market has experienced significant growth and development in the last decade, and experts predict that this trend will continue in the coming years. Here are some of the current trends and future predictions of the Turkish real estate market: Foreign investment:

1- Foreign investment: Turkey has become an attractive location for foreign investors due to its positive economic and political climate, low real estate prices and high rental returns. The Turkish government is also implementing policies that will make it easier for foreigners to invest in the real estate market, which is expected to drive further growth in the sector.

2- Development of infrastructure: Turkey has made major investments in infrastructure development in recent years by building new airports, highways and public transportation systems. This has increased accessibility to various parts of the country and led to increased demand for real estate in these regions.

3- Luxury real estate: The demand for luxury real estate in Turkey has been increasing in recent years, especially in cities such as Istanbul. This trend is expected to continue as wealthy individuals seek to invest in high-end properties.

What are the factors driving demand in the Turkish real estate market?
There are several factors driving demand in the Turkish real estate market:

• Economic Growth

The steady growth of the Turkish economy has led to an increase in real estate demand from both domestic buyers and international investors. Turkey’s economic growth has been a significant driving force behind demand in the real estate market. Türkiye has experienced strong economic growth in the last decade; GDP growth rates averaged around 5% per year. This growth has led to increased disposable income and greater access to credit, which has increased demand for real estate.

• Population growth (Demographics)

Turkey has a large and growing population with a significant number of young people entering the workforce and starting families. This has created a strong demand for housing, especially in urban areas.

One of the key drivers of Turkey’s economic growth has been its large and growing population, which has created a strong housing demand. This demand becomes especially evident in large urban centers such as Istanbul, Ankara and Izmir, where rapid population growth has occurred in recent years.

• Government Policies

The Turkish government has implemented many policies to encourage investment in the real estate sector, including the Citizenship by Investment program, which allows foreign investors to obtain Turkish citizenship in exchange for a real estate investment of at least US$400,000.

One of the key drivers of Turkey’s economic growth has been its large and growing population, which has created a strong housing demand. This demand becomes especially evident in large urban centers such as Istanbul, Ankara and Izmir, where rapid population growth has occurred in recent years.

• Government Policies

The Turkish government has implemented many policies to encourage investment in the real estate sector, including the Citizenship by Investment program, which allows foreign investors to obtain Turkish citizenship in exchange for a real estate investment of at least US$400,000.

• Low interest rates

Low interest rates make it more affordable for individuals to obtain mortgages and purchase properties, which increases demand in the real estate market. Thanks to lower borrowing costs, more people are able to buy homes or investment properties, increasing the overall demand for real estate.

In addition, low interest rates make real estate investments more attractive, especially for investors who want to obtain a stable and reliable return on their investments. As a result, the low interest rate environment has helped increase demand in the Turkish real estate market, especially in major urban centers such as Istanbul, Ankara and Izmir.

Overall, these factors are expected to continue to increase demand in the Turkish real estate market in the coming years, especially in major city centers and popular tourist destinations.