Real estate acquisition in Turkey accounts for 19.5% of the GDP. This figure surprises many, both domestic investors and international. Yet, Turkey’s real estate market, one of the most attractive in the world, has much going for it. From expected capital growth to the citizenship by investment program, Turkish real estate weathers the storms of global economic problems again and again.
From the long-term 0% interest-free payment plans for affordable new housing to the luxury homes that rank as the most expensive in Turkey, one key aspect is diversification. However, there are many other reasons why Turkey’s real estate market performs well. Let’s look further at real estate acquisition in Turkey and how the markets contribute towards the GDP.
How Real Estate Contributes to Turkey’s GDP
1: Turkish Housing Stats
Before we examine why Turkey’s real estate sector is so strong, let’s look at some housing stats. Turk Stat is the Turkish Statistical Institute. They publish all details of Turkey, from the economy to social aspects. Let’s look at the section of construction and housing. The Turkish statistical Institute say that last month (July 2023), 109 thousand 548 houses were sold in Turkey. This was an increase of 16.7% Y-O-Y.
There was a decrease of 17% in the first half of the year, based on last year’s figures. Still, the main reason was fewer mortgage sales, probably because of interest rate changes implemented by the Central Bank to prop up the economy, which is currently experiencing problems with the weakening of the Turkish lira and high inflation. Regarding housing types, there were twice as many resales rather than purchasing off-plan or newly built homes. Regarding sales to foreigners, in that month, there were 2801 sales.
2: Housing Prices in Turkey
Now, we head to the Residential Property Price Index published by the Central Bank. The Residential Property Price Index, which covers the whole country, is constructed to monitor price movements in the Turkish housing market. They say the average price per square meter is 24,598.6 Turkish lira. However, this varies drastically across the country, from Istanbul coming in at 37220.2 ₺ to Ankara coming in at 18275.5 ₺. Despite growing house prices in Turkey, it is still one of the top 15 cheapest places to buy a house worldwide, according to Finder.com.
3: Building Permits and Construction Sectors in Turkey
According to the Turkish Statistical Institute, one aspect that slowed down is building permits awarded to construction sectors. At the turn of the century, Turkey embarked on massive countrywide programs to reinvent housing sectors, and many construction companies sprang into action. According to building permits issued, the peak construction boom was in 2017. Still, issued building licenses slowed down in 2019, when the COVID-19 pandemic started.
The Turkish lira also lost value, causing the exchange rate to sky-high. Many construction materials were sourced from abroad; construction costs and trade became more expensive, contributing to the slowdown and, in some cases, causing construction companies to go out of business. Building permits by types of investors refer to the public sector, private sector, and building licenses for construction co-operatives of a Turkish company.
4: Housing Market Trends
COVID-19 changed housing markets all over the world. In Turkey, there was a surge in demand by domestic buyers for the coastal areas of Turkey, eager to escape COVID-19, which spread rapidly in big cities. Additionally, domestic buyers are now turning away from the big city of Istanbul.
Despite not being the capital, Istanbul is the hub of everything from business to finance to education and real estate. Istanbul is expanding into the outskirt districts with significant lifestyle complexes being constructed. For some, the city is getting too big, and they are heading to the other waterfront, the central city of Izmir. Naturally, economic activity will always affect the Turkish market. For domestic buyers and Turkish companies, the hot topic of interest rates will always be a factor for them.
5: Foreign Direct Investment in Turkey
The Invest in Turkey government portal says Foreign Direct Investment inflows in Türkiye increased to USD 13.3 billion. At the same time, real estate Foreign direct investment was USD 5.6 billion, 42.2 per cent of total FDI in 2021. Foreigners love Turkish markets, and in 2022, house sales to foreigners reached an all-time high, peaking at 67,490 units, which accounted for 4.5% of all house sales. When Turkey first changed their laws regarding house sales to foreigners, it only captured 1.1% of Turkish markets.
6: The Turkish Citizenship by Investment Program
One widely discussed aspect is the Turkish citizenship by real estate investment scheme. To get citizenship, applicants must invest $400,000 in property and keep it for at least three years. This program also extends to the applicant’s spouse and dependents and has received much interest from Middle Eastern and Gulf countries. The program was set up to boost the housing market of Turkey’s largest city, Istanbul. To date, roughly 9000 people have been awarded citizenship.
7: What is the Future of Real Estate in Turkey?
Global and local events always affect Turkish housing markets like any other country. However, real estate is considered an ideal investment due to its ability to weather international and domestic economic crises. The thing to remember about Turkey is that real estate only came into its prime roughly 20 years ago. Until then, Turks couldn’t get mortgages, and much housing was old and worn out. In some cases, the ghettos were also health hazards. Families often lived more than one generation together.
These days, the market continues to grow in more ways than one, thanks to the Turkish Government’s 2023 vision plan. Planners and architects work together to ensure green spaces and modern living trends. At the same time, council investments in transport, education and social facilities boost a region’s profile. As with any country, though, it is better to drill down regionally rather than countrywide when looking at investment and growth.
Certain places in Turkey have better predictions for capital growth than others. Istanbul, the largest city, will always be an investment hotspot. Still, new emerging districts are grabbing the spotlight throughout the country as communities grow and expand. But how does Turkey compare to European countries? For that, we need to look at Euro Stat.
8: Turkey and the Eurostat Housing Index
The Eurostat Housing Price Index covers trends in European countries, including whether property prices are rising, falling, or remaining stable in different regions and countries. The list of countries can also be used to compare the performance of housing markets across European countries and a few non-European join. The Eurostat HPI is used for various purposes, including economic analysis, policy evaluation, and monitoring trends in the housing market.
It helps governments, researchers, and policymakers assess housing markets. Eurostat calculates the HPI using a methodology that considers the price changes for residential properties while considering factors such as location, type of property, and size. The index compares property price movements across the list of countries and regions.
The HPI data is collected from various national statistical offices and institutions responsible for housing and real estate data in each participating European country. These sources provide data on property transactions and prices. Their latest data from quarter 4 of 2021 up until the present shows Turkey leads the housing index. Hence the country is ideal for investors looking to get out of the Euro Zone.
9: Why Turkey Attracts International Property Investors
Real estate sectors in Turkey have several strengths that make the country an attractive destination for domestic and foreign investors. These strengths include:
Geographical Location: Turkey bridges Europe and Asia, making the country a strategic location for trade and commerce. A major global city, Istanbul is a significant hub for international business and finance.
Diverse Property Types: The Turkish real estate market offers several property types, from apartments and houses to commercial properties and vacation homes. This diversity caters to a broad spectrum of investors and buyers.
Booming Tourism: Tourism in Turkey features historic sites, beautiful coastlines, and cultural experiences. This drives demand for short-term rental properties, creating investment opportunities in hospitality and tourism sectors.
Urban Transformation: Turkey underwent urban renewal and transformation projects in many cities, including Istanbul. This creates opportunities for developers and investors to participate in rebuilding and upgrading older neighbourhoods and infrastructure.
Government Incentives: The Turkish government implemented various incentive programs to attract foreign investors. These include the Citizenship by Investment program, which grants citizenship to real estate investors, and tax incentives for development in specific regions.
Strong Economic Growth: Turkey experienced periods of robust economic growth, contributing to growing middle classes with increasing purchasing power. This, in turn, fuels demand for housing and commercial properties.
Stable Banking Sector: Turkey’s banking sector is relatively stable, providing financing options for property investments. Mortgage markets have also been developing, allowing more people to access property ownership.
Cultural Appeal: Turkish culture and heritage are rich and diverse, attracting expatriates and retirees looking for unique living experiences. This artistic appeal drives demand for residential properties.
Infrastructure Development: Turkey invested heavily in infrastructure projects, including transportation networks, airports, and bridges. These developments improve connectivity and accessibility to various regions, enhancing property values.
Young Population: Turkey’s relatively young population ensures a growing workforce and the potential for increased urbanization. Young professionals and families contribute to the demand for housing.
10: Istanbul – The King of Turkish Property
- Population: Approximately 15 million
- GDP: Over $400 billion (2021) 40% of Turkey’s economy
- Average Property Price: Varies widely by district
Istanbul, Turkey’s most populous city continues to experience significant population growth due to internal migration and urbanization. This growth drives demand for housing and real estate development. Istanbul has also attracted much foreign investment. The Turkish government implemented policies encouraging foreign buyers, such as granting Turkish citizenship to confident investors.
Istanbul property prices vary widely depending on location, type, and condition. In recent years, Istanbul saw both price increases and stabilization in various neighbourhoods. Popular and central areas tend to have higher property prices. Additionally, Istanbul’s thriving rental market is due to the large population and presence of students, expatriates, and professionals. Rental yields vary depending on the neighbourhood and property type.
Overall, Istanbul has undergone urban transformation, replacing old, deteriorating buildings with modern, earthquake-resistant structures. This process opened up opportunities for development and investment. To keep up with housing demand, Istanbul also saw significant infrastructure projects, including new transportation networks, bridges, tunnels, and airports. These developments have influenced property prices and accessibility.
Prime Istanbul Districts Contributing to the GDP
- Beyoglu: This district, encompassing Taksim Square and the historic Galata area, has thriving cultural scenes, making the neighbourhood ideal for modernity and tradition. Property prices in Beyoglu vary, with upscale districts like Istiklal Avenue and Cihangir commanding higher rates.
- Besiktas: Home to prestigious universities, upscale neighbourhoods, and iconic landmarks like the Bosphorus Bridge, Besiktas attracts local and international buyers. The district offers luxurious apartments and waterfront properties.
- Kadikoy: Located in Asian Istanbul, Kadikoy features vibrant social scenes and excellent transport links to European Istanbul. Property prices are slightly lower than European districts but have been rising steadily.
- Sisli: Cosmopolitan Sisli features business hubs, upscale shopping districts, and luxury residences. This area appeals to investors seeking high-end apartments and commercial properties.
11: Other Places to Invest in Turkish Property
- The Turkish city of Antalya: The Mediterranean Gem
- Population: Approximately 2.5 million
- GDP: Over $30 billion (2021)
- Average Property Price: Varies by district
Antalya attracts tourists and property investors along Turkey’s picturesque Mediterranean coast. This coastal city offers stunning beaches, a pleasant climate, and thriving tourism industries. Hence, the Antalya Provincial Directorate of Culture and Tourism say the city welcomed over 16 million tourists every year. Prime Districts for investment include…
- Konyaalti: This district boasts beautiful beaches and modern infrastructure. Konyaalti Beach, with its Blue Flag status, attracts visitors and investors alike. The area offers apartments and villas.
- Lara: Lara Beach, another sought-after location in Antalya, features upscale resorts, hotels, and residential developments. The district offers luxury villas and apartments with sea views.
Antalya’s tourism sector consistently grows, attracting investors looking to profit from vacation rentals. Property prices in Antalya have also grown steadily, making the region an attractive destination for capital appreciation and commercial real estate. While the region’s natural beauty, with lush greenery and stunning coastline, enhances overall appeal for residents and tourists. Antalya’s international airport also offers direct flights to numerous European cities, making this Turkish region convenient for international travellers and property owners.
- Bodrum: A Mediterranean Paradise
- Population: Approximately 200,000
- GDP: N/A (primarily a tourism-driven economy)
- Average Property Price: Varies by district
On the southwestern tip of Turkey’s Aegean coast, Bodrum features stunning beaches, vibrant nightlife, and historical attractions. The Bodrum Peninsula offers diverse locations, from bustling towns like Bodrum and Yalikavak to tranquil villages like Gumusluk and Turgutreis.
Each area’s unique charm appeals to different types of buyers. Yalikavak, in particular, gained international recognition for its upscale marina, luxury villas, and celebrity appeal. The area saw significant development in recent years. For peaceful retreats, Gundogan offers tranquil settings with beautiful beaches and relaxed atmospheres.
Looking to Invest in Turkey – Use Our Services
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- Buying: We’ll handle the research, negotiations, and paperwork so you can focus on the excitement of homeownership in Turkey.
- Selling: Trust us to market your property effectively, attracting the right buyers and ensuring you get the best possible return on your investment.
- Investment Properties: Interested in real estate in Turkey as an investment? We’ll help you identify lucrative opportunities, from rental properties to fixer-uppers with potential.
- Relocation: If you’re new to the area or relocating, we’ll make your transition seamless, helping you find a property in Turkey that suits your unique lifestyle
Reach out today to schedule a consultation, and let’s begin this exciting journey together. Your dream property is just a phone call away! Alternatively, also see our portfolio of property for sale in Turkey.