An exclusive interview with the CEO of Imtilak Real Estate about the rise in real estate prices in Turkey

Follow with Imtilak Real Estate company the answers to a set of questions that may be asked about the rise in real estate prices in Turkey, and its impact on the Turkish real estate market, as these questions are answered by Engineer: Bara Badenkji, CEO of Imtilak Real Estate.

An exclusive interview with the CEO of Imtilak Real Estate

1.   Do you think that the high prices of real estate sales in Turkey are exaggerated, or is it normal?

When asking about the issue of real estate prices in Turkey and whether it is exaggerated or not, we must take into account several factors:

• The location of Turkey in general - and Istanbul in particular - is a link between the continents of Asia and Europe, and when it comes to a vital location like this, it is not surprising that prices are constantly rising, which means an abundance of great and distinguished investment opportunities in Turkey's real estate.
• Turkey's real estate prices are described as competing with real estate prices in Europe, especially the western part of it, noting that real estate in Turkey is distinguished by the same quality of services, and the durability of the infrastructure in Europe's real estate.
• The increasing demand for real estate investment in Turkey, especially by Muslim and Arab expatriates in Europe, where these investors found in Turkey a safe destination for them, in light of the political and economic turmoil experienced by their countries of origin, in addition to the cultural and civilizational environment that welcomes investors in Turkey, which made it a suitable place to spend holidays or spend beautiful and relaxing periods of retirement. This was also reflected in an increase in the demand for real estate in Turkey, and thus the fact that real estate investment in Turkey continued to be profitable because prices in it increased over time.
• The Turkish domestic market is a young market, and the percentage of young people in the Turkish people is high. According to the data of the Turkish Statistics Institute for the year 2020, the population of Turkey - between the ages of 15 and 24 years, reached about 13 million people out of 83 million people, that is, 15.4% of the total population In Turkey they are young people; This is the highest percentage of young people in Europe!

Therefore, this remarkable rise in the percentage of young people in Turkey necessarily requires an increase in the demand for ownership and rent.

• In addition, the high prices of building materials - globally - such as cement, iron, and covering materials (finishing), and others; raised construction costs in dollars, and thus contributed to the increase in prices.

In short: the increase in demand and the increase in costs led to an increase in the prices of real estate in Turkey.

2. Which areas of Istanbul have seen a significant increase in their prices?

According to a study conducted by the Center for Economic and Social Studies at Bahçeşehir University in partnership with one of the famous Turkish real estate sales locations in October of 2021, the most areas of Istanbul with a rise in real estate prices were:

1. Kadikoy on the Asian side of Istanbul.
2. Sile on the Asian side of Istanbul.
3. Sariyer on the European side of Istanbul.
4. Catalca on the outskirts of European Istanbul from the side of Edirne.

There are other regions that recorded a noticeable increase in their prices.

Here, we note that real estate prices have started to rise significantly for some areas during the year 2020, starting from June, after the end of the first closure due to the Coronavirus pandemic. For example, we were selling a property consisting of 3 rooms and a hall, in the period before Coronavirus, by about $163,000, then the rise started until today the price of the same property reached about $200,000, which means that the rate of a price increase according to the dollar amounted to 22.7% during about a year and only half, which means a lot to those looking for a safe and guaranteed investment in profits.

3. Was this increase reflected in your profits in sales or is it still the same?

First, we would like to point out that real estate consulting and brokerage companies adopt the principle of commission that is paid as a certain percentage of the price, and accordingly, increasing sales means increasing profits, and does not mean increasing prices, because an increase in prices if accompanied by a weakness in demand, this may lead to a decrease in selling, and thus the profits of the brokerage firms decrease.

But it can also be said that the profits of real estate owners have been very large recently, despite the circumstances of the change in the exchange rate of the Turkish lira against the dollar, as many investors have profited from the recent rise in real estate prices in Turkey.

4. What is the impact of this recorded rise in real estate prices in Turkey on those wishing to buy real estate, whether they are foreigners or Turks?

It became clear to us after the Coronavirus pandemic, that there is a global trend towards investing in fixed assets, and in gold as safe-havens, in addition to the continued increase in demand for real estate in Turkey by foreign and local investors alike.

Despite the increasing and continuous rise in prices, due to the permanent need in the internal Turkish real estate market, as well as the great external demand for real estate investment in Turkey, which we have already mentioned.

Here’s an important thing here, which is the decline in the exchange rate of the Turkish lira against the dollar and its negative impact on the purchasing power of local investors, but this effect is considered temporary. Once, the activity of the Turkish local real estate market returns to recovery again, after prices stabilize according to the lira again, we have also become accustomed to that in the Turkish domestic market in previous and similar crises.

5. In your opinion, what is the impact of this rise in real estate sales prices in Istanbul on rents?

The rise in real estate prices in Turkey, in 2021, coincided with a significant increase in real estate rents, especially in Istanbul, where we often hear about the difficulty of renting a suitable house in it, given the high demand for permanently renting houses in Istanbul, in addition to this. Two reasons contributed to the rise in Istanbul rents, namely:

• Life returns to normal after the gradual decline of Coronavirus, for example, institutes and universities returned to face-to-face education, which led to an increase in demand for student hostels.
• High property prices led some of those who wanted to buy a home to postpone the idea - if their savings were insufficient - to rent an apartment instead of buying, while waiting for the necessary liquidity (budget).

 

Edited by Imtilak Real Estate ©

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