Last Updated on 23/09/2022
Investment in the Turkish real estate market: Best opportunities in 2022
The Turkish real estate market has witnessed many transitions recently, especially after the Covid pandemic which changed the world on different scales. Yet, 2022 has been a challenging year for this sector in Turkey. The exceptionally- increasing demand exceeded the supply which engendered a prices increase at surprising rates. These factors changed the market’s trends and contributed to creating new investment opportunities to make a profit in this challenging situation.
General overview of Turkish real estate market in 2022
According to Turkish Statistical Institute data, sales in the Turkish real estate market increased by almost 40% year over year in April, setting a record for the month. Although there is a growing amount of interest from foreign purchasers in Turkey’s booming market, local demand has been the major driver of price-growth acceleration in 2022.
Residential real estate sales reached their peak in December 2021, when they nearly doubled compared to average monthly statistics. Due to a dearth of supply and a slowdown in new development, particularly in Istanbul, supply chain problems brought on by the pandemic and increasing construction costs have driven up housing prices globally. Consequently, new constructions decreased dramatically which increased new property prices.
In fact, prices for new construction have risen above average due to a supply bottleneck. According to data from Turkey’s central bank, residential property prices per square meter increased generally in Turkey for the five years up to April 2022 by 127% and in Istanbul by 142%. In Turkey, new construction prices increased by 131%, and by 157% in Istanbul.
You can find more detailed explanations about the Turkish real estate market in 2022.
Prices forecast in Turkish real estate market
How are the prices in Turkish real estate market in 2022?
Prices in the Turkish real estate market are rising faster than those in other European countries. Turkey tops the list of European nations in the Eurostat house price index. Moreover, between 2010 to the fourth quarter of 2021, the value of Turkish real estate climbed by 427%. That represents a growth in real estate prices ten times greater than the European Union. The price increase continued in 2022 as well. In fact, data from the central bank of Turkey shows that in July 2022, the Residential Property Price Index (RPPI) climbed by 8% on a monthly basis and by 52.6% on an annual basis.
Likewise, by July 2022 RPPI increased in Istanbul only by 200.1% annually with an 8.2% monthly increase. If we would like to evaluate this growth according to the property type we can state that RPPI for new dwellings rose by 172.8 % in Turkey and 208.9% in Istanbul. Meanwhile, second-hand properties RPPI recorded an increase of 174.6% in Turkey and 202.1% in Istanbul.
Why did property prices in Turkey increase in 2022?
The remarkable increase in prices in the Turkish real estate market in 2022 is due to many reasons. First of all, as we above mentioned, the high demand versus the low supply is the major reason for this update. Many political and economical factors contributed to increasing the demand for real estate in Turkey such as the Russian invasion of Ukraine which led Russian investors to the Turkish market. Moreover, the citizenship by investment program also boosts the foreign demand for Turkish properties, especially in the period between the announcement and the implementation of the new amendment in investment minimum value.
Meanwhile, the increase in the construction cost worldwide joined by the lack of available land in the central areas impeded the new constructions and thus the supply decreased. This imbalance between demand and support created a gap that increased remarkably the prices of new-construction properties mostly.
Yet, we should clarify that this situation is reversible and would be regulated within a couple of years until the ongoing urban regeneration projects finished bosting thus the supply. Therefore, investors should catch the opportunities in this specific situation.
The resale market is a good investment opportunity in 2022
The abovementioned supply/demand gap created new opportunities in the resale real estate market in Turkey for both buyers and sellers. In other words, facing the high demand, people who bought a few years ago put their properties on sale supplying thus the market with new supply. Meanwhile, they benefit from the Price index increase over time and still can get a good profit based on the price they paid at the moment of their purchase. Moreover, in this situation buyers who need properties today can afford good offers with interesting price/quality opportunities compared to the current market prices of new constructions.
To sum up, it’s important to note that Turkey’s second-hand property market offers a variety of chances, but thorough research is necessary. To explain and examine the resale market, MEO Consultants professionals will give you a more in-depth series of articles. However, those interested in buying second-hand real estate can request a risk-free initial consultation.
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