Last Updated on 18/04/2022

How and where to invest in Istanbul Real estate 

Turkey has risen to prominence as one of the world’s most important investment destinations for the real estate sector. In fact, it is one of the most important sectors in the country’s economy as it ensures a steady income. Likewise, Istanbul comes on the top of the list thanks to its strategic location. It is the only city in the world situated on two continents. Foreigners willing to invest in Istanbul real estate should be aware of specific facts.

How to Invest in the Istanbul Real estate market

Key ideas to invest in Istanbul real estate

We recommend foreign investors willing to invest in the Istanbul real estate market study the sector trends well. They should analyze the current situation of the sectors and why not collaborate with experts in the market.

For this reason, the MEO consultants team summarized the most needed facts before you invest in Istanbul real estate market.

First of all, note that foreign buyers make up around 5% of all real estate transactions in Istanbul. Yet, Turkish buyers run 95% of the market. Thus, your exit strategy should be Turkish facing this fact. To clarify, when you invest in Istanbul real estate as a foreign buyer, you should sell to a Turk.

Moreover, you should know that Turkish buyers value strong brands. Therefore, they prefer to purchase from well-known developers rather than unknown or newly-established companies. So make sure to choose trustworthy developers or construction companies before you invest in Istanbul real estate market.

What type of property to invest in

You might be surprised to know that the preferred types of properties to invest in Istanbul real estate market are 1 and 2-bedroom units. In fact, they are more affordable and easier to sell.

To clarify,  up to 62% of Istanbul’s population is under the age of 32. Thus, social demographics and culture have changed. Consequently, young people are more and more independent. They can afford to live alone or with their partners. Furthermore, disposal incomes have increased over the past 10 years. Consequently, young professionals can manage mortgages. Thus, they can get into the property ladder much earlier.

Moreover, Turkish people like balconies and outdoor living spaces. Therefore, apartments with spacious balconies are more advantageous. So don’t trust agents who will try to convince you that balconies are a waste of space and money.

ROI and rental income in Istanbul real estate market

The ROI is an essential point for investors. Yet, Istanbul real estate market is full of alternatives and options. Thus, investors should evaluate all the opportunities wisely to earn the best investment.

Many projects in Istanbul adopt the guaranteed rental income scheme, which is generally a marketing gimmick. In other words, it is a package to attract buyers and make the offer more appealing. However, smart investors usually assess these methods. In fact, they only have to evaluate the project’s m2 price and compare it with other projects in the same area. Thus, you will notice a 20-25% increase in the price. And this is the part you get back as a “guaranteed rental income.”

Where to invest in Istanbul Real estate market

Istanbul is a big city with many residential alternatives all over the city. Yet, some districts are more advantageous than others for those who will invest in Istanbul real estate.  

You should know that suburban parts of Istanbul have an important supply of residential properties. We can cite among these areas Bahçeşehir, Esenyurt, Beylikdüzü, bBşakşehir and Silivri…  In fact, they are suitable areas for living and for family homes. Yet, it will take a minimum of 4 to 5 years before prices increase. Therefore, the capital growth will be limited in case of exit within 3 years.

So, don’t be tempted by “bargain deals” agents offer you. Remember that these areas are easy to buy but very difficult to exit. In other words, these areas are more suitable for living not as a pure investment.

However, the best investment zones are urban-regeneration districts in central Istanbul. In these areas, the supply of quality modern properties is still limited, and the prices are currently much lower than in other areas.

To ensure a rapid and sharp increase in prices within 2 or 3 years, you should select the following areas carefully. Here are examples of Urban-regenerated regions that offer good investment opportunities.

In European are:

• Bomonti, şişli
• Eyup Sultan
• Kağıthane
  
• Nişantaşı 

On Asian side:

• Kartal
• Ataşehir
• Kadıköy

Learn also about the best place to buy a property in Turkey.

Real estate purchase cost

Foreigners willing to invest in Istanbul real estate market should be aware of the property purchase expenses. We can divide the real estate purchase cost into two categories.

One-time cost

These are expenses that you pay only once in the purchase process. They can vary depending on the developer except for the following:

• The purchase tax is 4% divided equally between the buyer and the seller and paid on the property completion.
• 1% VAT
• Utility expenses: To connect water, gas, and electricity. Generally, these fees are around 100$. They are also paid after the completion of the project.

Yet, if there are any additional costs, the project management team will inform you from the beginning.

Regular costs

You pay these costs regularly according to a specific period.

–          Annual property tax: 0.2%

–          Maintenance fees: It is 0.5$ per sqm paid monthly on the charge of tenants.

–          Rental Agency fee: It is on the charge of the tenant each time he rents a new house. It is usually one month’s rent.

If you would like to know further details about the real estate investment in Istanbul and Turkey, MEO Consultants offer you a complete advisory.

Learn more about our services.

Get a free-risk initial consultation .