With each passing year, real estate market investments in Turkey double, as the country offers the most profitable returns to investors. The real estate market provides 150% profits to investors in Turkey by grabbing the attention of foreign investors as the only beneficial investment opportunity. In the following sections of the article, we will look at all the details of real estate investment in Turkey.
How to Choose a Real Estate Investment in Turkey?
Before taking your first steps into real estate investment in Turkey, there are a couple of steps to consider. The steps to choose a real estate market are first to decide on a city and then find the perfect neighborhood to buy a property. A lot of the best places to invest in have similar characteristics.
According to the real estate market's trends and statistics, it will be easier for you to find a suitable property at such a location where you can rent or resell the apartment. Factors to consider before choosing real estate in Istanbul;
Rental properties are a typical kind of real estate investment in Turkey. Real estate is a good source of regular income, having rental yields of 8-11% against 2-4% from residential property. Maintenance of commercial property is much easier than residential property. This requires limited management as professional project maintenance agencies take care of these properties.
Another positive point is that the investors do not have to spend on the furnishing of the property, as the tenants would furnish it as per their taste and requirements. For residential property, short-term leases are preferred, and for commercial property, a 3+3+3-year agreement with a predetermined rent appreciation is made.
Before buying a property in Turkey, you must know about your budget and how much you are willing to spend on the property.
Banks offer loans for real estate investment in Turkey, but the terms and amounts covered depend on the property type. It is easier to get a loan for residential property from the banks for at least 90% of the property value. On the other hand, loans for commercial property are much harder to get, and only 60% of the finances for the property value are covered.
The interest rate is much higher and is only suitable for you if you have enough finances available. Still, if you have restricted funds, then you should invest in residential property.
Selling the Property
Finding the right buyer is a slow and challenging process for exiting or liquidating real estate assets. If you invested in a commercial property related to a specific industry, the economic condition plays a significant role in the commercial property. If the market has slowed down, it can be challenging to find a buyer and sell the property.
You might even have to compromise on some things like rent. However, there is one possibility with the commercial estate that you can part sell, unlike the residential unit.
Analyzing the demand is an indispensable step for real estate investment in Turkey, as it is for any market. It is essential to make sure that you invest in a market that has a stable growing rental demand, and it is necessary to know your target audience as you do not want to put your cash flow on pause.
When evaluating real estate rental demand, you need to consider vacancy rates, days on the market, population growth, and the number of rental units vs. available listings.
The rise and fall of the Turkish Lira are also factors to consider if you want to make a real estate investment in Turkey. The exchange rate from your currency to the Turkish Lira will benefit you in huge profits or cost you money.
When dealing in Turkish currency in exchange for your money, timing plays an important role considering that the Turkish currency has lost 30% value over a year, getting you a discount of 30%. As a result, when the Turkish Lira is weak, it is critical to invest in Turkish real estate.
Is Location Important in Real Estate Investment in Turkey?
Real estate is an excellent choice to diversify your investment holdings, as the benefits are significant. It is also essential to make sure you take your time to choose and purchase the right property, which can provide investment success in the future.
When planning to buy a property, you need to consider the property's increase in value, determined by how appealing it seems to potential customers. If you want to put the property on rent for general income, the location plays an essential role. People mostly look for houses closer to their workplace, or the commute time to other places is less.
If your property is closer to the central locations, it will be in more demand. It is also beneficial to invest in property in such a location that will grow in value in the future due to the infrastructure development to get you high returns shortly.
However, sometimes the noise and traffic could be a put-off for people who prefer quiet areas. When narrowing down property options, it is also necessary to have the property closer to amenities like shops, restaurants, cafes, gyms, and family renters. If the schools are near the property, people are more likely to be interested.
If you are investing in properties, you need to keep in mind that you should also be looking for your future tenant. Investing in a developing neighbor will help you with your future investment goals.
When Should You Invest in Real Estate?
A significant factor for many people while investing in real estate is location. Time is also a principal factor in the investment decision, as it can affect the long-term profitability of your investment.
Since you might be required to pay the down payment of between 3% to 20%, the best time is when you have financial stability. You will also be in charge of closing costs from 2% to 5% of the price that the property was purchased. Besides these prices, there will be other payments such as mortgage payments, property taxes, maintenance, utilities, etc. To meet these expenses and avoid debt, financial stability is a must.
Before making a purchase, you need to do your research to minimize risk and maximize return on the investment. First of all, you should do a real estate market analysis of where you want to invest. It is also essential to analyze different neighborhoods using metrics like rental income, listing, price, and cash return. Other significant factors to consider during the neighborhood analysis are population growth, economic growth, crime rate, local news, and facilities.
Secondly, you will do a rental property analysis after finding an area and making listed or even off-market properties. Lastly, to identify defects in the property, you need to do a home inspection.
You have to make sure before investing that it is the right time of the year. For example, winter is the best season to buy property as there are very few buyers in the markets, and the prices usually go low.
The real estate agent will be more attentive to you as there won't be any demand, the second-best time to invest in spring, as there is an increase in properties. You must always do your research before buying a property, and once you have found the one which suits you best, do not wait for winter or the buyer's market to make the purchase.
Real Estate Investments in Turkey - Which Cities to Invest In?
The demand by foreigners to invest in properties in Turkey has been growing ever since it was announced that foreigners could get Turkish citizenship if they make a certain amount of investment in real estate.
Foreigners are interested in buying property in Turkey to hold it as their vacation home or put it up for rent to generate a yearly second income. With continuous development in Turkey, it has turned into a bright torch attracting tourists and investors. However, there are many cities with different benefits for real estate investment in Turkey.
Istanbul and Trabzon have been in the rankings for the best investment cities in Turkey. Massive metro tunnels, trams, and tourist areas make these cities economically and commercially attractive.
If you would like to invest in a holiday home, Antalya is the best option for you. It has cheap property prices, and it is one of the top tourist attractions for vacations. Russians, Brits, and Germans are attracted to investing in property in Antalya.
Antalya has a large population of ex-pats, and the city center is open all year. Antalya's weather is ideal year-round, with excellent public transportation making it a more appealing option. For a more laid-back lifestyle with golf and fishing, you might also look outside city center neighborhoods like Belek, Side, Lara Beach, and Konyaalti.
The most popular city amongst Middle Eastern buyers is Bursa. The city has a lot to offer, such as beautiful Ottoman buildings, thermal baths, green parks, gardens, historic sites, and mountains. To enjoy skiing and snow, you can go to the Uludag mountain located in Bursa. Properties in Bursa remain cheap all year round, but the new Osmangazi bridge has decreased the commuting time to Istanbul to one hour, so it is more likely for the prices to increase.
Another destination that will give you value for your money is Fethiye. It is the best option for mountain and beach lovers, with beautiful landscapes and small villages like Uzumlu. You can experience the traditional Turkish lifestyle and enjoy the beautiful bays and beaches. Fethiye, too, is a hub for the ex-pat population.
And finally, Turkey's most popular coastal area Bodrum attracts foreigners with its fascinating and ancient ruins, castles, beaches, and resorts. Bodrum gives a traditional feeling with low-rise houses that are painted white. The downside to investing in Bodrum is that its property prices are higher than the houses in Fethiye, but affordable property options exist.
With recent drops in the strength of the Turkish Lira, prices are highly affordable for foreign investors. With many different options offered by several cities and an ever-increasing demand for properties both internally and from abroad, real estate investment in Turkey is desirable right now.
Frequently Asked Questions
1. Is it safe to buy property in Turkey?
Purchasing property in Turkey is very safe and simple if you do things correctly and work with a professional real estate company that knows what they're doing.
2. Is it good to invest in real estate in Turkey?
Investing in Turkish real estate is advantageous due to its high liquidity. Apartments in residential complexes that provide various services and are located in areas with well-developed infrastructure are in high demand all year. They are also appealing for resale.
3. Is this a good time to buy property in Turkey?
Buying real estate in Turkey is a profitable long-term investment. Despite the worldwide COVID-19 pandemic, the market offers unmissable opportunities, particularly for foreign investors.
4. Can you buy citizenship in Turkey?
You can buy your way into Turkish citizenship since January 2017.
5. Is real estate expensive in Istanbul?
Purchasing a property in Istanbul is an excellent investment because the city has very reasonable prices, particularly for foreign buyers. Istanbul also has a high return on investment in the form of rental income, as most properties in the city have 12-month rental potential.
6. Can foreigners get a mortgage in Turkey?
As a foreigner, it is possible to obtain a Turkish mortgage under the right conditions.