The Reasons Increasing Real Estate Prices In Turkey 2022

The growing and increasing demand for property in Turkey normally and in Istanbul specifically has led to the rise in land prices and their clear rise today, despite the depreciation of the Turkish lira against the dollar and other factors that some may even see as negative, like global inflation and also the war between Russia and Ukraine, but the important estate investor realizes that the foremost profitable investment opportunities are formed when the demand for investment is declining because of concerns that don't have anything to try to to with assets investment.
The reasons that we are going to discuss today justify the increase in prices in realty and make sure that this rise are sustainable and growing as long as demand continues to grow, and this has been confirmed by all the past years.

OVERVİEW

Yesterday’s opportunity reaps its results yesterday’s investor rtoday. As for today’s investor, he will reap the results of his investment within the near future. that's why the foreign investor Rogers said:
“Don't wait to shop for realty. Buy property and wait.”
That is, don't wait to shop for a property, but buy a property and so wait. He indicates that the 000 estate sector normally has investment opportunities that are constantly renewed, and thus it's important to start out this investment as soon because the possibility becomes available.
Let us start from this introduction, which expresses what's happening within the minds of variety of assets investors today within the Turkish property market:

A large number of investors today who are still trying to find an acceptable property in Istanbul, whether for housing or investment, must are in grips with assets brokers during the half of last year 2021, and maybe a part of them visited Istanbul by themselves within the middle of last year and saw some land offers and didn't make a call to buy any of them at that point.

Today, with the approaching of spring season, investors' requests for brand new offers are renewed, thanks to the power to schedule a detailed visit and choose the proper properties, but these investors are surprised by the new prices of the properties, which have increased by no but 70% during the past nine months. The property that was worth $ 100.000 in June 2021 today in March 2022 its value ranging between $ 170.000 to $ 200.000, so what happened during this relatively short period and greatly affected property prices?

• Is it because assets brokers attempt to mislead customers with exaggerated prices?
• Or is that the reason being illogically raised prices by assets projects to extend profits?
• Or is that this rise logical and justified beyond the control of land brokers and developers?

Whatever the real reasons, we noticed from the start of 2022 until the date of scripting this article that many customers don't accept the new prices of property in Istanbul and after field tours, most of them take a choice to postpone the concept of ownership again, perhaps land prices will return to what they were, will the long run of assets prices in Istanbul return to what they were before, or is that the rise inevitable and therefore the coming period will carry more realty prices?

It is out of the question to properly predict the long run of realty prices in Turkey normally and in Istanbul particularly without answering the questions we raised above, and thru which we will expect the progress of the 000 estate price scheme.

What are the explanations for the increase in assets prices 2022?

Reasons associated with the exchange rate:

If we return to 2017, we are going to find that the rate of exchange of the Turkish lira against the US dollar was akin to each dollar about 3.4 Turkish liras, and at that point the worth of a 3-room residential property in western Istanbul in a vicinity like Beylikduzu within a residential complex was in average about 610.000 TL, cherish approximately $ 180.000 and also the price of the identical property today, with the common rate of the lira against the US dollar approaching to fifteen liras for each dollar like approximately 2.5 million Turkish liras, which is corresponding to approximately $ 165.000, practically increasing the worth of residential realty on the idea of the Turkish monetary unit doesn't change its price significantly if the calculation is formed for foreign currencies like dollars.

As for the amount between late 2018 and until mid 2021, when the Turkish monetary unit witnessed a powerful decline against the dollar, the costs of residential property were almost constant, and this suggests that the previous property that we were talking about at a price of 610.000 TL experienced a small increase in its price to achieve 720.000 TL, which is such as about $ 90.000 if we calculate the charge per unit of the lira against the dollar, each dollar equals 8 Turkish liras (certainly the charge per unit and therefore the price of land during this era weren't fixed, but if we calculate for the dollar, we are going to find the value approximately $ 90.000 on average).

This means that in this era (end of 2018 and mid 2021) assets prices were very attractive and amounted to half the important price of the property if the calculation is formed for foreign currencies like dollars.

Notes:

• A large a part of residential land isn't suitable for investment, and this suggests that the property in terms of features are often suitable for your family to measure in, but when reselling later, if the calculation is finished in a very foreign currency, we'll find the damage near the acquisition price or maybe but it, so we always in Right Home warn, there are investment properties that aim to attain the next price when reselling them, irrespective of their area and number of rooms. If you're interested, you'll be able to contact us for more information.
• Current land prices aren't considered high if they're compared to prices before the beginning of the strong decline of the Turkish lira in late 2018.
• The reduced prices during that period (late 2018 and mid 2021) are considered an investment opportunity even for residential properties to hide the value gap during the past months and return to their true value.

And here we've the subsequent important question: Why didn't land prices rise directly when the worth of the lira fell against the dollar?

In fact, we've repeatedly mentioned in previous articles that the important estate market may be a local market par excellence, and also the Turkish investor is responsive to the change within the value of the Turkish lira against the dollar, but his investment plan is generally supported the Turkish lira, and so when the worth of the lira halves within a brief period, it doesn't be during this local market to lift the 000 estate prices 100% immediately, but this rise will definitely need a period of your time, not short.

We must also not forget the emergence of the Corona virus and its negative impact on the sector of property investment, which successively postponed the further price hike.

But today, with the rise within the prices of building materials, as we are going to see later within the following points, the value difference has appeared very quickly.

Reasons associated with building materials:

Although Turkey is an exporter of the many materials employed in construction, like kitchens, marble, doors, and locks, it imports an oversized a part of primary construction materials like iron and cement. let's have a look at the worth chart of iron and building materials in recent years:

By the center of 2021, the sharp increase within the prices of iron and construction materials reached about 80% for iron and 25% for other construction materials.

The sharp rise within the prices of construction materials won't only affect the projects under construction, but also the costs of ready-to-move-in assets, because the developer who sells ready-made land has to pay the new prices for construction materials to start out his new project.

Even the offers of resale and used properties are slowly approaching the costs of recent properties because of the high demand for affordable properties and therefore the low demand for high-priced properties, which is able to inevitably cause a balance within the market during the subsequent few months.

Reasons associated with the increase in rental prices:

Raising assets prices so as to qualify them to draw in a better rental return is an incorrect equation, but its opposite is true, meaning that the high rental return for any property qualifies it to be sold at a better price.

Turkey normally and Istanbul specifically have witnessed during the past months a pointy rise in rental prices, reaching over 120% in some areas, and on the average 84%, in keeping with government statistics.

This means that almost all of the properties became eligible within one year to draw in double the rent that they were qualified to realize in previous years, and after all there's no value to lift the rent of any property without a true demand for this property at the new price, and this was clear in most areas of Istanbul, which is that the presence of tenants willing to rent these properties, whether or not they were twice the worth of last year.

The rental return in previous years before the increase in property prices was approximately like 4% to five on the average, and now after doubling the rental return, it becomes logical to double the property price to take care of this same percentage.

Reasons associated with supply and demand:

The negative effects of the Corona virus and therefore the economic recession that affected the globe greatly affected the movement of creating new projects, and so for Istanbul, the demand has become beyond the provision, and this is often a reason that certainly ends up in an increase within the prices of land originally offered within the market today.

In addition, the dearth of suitable land for construction near important infrastructure makes suitable land for construction in high demand, and this successively ends up in an already high land price even before construction begins.

Economic reasons:

High rates of inflation in America, which is able to soon be in the midst of raising interest rates by the US Fed, which is able to cause currencies falling against the dollar, which can gain temporarily greater strength and weakening within the long term its purchasing power.

The world has not yet recovered from the negative economic effects of the Corona virus, whether on manufacturing or supply chains, and this successively results in higher costs generally, including construction costs, and thus realty prices.

Politics reasons:

The recent war between Russia and Ukraine led to a big increase in oil prices on the one hand, and also secondarily made investors resort to safe havens for investment like owning assets rather than opening commercial activities that the event of the war may cause a whole halt.

There must be other reasons that we failed to mention today, but these are the most reasons that justify the type of sudden rise in assets prices that Turkey normally and Istanbul specifically are witnessing.

As for the longer term of land prices in Turkey, it is predicted by evaluating the essential factors we mentioned, and can they still affect the increase in realty prices, or will they do not want within the coming years?

To benefit from the experience of our specialists in Right Home, you'll get a free consultation by contacting us.