Why Istanbul property is booming
Property prices in the Turkish city of Istanbul have risen more than 20 percent in the last 12 months alone, but what's driving the boom in real estate there?
According to the Istanbul-based property firm Universal 21, the city outpaced all others in Turkey for property price growth, and was 6.2 percent ahead of the 13.8 percent national average.
Turkey is now ranked the fifth fastest growing property market in the world, and Istanbul is also one of the fastest growing cities.
Adil Yaman, Investment Director of Universal 21, said: "There are several factors contributing to the rise in property prices in Turkey and Istanbul in particular. Much is made of foreign investment and there is little doubt that more and more foreign investors have been looking seriously at Turkey as a place to make a good return on property investment.
"However, it is actually the domestic market and Turkish investors who are largely responsible for driving property prices upwards. This is a good thing when you consider that there are cities in the world where prices are driven by demand from foreign investors. When those foreign investors lose interest, this can have an impact on growth.
Yaman added that he believes there are still opportunities for foreign investors to benefit from more sustainable price growth.
He said: "The opportunity in Istanbul is still there for the taking for savvy investors who want to take advantage of low property prices and high capital growth potential."
According to Turkish economists, the engine for growth in Turkey as a whole has been fuelled by a credit boom. The latest statistics show that even with economic performance falling short of previous years, this has not had any effect on property prices. If anything they are rising more than in 2012.
Official figures released by the Turkish Statistical Institute showed that home sales to foreigners made up one percent of total house sales of 1,157,190 in 2013, however this did mark an increase of 50 percent on a year earlier.
The easing of restrictions on the reciprocity law was conceived at least in part as a way to encourage more foreign investment in Turkey's property market. Investors from oil rich Gulf States have been welcomed with open arms, and there is compelling evidence that these investors are looking at cities like Istanbul as an alternative to other cities, according to analysts at Universal 21.
Even so, investment continues to be dominated more by domestic investors, which means there is still an opportunity for foreign investors to move in and take advantage while Istanbul is still viewed as an emerging city in comparison to say London or Paris.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
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