Istanbul to grow as its steps nearer to the EU
A new report from Jones Lang LaSalle has found that despite the global economic slowdown, the residential market in Istanbul remains buoyant, with plenty of opportunities on offer for investors, especially approaching 2010 when the city will be named European Capital of Culture and may be a step closer to EU membership…
The shortage of available land in the centre of Istanbul has pushed up market prices, and forced residential developers to expand towards the city’s periphery. These emerging areas are being supported with planned transport links, while regeneration plans aim to move industrial production to the outskirts of the city to help the development of residential areas within the city centre.
Jones Lang LaSalle’s new report ‘Istanbul Real Estate Overview,’ showed that there was huge potential for long term growth.
Avi Alkas, Chairman of Jones Lang LaSalle Turkey, said, “The residential market in Istanbul has undergone rapid development over the last five years, and market drivers remain strong, creating further room for continued growth.
“The city offers huge potential with an expanding middle class and their strong investment intentions, ongoing migration into the capital, as well as the need to replace the existing earthquake-vulnerable stock. The global economic downturn may result in a slowdown of some luxury residential projects in the coming years, but demand from the middle classes is expected to remain strong,” added Mr Alkas.
Alan Robertson, Managing Director of Jones Lang LaSalle Turkey, said, “The global economic slowdown has caused a modest correction in residential prices but on the whole Istanbul’s residential sector is proving more resilient compared to other major cities around the world.
“The population is projected to reach 14.5 million by 2015, creating an estimated 1.18 million extra households and this potential growth means that major developers are continuing with large residential projects. The city’s combination of size, scale and location, strategic commercial position as well as strong retail market will also enhance the residential sector’s potential over the long term,” he added.
The Turkish Government, keen to encourage foreign investment, has already reformed aspects of the property buying process to make it more transparent and appealing to investors. Currently, the lack of an efficient mortgage funding infrastructure has caused an imbalance in the residential market. However, the mortgage market in Turkey is still in its infancy and shows strong potential for growth. The appeal of investment property in Istanbul is also set to increase as the city moves towards being crowned European Capital of Culture in 2010.
Apartments and townhouses across the most popular residential and historic areas of the city have seen up to 20 per cent growth year on year until now.
The World Travel and Tourism Council predicts that tourist numbers will continue to rise, so rental potential on a property in Istanbul looks set to be strong. The Government has pumped huge amounts of money into improving transport and infrastructure, which will attract more international tourists and investors. With the European Capital of Culture tag fast approaching, Istanbul is busy improving its cultural offerings. The local museums are now geared towards promoting the city’s European heritage, such as the installations by contemporary Turkish artists at the Istanbul Modern Museum and there are hopes that the European Capital of Culture title will help to progress Turkey’s bid to join the European Union.
In this vein, the Turkish Government is planning to take a number of ‘important steps’ regarding its EU accession process after the local elections at the end of this month, said the country’s Chief Negotiator for the EU membership talks.
Egemen Bagis said, “We are planning to take some important steps, constitutional amendments in particular, regarding the EU in cooperation with opposition parties after the local elections.”
Marmaray to bring prosperity to regions
Two major transportation projects, Marmaray and Anadoluray, will be in use in three to four years time on the Anatolian side of Istanbul, affecting the regions they are passing through. They will also have a “golden touch” on the residential sites right next to and surrounding the exits of stations.
Two giant transportation projects in Istanbul, Marmaray and Anadoluray, will connect the two continents of Asia and Europe and have a major impact on the real estate market.
The Marmaray Project is an underwater railroad tunnel between Üsküdar and Sirkeci. Anadoluray is the railroad joining Kadıköy and Gebze. Two different consortiums are building the projects. In addition to those, a metro system will connect Üsküdar to Çekmeköy-Taşdelen. Also, this metro line will reach out to Sabiha Gökçen Airport on the Asian side through Sultanbeyli and Kurtköy.
Once these projects are finalized, the city’s traffic problem is likely to be substantially relieved and at the same time several districts of the city will emerge as new property hotspots. Anadoluray and the metro line connecting Üsküdar to Çekmeköy-Taşdeşen will be finished in 2012.
Several lines that are being built on the Anatolian side are as follows: Üsküdar-Söğütlüçeşme-Gebze, Kadıköy-Kartal-Tuzla,Üsküdar-Ümraniye-Sarıgazi, Bostancı-İçerenköy-Dudullu,Üsküdar-Beykoz, Çekmeköy-Sarıgazi-Kurtköy.
Regions such as Ümraniye-Tepeüstü, Çekmeköy, Taşdelen-Alemdağ, Sarıgazi-Samandıra and Kurtköy will emerge as new hotspots of property. Tuzla, Pendik and Kartal on the E-5 highway will also prosper for being in the vicinity of the modern transportation system.
The rail transportation systems will definitely impact commercial property, realtors believe. RE/MAX Yıldız’s commercial real estate expert Ulvi Kocailik says commercial properties will prosper along the E-5 highway, Ümraniye Tepeüstü, Kozyatağı and Şerifali.
Fast connections, transportation and heating
Digital infrastructure is just as important: “Fast connections are important for companies. If transportation, communication and heating are not provided, then those areas cannot develop. When mass transportation is provided, then transportation of personnel is facilitated. Otherwise the property owner or the boss has to provide transportation to at least 30-40-50 staff members.”
This is the reason companies prefer to buy property from areas as close as possible to the transportation network. “Offices are extremely affected by transportation systems,” says Kocailik.
Rails systems will help develop regions such as Kozyatağı and Tepeüstü. “Commercial property will develop in these regions. Stores will be opened in places where pedestrian circulation will increase,” says Kocailik.
Investment Opportunity
Property investing in Istanbul
Even during the global economic crisis, according to the article, property developers have been raking in high volume property sales from their residential property developments
Turkish real estate has become easier to purchase as property prices have effectively dropped as low as 50 percent in the suburbs of Istanbul; and as low as 20 percent for a sea view Bosphorus flat in Beyoğlu. Local Turkish buyers are not borrowing from banks but rather from family and friends to own property in Turkey. In addition to price drops, builders are offering other property buying incentives such as ideal rental guarantees in rapidly developing suburbs of Istanbul; interest free, and long term payment plans are just a few to mention.
There are many opportunities to buy into properties in Turkey for private investors; in Istanbul many construction companies are creating brand new residential communities that are certain to represent a positive investment. Along the southern Turkish coastline developers are obligating to the development of spectacular resorts in huge demand from tourists and second home investors. Private investors can consider aiming for investment property to rent out to the tourism market; alternatively even buying property in Turkey with plans to resell to the growing base of overseas buyers seeking individual properties in Turkey.
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Introduction and development of new ’satellite districts’ is the future residential heartlands of Istanbul, new developments are being built which currently offer some outstanding investment opportunities at “early release” prices.
The execution of urban transformation projects in a variety of Istanbul districts has also encouraged strong property sales; as these transformations are increasing the value of real estate in those particular areas.
In addition to the attractive purchase prices of property in Istanbul comes the higher rental rates. You can pay the same amount of money for a property in Istanbul and another major city in Turkey; but receive substantially higher rent for your property in Istanbul than the same sales priced property in another major city; and in foreign currency (USD, Euro, Japanese Yen) rather than the Turkish Lira. However, Istanbul is very well known as giving one of the best investment opportunities in Europe as the top performing hotspot for overall growth and for capital returns.
Property investment in Turkey is bursting with choice, as an investor has a choice of location, investment approach, target market and undeniably an unsurpassed diversity of property advantages.
Golden years of real estate are coming back
ISTANBUL - Interest in investing in Turkey’s property market has intensified because the industry has been averaging 40 percent returns while the rest of Europe floats around 5 percent growth. It is now easier to purchase as property prices have dropped
The last of the golden years for a large property investment boom in Turkey began in 2003 and carried on quite strong until 2005.
The last preparation year was 2002 when a new law came out, and foreign nationals were allowed to purchase real estate in Turkey in their own name. Well be prepared. The year to get ready for the next big property boom is 2009.
According to a representative of Garanti GYO, interest in Turkey investment property has intensified because the market sector has been averaging 40 percent returns while the rest of Europe floats around 5 percent growth. Obviously these levels of potential profitability are of great interest to corporate investors and it is worth taking into consideration that Dubai Holding’s commitment to the Turkish property market represents their largest international financial investment, which just goes to show how certain they are of the large profit margins in Turkey.
Europe’s Top Investment City
This unique city, at the meeting point of Europe and Asia, located on both sides of the Bosphorus (Istanbul Straits) is described as a jewel by the famous French author Lamartine. Istanbul is a city of synthesis which realizes in an atmosphere of tolerance the uniting of the East and the West on the subjects of culture, art and religion, at the borders of two separate continents. The Bosphorus, which stretches out between the emerald-like slopes, the woods and the bays adorned with one thousand and one beauties, is unique. Halic Bay (Golden Horn), a horn-shaped bay located on the European side of Istanbul, is one of the most beautiful natural harbors in the world.