During the boom Turkish property was primarily seen as a lifestyle purchase for foreigners but now it is increasingly being seen as an investment, particularly in cities like Istanbul, Ankara and Izmir with low property prices and ferocious growth.
In the last 18 months Istanbul has become dominant in real estate investment news and analysis. Perhaps rightly so with its huge population, incredible population growth and multiple multinationals setting up shop in the city — not to mention the new airport and canal projects.
In this respect the latest news is a bit of a shocker. At a recent conference of the Real Estate Investing Partners Association (GYODER), the realty group’s chief researcher, Emre Çamlıbel, told a gathering of journalists that the top three cities of İstanbul, Ankara and İzmir have seen their share of the value of annual national realty sales steeply decline from 51 percent in 2010 to 41 percent in 2012, a trend which suggests that growing opportunities in provincial cities may be reversing a decades-long migration trend towards the country’s mega cities.
But the report also shows that construction isn’t keeping up with this trend, as the number of residential building projects in İstanbul in 2012 was more than that of Antalya, Bursa, Kocaeli and seven other provincial cities put together. “This is a potentially historic shift, no doubt, though the building market is obviously still focused on İstanbul,” said Çamlıbel.
Another positive trend is in the mortgage market, in which Çamlıbel reports not only “massive growth” over the last 8 years, but also 6-10 year loans replacing 5 year deals and with lower interest rates as well. Low-credit consumers have been kept out of the market by 5 year deals. “Housing credit extended by banks has grown from under $1 billion in 2004 to $86 billion in 2012,” Çamlıbel told reporters.
One reason why banks are more willing to lend is because construction projects are increasingly registered and legal, reversing a long trend of unofficial construction and shady loans. GYODER estimates that in 2008, 164,734 of the 329,777 housing projects built were officially registered. In 2012, 539,985 of an estimated 741,592 new residential building projects were registered with the state.
“It’s good evidence that, despite the continuing housing boom, Turkey is doing reasonably well in registering construction and reducing the size of the black market,” said Çamlıbel. “When it comes to enforcing earthquake standards or collecting property tax, this is a good development.”