factors influencing property prices in Turkey in 2023.
Table of Contents:
You may find two apartments with the same size and specifications in the center of Istanbul, but their prices can vary significantly. Why does this difference exist, and what are the key criteria determining these price variations?
The growing real estate sector in countries like Turkey, along with government support for development projects and infrastructure enhancement, has led to a relatively stable increase in property prices in recent years.
Besides factors like location, finishing touches, and project services, key elements with similar patterns also influence property prices. In this article, we'll explore the crucial factors shaping property prices in Turkey.
Prices tend to rise as you move closer to the city center.
Closeness to transportation, historical sites, tourist attractions, markets, and essential facilities such as hospitals and universities can greatly influence property prices.
Regardless of the apartment layout, size plays a role in determining the price.
Larger properties generally have a lower price per square meter.
Age and Condition of the Building:
And of course, buying a new or unused property is considered better than buying an old property in need of a large number of costly and exhausting renovations. These renovations may require a long period of time. However, the decrease in property prices and apartments due to the lack of interest in purchasing them and the decrease in demand may make them a profitable deal for many investors who have a broader long-term perspective. They may see features in the property that others may not see, making their apartment sell later at much higher prices compared to the purchase price after conducting some necessary renovation operations to make the property look modern and vibrant again.
Today, construction companies seek the expertise of renowned experts and engineers to protect their projects from the risk of earthquakes. It has become one of the most sought-after factors by investors and provides an advantage for the property buyer in terms of confidence in not losing capital and achieving the maximum possible level of safety to preserve lives.
The Turkish government has mandated all construction companies to implement their projects according to earthquake-resistant systems. Buildings are now constructed using specific technologies and specialized building materials, the prices of which have risen compared to similar buildings.
Quality of Materials Usedin Cladding and Finishing This factor includes the quality of finishes, modernity, such as lighting type, electrical system, heating systems, and the flooring used. It also considers specifications that come with the apartment, such as furnishings, views, and social facilities accompanying the residential complex, the height of the apartment, and more.
Exterior Appearance of the Property:
The external appearance of the building contributes to increasing the value of the property, such as the type and quality of external cladding and the possession of the building with glass facades or historical and heritage facades.
In addition, the higher prices of apartments with facades facing the sunrise and good ventilation contribute to reducing humidity levels compared to lower-priced apartments facing directions not exposed to the morning sun or in lower floors where humidity is more prevalent. Such apartments may be surrounded by tall buildings that obstruct good ventilation, leading to odors and stains that may spread on their walls. Meanwhile, prices rise for apartments with spacious views, sea views, or views of forests and parks.
City Status and Importance for the Property:
Now, let's talk about the supply and demand dynamics, a crucial factor that adds a competitive edge between the Asian and European sides of Istanbul.
Supply and Demand: Supply and demand play a pivotal role in the real estate market, creating competition between the Asian and European sides of Istanbul. The European side, being the business and trade hub, is in high demand for both living and real estate investment due to its proximity to major commercial centers.
On the other hand, the Asian side might have significantly higher prices despite fewer commercial centers. However, its residential projects stand out with unique views and modern, upscale finishes, attracting business professionals and many investors seeking tranquility away from the city's hustle.
Seasonal and Circumstantial Influences:
Various circumstances and seasons contribute to fluctuations in demand for specific types of apartments. For instance:
Summer and Tourist Seasons:
Prices of 1+1 apartments in city centers may rise during summer and tourist seasons as tourists prefer them over hotel rooms, and families seek villas for vacations, leading to increased prices.
Start of the School Year:
With the beginning of the academic year, there's a surge in demand for studio apartments as new students flock to cities for enrollment in renowned universities, causing a rise in their prices.
Proximity to Public Transportation in Turkey:
The Turkish government continues its efforts to expand metro lines, connecting cities and provinces across Turkey with the largest network of transportation. This has had a positive impact on the rise of property prices throughout the country.
One recent achievement was the completion of the metro project in the city of Başakşehir, inaugurated in April 2023. This project had a direct influence on increasing property prices in the area, enhancing the overall value of real estate investments. As the government invests in improving transportation infrastructure, it not only facilitates ease of movement but also contributes to the appreciation of property values in various regions of Turkey.
Proximity to Major Economic Projects:
The assurance provided by the Turkish government and its commitment to fulfilling promises in executing massive projects, coupled with continuous efforts for the country's development, instills confidence in investors placing their capital in its real estate market. Many large-scale projects, especially those near construction developments, have contributed to significant leaps in apartment prices, delivering profitable advantages to their owners. A prime example is the inauguration of the new Istanbul Airport and numerous other colossal projects such as suspension bridges, highways, and seaports.
Today, the anticipated completion of the new Istanbul Canal, spanning 45 kilometers upon excavation completion, is expected to drive up property prices in the areas it traverses and nearby regions. These areas include:
- Arnavutköy: 28.6 km
- Başakşehir: 6.5 km
- Küçükçekmece: 7 km
- Avcılar: 3.1 km
In addition to the regions of Esenyurt and Beylikdüzü.
Since the announcement of the start of excavation operations in 2017, property prices in Istanbul in these areas have risen by 40% due to increased demand. It is anticipated that these increases will multiply when the canal becomes operational, expected by 2027. The new Istanbul Canal is poised to be a transformative factor, not only in terms of transportation but also in the real estate landscape of the surrounding regions.
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The quality of finishes, innovative lighting, electrical systems, heating, flooring, and additional features such as furnishings and scenic views all contribute to the pricing of a property.
Facilities and Accompanying Services in the Complex:
The facilities and social amenities within the residential complex play a crucial role in enhancing the overall value of the property
These include swimming pools, sports fields, saunas, sports clubs within the complex, along with parking spaces and all recreational amenities.
The presence of small details in the property area, like markets, gardens, parks, and sea or green views, significantly influences the apartment's appreciation, elevating its price by adding a crucial element of luxury.
Monthly Service Fees ("Aidat"):
Monthly service fees, referred to as 'Aidat,' are amounts paid by apartment owners to the management of the residential complex in exchange for services provided to residents, including cleaning services and more.
The more modern the residential complex and the greater its offering of social, lifestyle, and entertainment facilities, like sports clubs, pools, and parks, the higher the value of monthly service fees
These fees, in turn, impact the property prices, reflecting the quality and range of services provided within the complex.
Investing in a property with comprehensive amenities can enhance the living experience, influencing the desirability and value of the real estate.
Reasons for Varied Property Prices in Turkey:
Government Tax Reductions:
Government tax reductions are a step towards encouraging foreigners to invest and acquire properties at a lower cost due to exemptions from certain types of taxes. The Turkish government has provided VAT exemptions under specific conditions outlined by Turkish law, as per regulations issued in 2017. The Turkish Parliament defined individuals eligible for tax exemptions, including foreign buyers residing outside Turkish territories, foreign companies with no business center within Turkish territories, and Turkish citizens who haven't lived in Turkey for more than 6 months. The law stipulates that the property must be new, not previously purchased by the buyer in Turkey. The payment should be made in foreign currency from outside Turkey, and the buyer must commit not to sell the property for one year.
The following table illustrates the VAT values based on the type and size of the property:
|Area Less Than 150 m2
|Area 150 m2
|Area Larger Than 150 m2
|Not Specified (18%)
These tax reductions contribute to the variability in property prices, providing incentives for certain types of buyers and influencing the overall cost of real estate in Turkey.
Government Incentives for Investors:
The Turkish government's policies have played a significant role in the flourishing Turkish real estate market. Through facilitations provided to foreign investors and the privileges granted to them, such as the right to apply for real estate residency, investors have been given advantages that make their investment goals experience continuous growth. In the backdrop of the country's political and social stability, it presents a fantastic opportunity to attract foreign capital for property purchases. The real estate residency allows them the freedom to establish their companies, manage their businesses, and conduct banking transactions to multiply their capital and achieve their highest investment aspirations.
Additionally, there is the advantage of obtaining Turkish citizenship by purchasing property worth up to $400,000 USD. We have previously discussed in detail the conditions and advantages of obtaining real estate residency and the criteria for exceptional Turkish citizenship or qualification for Turkish citizenship through property purchase in previous articles.
At Damas Group Real Estate, our team of real estate consultants offers you a range of options that balance your investment plans with your available budget. Sometimes, your budget may not allow you to acquire all the features, and you may need to compromise on some non-priority features to avoid the property value rising disproportionately to the capital you intend to invest. We provide you with a detailed study, arranging criteria that align with your investment aspirations, prioritizing them according to your budget, to reach the optimal choice together.
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Keys to finding related properties:
1. Property location. 2. Property size. 3. Age and condition of the building, its earthquake readiness, and the quality of materials used in cladding and finishes. 4. External appearance of the property. 5. The status and importance of the city where the property is located. 6. Proximity of the property to transportation methods. 7. Proximity of the property to major economic projects. 8. Privileges offered by the property, facilities, and services associated with the complex, and the amount of monthly services fees (revenues).
The Turkish Parliament has specified individuals eligible for tax exemption, and they are: 1. Individual buyers residing outside Turkish territories. 2. Foreign companies whose business headquarters are not located within Turkish territories. 3. Turkish citizens who have not been living in Turkey for more than 6 months. The law stipulates: • The property must be new, and the buyer must not have previously purchased properties in Turkey. • Its value must be paid in foreign currency from outside Turkey. • Commitment not to sell the property for a period of one year.
Certainly, as the property area increases, the price per square meter decreases (inverse relationship). For example, the price per cubic meter for a studio is higher than the price per square meter for a larger apartment with 3 bedrooms, even though they are in the same project.
Monthly dues or returns refer to the monthly amounts paid by the apartment owner to the management of the residential complex in exchange for the services it provides to residents, such as cleaning services and others. The returns increase when the residential complex includes more social, lifestyle, and recreational facilities, such as sports clubs, pools, parks, parking lots, and more.
Its property prices increased by 40%, and it is expected that this percentage will double by the year 2027 upon the completion and operation of the canal excavation.