Strong fundamentals for residential demand remain intact while short-term demand and supply has been reduced by the lack of liquidity, making distressed residential real estate an attractive investment alternative.
Strong fundamentals for residential demand:
Based on Deutsche Bank’s 2007 forecasts, 5.3 million (3.7 million being households and appr 1.6 million being replacements) of new housing units will be needed between 2007 and 2017. Furthermore, according to the State Planning Agency data, more than 8% of buildings in Turkey are categorized as ‘in ruins’ or inhabitable and only an estimated one-third of all housing units in Turkey have building permits.
Economic circumstances hold up demand in the short-term:
Housing market activity has significantly slowed down in the months following the global crisis, indicating a temporary hold up of demand until the economic picture clears up.
Supply up due to lack of sales and credit facilities:
Many development projects in Turkey are financed through planning and construction phase sales. Accordingly, many new developments have been put on hold when sales saw a sharp decline. High cost of debt and general lack of credit availability has led to offer deep discounts.
The residential market is more stable following the decline in prices by developers willing to go ahead with quick sales instead of holding to the properties. Prices have started showing signs of increases in the last 2 quarters of 2009 and in 2010.
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