Property Investors Turn to Turkey - Promising Real Estate Market

Here is an article in Financial Times about the interest in Europe for buying property in Turkey. The article suggests that the rental yields in Turkey are around 5,48% and this is higher than in comparable markets in Europe.

There is even an example of a development in Beylikduzu that is marketed by Experience International and the property investors are protected by a rental guarantee of 7.5% during the first 2 years. However, the right question should be "what happens after those two years?"

Assuming there is a reasonable supply-demand ratio in a market for both hi-end and low-end properties, the luxury properties usually have lower yields. For example, if there is only a few hi-end developments in a city and there is more demand, the prices will go up and luxury properties will yield better prices than others in a city. However, there is enough of both types of properties in Istanbul. And, as it is the case anywhere else, luxury properties have lower yields.

Yield is one part of the equation where the capital gain is the other important factor. So, the right question here is if you decide to sell this property in Beylikduzu after 2 years, will you be able to sell it for more than you bought? For the same amount, less or more? This depends on how much you paid, if there is demand at the time you try to sell and how quickly you will want to liquidate.

The article mentions an interest rate of 4.05% per annum with a loan to value of 70%. So, if you make an investment where the yield is around 5% and the interest is 4% you make some money out of this. But, what if you can't sell the property for the same price? These rental guarantees are usually built into the selling price giving the developer a higher margin to finance the future payments.

It all comes down to the location and sales price. Beylikduzu is a neighborhood outside of city center of Istanbul which is approximately 30-45 minutes by car. There are a lot of other developments in the area so we will need to know how much stock there will be in a couple of years and how many people wants to live in Beylikduzu.

Also, once the rental guarantee is finished, it may be very difficult to find a property manager to take care of the property and rent it out on behalf of the owner.

Articles like this may intend to show the strength of a city but it is not that easy to go ahead and make a purchase that will be profitable in the long term while providing peace of mind and positive cash flow.

I will suggest investing in the city center of Istanbul where there is always more stable demand and practically no increase in supply since there is nowhere to build new developments at a considerable rate. These properties offer similar yields, better capital gain potential and quicker liquidity.

Take a look at the article, it is an interesting read that suggests the bearish outlook of the Turkish real estate market.

Luxury Serviced Apartments Throughout Istanbul - Asian and European Sides

For business travelers coming to Istanbul, there is a wide range of options in Istanbul. There is nice post on the Istanbul Turkey Apartments blog about several luxury serviced apartments options throughout Istanbul. The listed properties include those both on the Asian and European side of Istanbul.

Corporate managers like Manzara are listed on site along with smaller property managers like Manzara Istanbul and I'zaz in Beyoglu.

Noa is also another property manager which is actually the management subsidiary of a development company. They seem to start renting out apartments for daily and weekly basis. This can be a good alternative if you are looking to stay at a central location within close proximity to many restaurants and bars.

The Asian part of Istanbul has been expanding rapidly with many industrial areas attracting foreigners for Short to medium terms. There are several good options listed in the article if you will be staying on the Asian side of Istanbul.

A further post with options on economic accommodation options is set to follow.