The future of real estate investment in Turkey – the secrets of the real estate market
Investors suffered in 2017 from the crisis in the Turkish real estate market due to several reasons, but we justify our advice to you not to be afraid of the fluctuations of the Turkish currency against the dollar. Maybe.
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Aspects and secrets of real estate investment in Turkey
First: The Turkish real estate market is a local market, as the real estate market in Turkey depends only 1.59% on foreign investments, according to the statistics of the Turkish Statistical Institute for 2017, 22,428 real estate units were sold to foreigners in Turkey out of 1409314 real estate units that were traded last year That is, the volume of real estate sales to foreigners constituted only 1.59% of the total movement of the Turkish real estate market.
Second: The Turkish real estate market depends on several basic factors, the most important of which are cost, supply and demand equation, project implementation period, location, view, payment plans, and finally foreign demand for the Turkish real estate market, and therefore this last factor is just one factor among a wide range of Other factors that will not inevitably be affected by any currency fluctuation.
Third: Turkish real estate market prices
The prices of the real estate market have not yet been affected by the devaluation of the currency. In general and in all sectors dependent on the local market – and the real estate sector is one of them, as we mentioned previously – the prices in the Turkish real estate market have not yet reacted significantly with the changes in the exchange rate of the Turkish lira, and therefore the The Turkish real estate market has not yet witnessed a significant increase in prices in order to compensate for the difference in the exchange rate of the Turkish lira. The rate of price increases has increased by only 5% so far, which means that foreign investments are not closely and directly linked to the Turkish real estate market.
Fourth: real estate loans
Interest rates play a major role in adjusting the balance in favor of the stability of the real estate market in Turkey, as we cannot neglect the role played by the government in a sector such as the real estate market in Turkey, which relies heavily on bank loans, as the interest rate on real estate loans has recently reached 2% per month . , which led to weakening the real estate purchasing power of the Turkish family, and thus the lack of Turkish demand internally to buy real estate in the short and medium term at the very least. This lack of demand would ensure that real estate prices in Turkey do not rise significantly, at least in the next six months.
Fifth: Turkey has shown remarkable efficiency in overcoming crises. Over the past years, Turkey has witnessed multiple crises, and the real estate market in Turkey has always adapted to them and continues to grow, as an example of this after the failed coup attempt on July 15, 2016. The Turkish government cooperated with banks and companies Reducing interest on real estate loans from 1.42% per month to 0.98% , which led to an increase in demand for real estate again and a rebalancing of the supply and demand equation, and thus the continued stability and growth of the real estate market in Turkey, and this is what you will see clearly when looking at the real estate market statistics in Turkey in First half of 2019
Sixth: The real estate market in Turkey is the righteous son of the Turkish economy, which always maintains high levels of growth. According to the statistics of ( Frank Knight ) , the growth rate of the Turkish real estate sector for 2018 amounted to 19.5% after subtracting the annual inflation rate based on the lira Turkish.
Seventh: There is an important fact that we should not overlook, which is that real estate capital doubles in the long term, in light of the increase in interest on loans in the real estate market in Turkey, the increase in inflation and the weak real estate purchasing power of the Turkish family, in contrast to the population growth in Turkey, all of these reasons This leads to the fact that the demand for real estate internally – which plays the main role in increasing the prices of the real estate market in Turkey – will be low now. Consequently, the real estate market in Turkey will maintain its prices and return to rise after an average period of time, which means doubling the real estate capital for the properties sold now, and the return on the real estate market in Turkey should be calculated over the medium or long term, not in the short term, as the The cycle of capital in the real estate market in Turkey should not be less than 7 years when calculating the return on capital.
How do we benefit from the real estate market situation in Turkey!
- The specter of risk always exists, but – under these particular circumstances – the investment returns are much higher than the risk ratios. Now the purchasing power of the foreign investor in the Turkish real estate market has increased by nearly 50%, that is, with $ 000, for example, you can Buying a luxury property in the center of Istanbul, while for the same amount 3 months ago, you could have bought an average property on the outskirts of Istanbul! Herein lies the opportunity. This drop in the exchange rate of the Turkish lira has prompted many foreign investors to buy housing units in Turkey. Some marketing officials in the Turkish real estate market have clarified that many real estate projects in Istanbul have achieved a great demand for buying apartments for sale in Istanbul in Turkish lira. This increase in the demand for purchase amounted to 20% compared to the purchase of real estate in Istanbul last year.
- Another secret that can give you flexibility and an excellent margin of safety when purchasing any property in Turkey, this secret is: Installment Purchase! so that the first payment does not exceed 50%The rest is in installments for a period of 3 years, and in these years you can monitor the performance of the Turkish currency rates and act according to its price. Either you continue to pay the installments if the lira remains low, or you pay the rest of the amount in advance if the Turkish lira returns to rise over the coming years, and with this You have reduced the risk in half, by making half of the amount you pay related to the lira and manage it easily and in your favor, while the other half – which represents your purchasing power – has nothing to do with changes in the exchange rate of the Turkish lira in the future, and speaking of the future, the general rules in the real estate market in Emerging Turkey says that the annual real estate capital growth rate is always higher than the rate of currency devaluation, which we have actually seen over the past years in the Turkish real estate market, and the coming years will be similarly after the stability of the exchange rate.
Foreign investors and interest from real estate investment in Turkey
It is worth noting that the real estate market in Turkey has been witnessing for years a demand from foreign real estate investors, which has been clearly achieved for Arab investors in particular, if they now represent 80% of the total foreign real estate investors in Turkey, where Iraq comes at the forefront The countries investing in real estate in Turkey, followed by Saudi Arabia, then Kuwait, surpassing Russia, which has become the fourth after the Russian real estate investment in Turkey was relatively the largest among other countries.
Turkish law also gives the right to citizens of 182 foreign countries to invest in Turkish real estate, which proves the continuity of the permanent influx of more foreign investors, and we note that most of the concessions and incentives granted by the Turkish government to foreign investors to buy real estate in Turkey were linked to the dollar prices. In Turkey, not the prices of the Turkish lira itself, and one of the most important of these incentives is to buy a property worth a quarter of a million dollars to obtain Turkish citizenship, and in this case the Turkish side will benefit in some way, because it is based on investments and foreign currency provided by them, and is considered an alternative to borrowing from the International Monetary Fund.
Finally , Finance Minister Berat Albayrak hopes that the Turkish economy will overcome last year’s currency crisis with just two quarters of deflation.
The Turkish economy contracted by three percent on an annual basis in the fourth quarter of 2021, after the currency crisis caused the lira to lose about 30 percent of its value last year. Economists expect a contraction of another two quarters on an annual basis.
The lira has lost about 15 percent of its value against the dollar since the start of the year, with its latest weakness coming as investors worried about Monday’s decision to re-run municipal elections in Istanbul, which the main opposition party narrowly won.
Albayrak said that inflation and employment in Turkey will improve this year, while the government will implement necessary reforms without hesitation. He continued, “Turkey, especially in terms of inflation and employment, will achieve a better level and a more balanced position by the end of 2022.”
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