2022 again saw a booming property market in Istanbul. Government incentives and external demand from within Turkey, coupled with drastically low supply of new property, saw a continued surge in prices. So what exactly happened in 2022, and what can we expect to see in 2023?
2022 was statistically a huge boom
Istanbul again posted record growth in the real estate sector, in both Lira and USD/EUR terms. Istanbul grew by a barnstorming 49% in USD terms, on average across the city. One city centre district, Beyoglu, posted an incredible 120% growth in USD terms, and the lowest performing district was Bakirkoy with just 32% growth.
This is covered in our stats article, read more about that here. In our annual stats article, we take a look at all district pricing and try to find a reason for the stat. This helps us predict what will happen over the 12-month term to follow.
Istanbul Real Estate Statistics 2022
Pandemic fuels demand for terraced apartments
The pandemic effect continued in 2021, with people looking for larger outdoor spaces – either compounds with large garden space, or apartments with gardens and balconies. People continue to crave outdoor spaces. The vast majority of apartment buildings in Istanbul do not have any garden space, and parks are few and far between. Compounds with large garden space and apartments with balconies and terraces continue to see huge demand. Villa prices surged as people craved outdoor spaces.
Central bank interest rates
The government’s insistence on reducing interest rates despite rising inflation continued the buying cycle. We used this exact sentence in January 2022 – it remains true. The government has not taken a step back from this policy, continuing to push cheap credit for expansionary growth. It worked again. With other assets losing value, investors turned to real estate and cars as a hedge against rising asset prices.
Low stock levels
In 2021, stock levels of brand-new property were reduced even further. 2022 was no exception. However, brand-name developers announced new projects throughout the city. With good growth in the sector, developers had the confidence to develop new plots. Smaller developers also had the confidence to enter smaller urban regeneration projects, demolishing older buildings, adding height and rebuilding.
Central Istanbul locations have a drastic problem with the supply of earthquake-resistant, quality apartments, and this is exceptionally difficult to change. It is a challenge for both local and central government to find a solution.
Heavy internal demand
International buyers only make up a small proportion of investors in Istanbul. The vast majority of investors are from within Turkey or expatriate Turks. This demand for Istanbul is fuelled by a desire among Turks to own a piece of the city. It is culturally seen as a solid investment, akin to buying gold.
This issue is now even pushing out local Istanbul residents, with many young people entering the property market no longer able to afford property in the city. A recent survey showed that in 2019 nearly 60% of local Istanbul residents could afford to buy a property in Istanbul. In 2022, this number fell to just 25%.
This is a common problem in major cities, but it is amplified in Turkey by heavy internal demand from other Turkish cities. Property is purchased and often left vacant. This squeezes property supply further, affecting pricing and rent. Rent is now also at record-high levels, well above the national minimum wage. Naturally, salary levels in Istanbul are multiple times higher than in many other parts of the country.
What we expect in 2023
With record-high prices, we expect developers to continue with rebuilding programmes. Unfortunately, this will not greatly increase supply in the city centre because there is very little vacant land. The majority of large compound development will take place on former factory and warehouse land in regions such as Kagithane and Media Highway, and on the Anatolian side in Maltepe and Kartal.
Internal migration will continue, with young people from across Turkey moving to Istanbul to find employment and opportunity. This will continue to put pressure on the central districts of Istanbul.
City centre – Sisli and Besiktas
The traditional central parts of Istanbul – Sisli, Besiktas, Kadikoy, Bakirkoy and Zeytinburnu – suffer from an undersupply of brand-new property. This chronic undersupply will continue into 2023 and beyond. New high-rise permits in Sisli are now extremely difficult to obtain, whilst in Besiktas, Zeytinburnu and Bakirkoy, height restrictions have traditionally limited large-scale high-rise development.
The Greater Istanbul Municipality, coupled with the Turkish government, generally favours more horizontal architecture as a response to the overly dense nature of many Istanbul neighbourhoods. Expect to see smaller boutique regeneration projects in these regions.
Istanbul’s premier business district starts in Sisli and extends north through Mecidiyekoy, Levent, 4. Levent and Maslak. Sisli is prime city centre and is in exceptionally high demand for both residential and commercial space. Development in this region is rare and usually expensive because vacant land is extremely limited.
Kagithane – Seyrantepe – Istanbul’s rapidly expanding technology district
Whilst most people know Seyrantepe due to the famous Vadi Istanbul mall, many people are not aware of the area’s actual name. International buyers are often incorrectly told that this region is Maslak or simply the Vadi district.
These zones are gradually merging along the Cendere riverbanks. Starting in Seyrantepe, major developments have appeared along the river and are gradually extending south towards the Halic. Whilst prices have already risen considerably in Seyrantepe, moving further south can still offer opportunities for value.
While the M7 metro line opened in Q4 2020, the pace of development has quickened as the potential of the line has become clearer. The M7 runs from this region towards central Istanbul and connects important residential and commercial areas across the city.
Istanbul Airport is also easily accessible from this region, with direct road links from Kagithane. The M11 airport metro line has further improved connectivity between Kagithane, central Istanbul and the airport.
We expected Kagithane to continue producing strong growth throughout 2023, particularly in regeneration zones outside the most expensive areas around Vadi Istanbul and within convenient walking distance of new metro stations.
Kemerburgaz and Gokturk
These two smaller districts are traditionally associated with Istanbul’s wealthier residents. Improved airport metro connectivity has significantly strengthened their connection with the city centre, creating new opportunities for investors.
As of January 2023, one-bedroom apartments could still be found for around $250,000, offering an unusual combination of lower-density living and relatively easy access to central Istanbul. Read more about these regions in our Gokturk and Kemerburgaz guide.
GOP and Eyup
Regions bordering the central districts are expected to absorb some of the demand that can no longer be accommodated within the city centre. Areas such as Eyup and Gaziosmanpasa provide relatively easy access to central Istanbul.
Government expenditure on transport infrastructure, including the M7 metro and T5 tramline, has encouraged further private investment in these areas.
These districts have considerably more space for future construction. Combined with large amounts of older housing stock subject to urban regeneration, this should continue to create a supply of mid-range property. We expect further projects to appear through the redevelopment of older buildings and the consolidation of neighbouring parcels into larger residential compounds.
Coastal route – Atakoy, Bakirkoy and Zeytinburnu
The coastal route provides attractive sea views as well as excellent transport links to many parts of Istanbul. The region also offers a strong lifestyle, with a wide range of amenities. These areas are particularly popular with upper- and middle-income residents.
The front line has seen heavy development of large-scale residential compounds. Many of these are likely to become long-term landmarks of Istanbul. They offer uninterrupted views across the Marmara Sea, the Princes’ Islands and the historic peninsula. With very little comparable land remaining, developments of this scale are difficult to reproduce.
The Marmaray rail line provides high-speed access across Istanbul and runs beneath the Bosphorus to the Anatolian side, connecting into Turkey’s wider rail network. This has made these coastal regions increasingly attractive to commuters.
Despite being in the upper bracket in terms of price, these developments remain attractive from an investment perspective. They benefit from strong rental demand and broad appeal among both local and international buyers. Supply is increasingly limited as most major compounds have already been completed and units gradually move into long-term owner occupation.
The crossroads of Istanbul – Bahcelievler and Topkapi
These regions are traditionally attractive to Istanbul’s middle classes. Easy access to the E5 provides multiple transport options to other parts of the city, particularly the city centre and business districts.
The region has historically been densely built, with narrow streets and limited underground parking. This began to change as older warehouses and factories moved towards the outskirts of Istanbul and were replaced by larger residential compounds.
This redevelopment has driven growth while prices have generally remained more reasonable than in the prime central districts.
Several large-scale projects are under development in both regions, although some have entered the market at comparatively high price points and therefore offer less compelling value.
Media Highway and Atakent
Moving further west, Media Highway, or Basin Ekspres, continues its regeneration. New metro infrastructure has encouraged heavy construction around stations and represents a significant improvement over the older approach of building residential areas before transport infrastructure was in place.
Today, Media Highway provides ample stock, although improved metro connectivity is expected to increase demand and gradually absorb this supply.
Atakent and Halkali in Kucukcekmece have long been popular with Istanbul’s middle classes. Rapid expansion throughout the 2010s transformed previously undeveloped land into large residential compounds supported by private schools, hospitals, shopping centres and improved infrastructure.
Halkali has also become an important transport hub, with connections to Marmaray and Turkey’s wider rail network. This continues to support demand and demonstrates how coordinated transport and residential planning can transform an area.
Properties located within convenient walking distance of metro and rail stations, particularly around Halkali, remain among the most attractive assets in this part of Istanbul.
Basaksehir and Bahcesehir
These two regions are investor favourites, but location, construction phase and developer quality are particularly important. A strong combination of these factors improves resale liquidity and provides a more reliable exit route regardless of broader market conditions.
Cheaper projects do not necessarily provide a better return. In some cases, resale periods are significantly longer and rental yields are weak enough that renting property in the region can make more financial sense than buying.
Basaksehir and Bahcesehir are among the closest major satellite towns to Istanbul Airport and have been developed through extensive public and private investment.
Basaksehir is home to major infrastructure including Mall of Istanbul and one of Istanbul’s largest state hospitals. Metro connections to central Istanbul are already operational and continue to expand. Bahcesehir has also benefited from major transport investment designed to improve access towards the city centre.
Esenyurt – A classic case of oversupply
Esenyurt continues to be a classic case of oversupply in an area that nevertheless has healthy demand for budget real estate. The district contains a large number of high-rise developments and has developed an impressive skyline.
However, resale has traditionally been more difficult because of the large volume of competing stock and the area’s buyer profile. Rental returns have also historically been relatively weak compared with stronger central districts.
Serviced apartments and better-managed branded complexes are generally the safer concept in this region. Projects operated by established developers are more likely to have competent on-site management and organised services, which can make a significant difference to both rental performance and resale appeal.
Beylikduzu – An idyllic western town of Istanbul
Beylikduzu is an exceptionally large district made up of the southern portion of the E5 between the two lakes of Istanbul. This gives it a huge coastal line, making it a family holiday home favourite. Traditionally, the coastal line has been a holiday home destination for middle-class Turks since the 1990s.
Much of the rise in Beylikduzu has been driven by branded projects in Yakuplu and Beykent. Standard buildings have not seen the same rises.
Beykent has heavy demand both internationally and locally, supported by its private schools, shopping centres and private hospitals. Its proximity to the E5 makes it an important satellite town for commuters who rely on the Metrobus system to reach the city centre quickly.
Due to height restrictions, a comparatively controlled level of supply exists, and we expected the region to continue seeing good gains in 2023.
Yakuplu is situated on the coast and has boomed due to the expanding and increasingly popular West Istanbul Marina. The main risk is that a large amount of vacant land remains available for continued development, which could create oversupply in an area traditionally associated with holiday homes.
Buyukcekmece – a retirement and villa town
Buyukcekmece is the penultimate district in West Istanbul. Whilst the district has a busy and congested town centre, much of the wider region consists of holiday homes and villas.
Holiday homes are centred around the coastal neighbourhood of Mimaroba. New secure compounds have lined this coast, providing access to sandy beaches and impressive views across the Sea of Marmara and Buyukcekmece Lake.
Due to heavy restrictions on construction in this area, particularly in terms of height and density, supply has not always kept pace with demand.
Villas are expensive throughout Buyukcekmece, particularly in established villa neighbourhoods such as Alkent. These villas recorded an average price rise of around 54%, an impressive return given that prices were already relatively high.
