Istanbul real estate statistics
Istanbul again enjoyed a barnstorming year for growth in the real estate sector. 2021 saw an overall 127% growth in real estate prices. Price growth has rewarded the local investor immensely, however what about the international investor?
A quick look at overall growth for real estate prices in Istanbul for all of 2021. Much of this growth is due to Turkey’s double digit inflation during 2021.
Istanbul price growth in lira for 2021
How does this affect the international investor as a US Dollar index?
Turkish investors were quick to react to exchange rate fluctuations by adjusting pricing accordingly. Coupled with a drastic shortage in new housing, prices continued to rise even in US Dollar terms. Opening the year at $653 and closing at $799 per square metre, the 12 month change was 22%.
What about district pricing?
This chart represents the majority of the central Istanbul districts where international money has flowed in 2021. All districts have seen incredible dollar indexed growth in 2021.
Umraniye, its neighbouring district (and actually home to the finance district), also had barnstorming growth for the same reasons. Umraniye also saw huge demand due to the opening of the M5 Uskudar metro line.
Kadikoy also saw huge growth, however this was due to the dwindling stock of new build property in central Istanbul. At the start of 2021, Fikirtepe (located in Kadikoy), had a large reserve of stock due to the massive urban transformation of the region (read more about this here).
Fikirtepe’s proximity to Bagdat Avenue, Kadikoy centre, the Metrobus, Marmaray and M4 metro line, made it an ideal investment for families and investors alike. The huge Medeniyet university at one end of Fikirtepe continues to expand, meaning the region is also a massive favourite with student rentals.
New stock in Bakirkoy is practically non existent, hence Bakirkoy’s primary sales in this district are resales. Majority of the new stock is lined along the Kennedy Avenue, which are prime, sea-front luxury projects. As a result sales in Bakirkoy is primarily made up of old stock, which does not appreciate as much as new stock.
Sisli saw incredible growth in the Bomonti neighbourhood, where the majority of skyscrapers reside. This area saw over 50% price rises in USD terms, and as a result pulled up the average for the region.
Besiktas has a similar story, however demand and turnaround in this district is much higher. The sheer volume of sales coupled with a lack of supply and high demand gives Besiktas a push.
Beyoglu is home to major touristic landmarks, and regeneration is centred around the Tarlabasi and Piyalepasa neighbourhoods. These new builds have increased in pricing beyond logic. Other high demand neighbourhoods have also performed well, such as Cihangir and Gumussuyu. Older stock continues to stagnate due to a lack of demand and an urgent need of government intervention for regeneration.
Kagithane has seen poor growth, having seen an asset bubble in 2020. Nevertheless, it has still managed an average 7% growth, and new build property will have seen growth above and beyond this amount.
Bahcelievler has similar issues to Bakirkoy in that the majority of sales are on the not-so-in-demand older pre 1999 stock. This poor price performance on old stock is dragged up by a limited number of new build projects in the region, which have seen excellent growth.
EyupSultan has an almost identical story to Kagithane. Supply is decent but demand is not always there due to the hilly nature of the neighbourhood. An urban regeneration centred around improving the Golden horn river front and the region around the historic mosque will see improved performance in 2022.
What about the suburbs?
The suburbs of Istanbul have traditionally tailed the traditional central districts. A large number of international buyers seek more space for their money in the dense suburbs of Esenyurt and Basaksehir. Holiday home seekers tend to invest in Beylikduzu or Buyukcekmece.
Whilst Istanbul as a whole averaged 22%, and central districts averaged over this, “suburban” districts also kept up. As stock levels in central Istanbul dwindled, investors moved into the suburbs. With lower pricing, larger apartments also attracted those on lower budgets.
Expectations for 2022
District growth figures above have been calculated in USD terms. Lira growth has been incredible for those who invested prior to 2021. This could be described as an asset bubble in lira and USD terms.
High inflation has been the main driver of this growth. Construction costs, wage growth, and land prices have all increased in drastic terms. The driver of this growth could be put into a university thesis and is beyond the scope of this article.
Logic would dictate that this growth could not continue in 2022. However, Istanbul also suffers from supply and demand issues. This imbalance is a result of several factors:
-Pre-2003 (non earthquake proof stock) dominates the Istanbul housing stock and must be renewed by law;
-Expansionary credit policy by the government continues to encourage Turks to buy new stock over old;
-A young and growing population influx from Anatolian towns;
-Heavy demand from Turks outside of Istanbul to have an investment apartment in Istanbul;
-A lack of new builds ensures demand heavily outstrips supply.
These are the simple macro factors, and each district has its own additional internal factors. These factors point to continued price growth until these imbalances are addressed. Heavy demand is difficult to curtail and supply is not meeting this demand. This almost always results in price growth in any asset, and we expect price growth to continue along these lines in 2022.