There are many reasons which make Turkey attractive for investors, and one the top reasons is, they can generate a higher return on real estate investment in turkey. According to Hurriyet newspaper, the chairman of the Real Estate Overseas Promotion Association (GİGDER) Ömer Faruk Akbal said: “We aim and plan to reach real estate exports of 15 billion dollars in 2023. We think that we can increase this to 20 billion dollars in 2025.” indicates the high demand for real estate in Turkey in recent years. Hürriyet Newspaper
What does the return on investment (ROI) mean? And how can it be measured?
Return on investment (ROI) is a financial metric that is widely used to measure the probability of gaining a return from an investment. It is a ratio that compares the gain or loss from an investment relative to its cost. ROI is calculated by subtracting the initial value of the investment from the final value of the investment (which equals the net return), then dividing this new number (the net return) by the cost of the investment, and, finally, multiplying it by 100. Investopedia.
What are the cities that offer the highest ROI in turkey?
The top five cities in turkey attract investors the most, these are:
Turkey has become one of the best 10 places to buy real estate overseas and Istanbul was the world’s 8th most visited city in the world in 2020. Istanbul and Turkey, in general, are enjoying strong economic growth and adapting modern technologies in infrastructure. In that, Istanbul is considered the largest city in Europe in terms of population, its fast-growing population is creating a huge demand for residential space (renting or buying) exceeding the supply by much, thus, Istanbul real estate investment could be a great source to gain higher ROI. According to the real estate index and regional report of 2021, the average price of a 100 square meter property purchased in Istanbul was between 490.791 TL and 817.985 TL. Thus, real estate prices in Istanbul increased by 6.6% compared to last month, %121.76 in the last two years, and 110.09% in the last four years. The real estate average ROI in Istanbul is about %74,78, this ratio may include expenses like repair and maintenance expenses, property tax, cost of borrowing, etc.
Ankara is the capital of Turkey, the real estate sector in the city is very sophisticated and is considered the second-largest city in terms of economic growth as well as in the demand for real estate after Istanbul. Compared to Istanbul, property prices in Ankara are somewhat lower, which makes it suitable for the middle classes. Recent studies have shown that the average price of a 100 square meter property purchased in Ankara was between 241.461 TL and 402.435 TL. And compared to last month, real estate prices in Ankara increased by 5.14%, 101.14% in the last 2 years, and 105.16% in the last four years. Thus, the demand for owning real estate in Ankara is growing with an average ROI of %49.82 including also other expenses like repair and maintenance expenses, interest, taxes, etc.
Recently, the city has witnessed a significant increase in terms of international investments, especially in the real estate sector. Izmir is the third-largest city in Turkey and is considered an important center for tourism, sea transport, and industry. The average price of a 100 square meter real estate purchased in İzmir in the first quarter of 2021 was between 400.139 TL and 666.899 TL. In Izmir, real estate prices rose by 4.6% this month, 115.29%in the last 2 years, and 142.40% in the last 4 years. With an average of %55.26 in return on real estate investment.
Antalya is a perfect place to spend your holiday. It is full of modern luxury resorts and residences. And many real estate buyers have taken Antalya as a place for investing or residing. Housing prices are much more affordable in Antalya compared to Istanbul and Izmir. Property prices have increased by 7.17% compared to the last month. While the average residential square meter price in Antalya is 4.544 TL.
Accordingly, the average price of a 100 square meter property purchased in Antalya is between 340.804 TL and 568.006 TL. And the prices have increased by 178.38% in the last 2 years, and 250.48% in the last 4 years and, an average return on investment of %78.16
includes real estate expenses.
The demand for real estate acquisition in bursa has grown after the opening of the Osman Gazi Bridge in 2016 which reduced the time between Istanbul and Bursa. Residential real estate prices rose by 5% compared to last month, 104.24% in the last two years, and 120.13% in the last four years according to Endeksa, with approximately %55.92 return on investment.
Property owners who invest in real estate in Turkey have two different options for earning income. The purchased real estate can be sold at a higher price in a short-term or long-term period or rented at a high rental income. In this way, real estate investors can turn their properties into permanent and profitable sources of revenue over the years. But to add value to real estate investment, there are several characteristics investors should take into account.
1- Security and Safety:
The security and protection system has become mandatory and must be found in all kinds of real estate to guard persons and properties against any kind of hazards such as crime, fire, sabotage, stealing, etc. Recently such a system is found in a wide variety of organizations and institutions like companies, offices, apartment buildings, and schools. For that reason, Business people or households prefer to own or lease properties located in safe and modern areas that provide high security.
2- Indoor Garden/Terraced property:
Another detail that makes real estate more attractive is having a terrace or indoor garden. During the covid-19 pandemic, households became aware of the importance of houses with a terrace or small garden once again. And the value of such a house has increased and reached exorbitant points. That means a residence without a balcony or with a small balcony is no longer preferred.
Location is more important than the real estate itself. The Quality of nearby Schools and universities, Ideal hospitals, proximity to grocery stores and shopping malls, proximity to highways are some of the top amenities people are looking for when deciding to buy a property. Buyers want such basic amenities within a 5–10 minute drive. So, if the location of your property is within a few meters of most of these amenities it will help raise the value of your property.
Demand for housing near transit is growing especially in big cities that have long travel distances like Istanbul and Ankara. As a result, owning real estate with good access to public transportation like subways, tramways, boats, and buses can increase its value.
5- Maintenance Fee:
Monthly maintenance fees (Aidat) can indirectly affect the property value. If the fees are so high, it will discourage anyone from purchasing it. Thus, the property stays on the market for longer than other properties, and the value gets reduced to attract buyers.
6- Age and condition:
Properties that are newer appraise at a higher value. The fact that the newer parts of the house, like plumbing, electrical wiring, the roof, water plumbing system are less likely to break down, and can generate savings for a buyer. Compared to an older home that may need some parts replacement in just a few years.
7- Social Life:
They say you can’t choose your family, but you can choose your neighbors, neighbors, and people living nearby can impact real estate value. Thus, good social life quality can help to increase the property value.
In sum, Turkey has one of the fastest-growing economies in the whole world, with a 5.1% average annual GDP growth over the past 18 years. The fast-growing population in Istanbul specifically and the desire for students, retired people, families, and businessmen to settle down in turkey have increased the demand to own or lease properties; in turn, this led to increasing the value of such properties due to the inability of urbanization in Turkey to absorb this large population density. As a result, investors can gain a high return on real estate investment in turkey ( selling or renting) and consider such return as a permanent source of income in the future.
You can see the annual return on real estate investment in turkey (Selling&Renting) percentages in the table below. Note: the given perceteges belong to Endeksa and may include property fees and exclude rental income.
|City||ROI (selling)||ROI (renting)|