Capital Appreciation of Istanbul Real Estate Market

The real estate market is one of the most lucrative economical sectors in Istanbul. Besides being fully underpinned by the Turkish government, it is also the most sought-after investment elements for national and foreign investors. As the developing districts in Istanbul continue to attract multinational companies, the thriving industry offers a comparatively easy route to secure net profits. To promote economical stability, the intuitive ‘Turkish Citizenship by Investment’ program has opened doors for foreign nationals to own a property worth a minimum of $250K with the benefits of availing full citizenship rights. 

Another contributing factor is that Istanbul is a giant tourist magnet. Each year millions of tourists visit the Mediterranean city and thousands of them end up buying a holiday home for obvious reasons. The increasing population and interest from abroad provide a high and constant demand for property in Istanbul. As a result, the real estate market witnesses high capital appreciation and offers considerable rental yields from commercial and residential properties. 

The return on real estate investment in Istanbul is one of the crucial aspects that encourages foreign investors to buy property in the stunning transcontinental city. Let’s explore the pivotal aspects and possibilities of expected and guaranteed real estate capital gains in Istanbul. 

What is real estate capital appreciation?

Capital appreciation is the growth of the market price or an increase in the value of the purchased property. It is the difference between the purchase price as well as the selling price in terms of a real estate investment. 

For instance, if you buy a house worth $260K and the price of the property increases to $360K in the next three years, you earn an additional $100K as capital gains after selling the property. 

What is Return on Investment?

Return on investment or ROI is the calculative ratio between net profit and the cost of capital or investment. In simple terms, it is a performance measure to evaluate investment returns and its overall efficiency. 

In accordance with the investment’s cost, ROI signifies the profitability or non-functionality of a specific investment. For instance, if the return on investment is net positive, the outlay is probably worthwhile. Similarly, investors should avoid splurging cash in calculations with negative ROI, which ultimately implies a net loss. 

Istanbul real estate sector

Turkey’s economy ranks 19th in the world and the progressive country is expected to have one of the ten biggest economies in the world by 2023. While the real estate market is predominately huge, it significantly contributes to the upward growth trends of the Turkish financial industry. 

Considering the fact that Istanbul is Turkey’s financial and economical capital, it records the maximum housing sales year-on-year. The neighborhoods and districts both on the European and Asian sides such as Sariyer, Sisli, Besiktas, Fatih, Kadikoy, Usukdar, and Beyoglu offer a high ROI opportunity. These central locations yield a guaranteed and minimum of 5% rental yields that can even go up to 8% in the city center. Nevertheless, the real estate prices in Istanbul rises by approximately 18% every year. 

Unless something extraordinary happens such as the COVID-19 pandemic, most properties usually increase in value. On the other hand, in the normal course of events, if the investment is made carefully, decent capital growth can be attained on Istanbul real estate.

What type of investment yields a significant capital appreciation?

Capital appreciation comes into direct effect only when the real estate is sold. Foreign investors seeking to earn higher returns mostly sell the property to Turkish property buyers, therefore, having a cogitative exit strategy is extremely crucial. 

A thoughtful way of ensuring that your capital gains are favorable is by doing due diligence for the composition of the project. While there are lucrative areas in the outskirts of the city, it is recommended to stick near the city center locations. Real estate invariably appreciates in such areas because high demands outweigh the limited housing supplies. 

However, in the newly developed satellite towns, the supply is higher than demand in these outskirts regions. Unless you are ready for long-term gains, you should prefer investing in the central districts of Istanbul otherwise. 

In many conditions, off-plan or under-construction commercial and residential units are often purchased by local and foreign real estate investors. Since on-going construction projects offer a higher scale for profitability, underway projects appreciate by nearly 35% to 40% by the time the structure is completed.

Final Thoughts

According to the latest research by Knight Frank’s Global Residential Cities Index, Istanbul secured 12th place in the world with overall housing price gains of 11.6% despite the ongoing partial lockdown. Furthermore, when it comes to foreign investments, the economical capital attracted the maximum interest of international real estate investors. These indicators strongly signify that real estate prices in Istanbul will inevitably surge in the coming years. While city center locations will seize optimum residential and commercial property sales, the steadily developing neighborhoods are expected to witness significant efflux in property demands. Consequently, as the value of the region increases in general, so will the real estate capitals. 

If you wish to buy a property in Istanbul or want assistance in formulating an ideal real estate investment plan, consult our seasoned real estate experts here. 


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