Factors Affecting the Real Estate Prices in Istanbul

factors affecting real estate prices in istanbul

Istanbul is reckoned as the economic and financial capital of Turkey. As a renowned city, it draws immense attention from investors and business executives from all over the world. In view of its cultural and geographical importance, Istanbul has emerged as a safe haven for real estate investments. It not only furnishes lucrative opportunities for capital injection but also stands out for its profitable and high-value real estate market. 

It is interesting to note that despite the coronavirus pandemic, the real estate industry continued to maintain its stupendous contribution, emphasizing the upward trend in housing sales to foreign and Turkish investors. 

In this article, we will shed light on the key trends in the Istanbul real estate sector such as the factors driving the housing market, the restraints to the expansion of new developments, and real estate opportunities for foreigners in Istanbul going forward. 

What causes the variation in property prices in Istanbul?

Among the Turkish cities, real estate prices in Istanbul in particular, are significantly surging. In the last five years, property rates in this city have spiked nearly 44.5%. Obviously, this is a general indicator of the housing prices in Istanbul as a whole city, but what about its individual districts? What about the outskirt locations and distant neighborhoods? What is the capital appreciation of newly-constructed apartments as compared to the old infrastructures? What is the demand and expectations for future prices?

Depending on fixed and variable components of Turkish real estate, the rates of premium villas and sea-view apartments differ in terms of prices per square meter. Let’s analyze a detailed rundown of factors that contribute to the variation of property prices in Istanbul. 

Real estate location

The location of properties in Istanbul plays a crucial role in determining the prices per square meter. Apartments or villas located in the heart of the city or in neighborhoods close to the city center are priced and rated higher than those situated in the suburbs. 

The proximity of the property to coastal areas, historical sites, educational centers, and transportation systems also contribute to the price variations.

The total area of the property

The project area and the size of the apartment or villa also largely determines the property pricing in Istanbul. Therefore, attention must be paid to net space, built area, and internal division of the houses you purchase in the city.

On a general note, the larger the property, the price per square meter is equivalent to the built area in a specific location.

Construction status and age of the property

If the property is newly planned and under-construction, the rates are usually expected to be on the lower side, leaving a significant margin for a better return on investment. As compared to the ready-to-move projects and houses for sale in Istanbul, off-plan properties offer a relatively higher probability of future price improvements and capital yield after resale.

Finishing and construction quality

The quality of materials used in the construction of houses and apartments in Istanbul along with the finishing of interior and exterior facades affects the prices. Flats with luxurious and high-quality fittings cost more than those with average finishing. 

Depending on the location, premium and well-furnished properties yield higher rental returns and capital gains after the resale.

Surrounding views from the property

The views from houses and flats in Istanbul are among one of the most influencing factors that shape the variation in the property’s pricing in the same neighborhood. For instance, sea-view and villas in Istanbul cost 40% more than those located in residential areas with no unique sights. 

Key market trends that affect the real estate rates in Istanbul 

The number of housing sales to foreigners has accelerated in Istanbul due to legislative amendments and government policies that eased the citizenship by real estate investment constraints for foreigners. 

According to the Turkish Statistical Institute (TurkStat), Turkey’s most populous city Istanbul has continued to be the top preference for buying properties in the country. On the other hand, when it comes to foreign investors, Iraqis, Iranians, Russians, Saudi Arabians, and Germans take the prime spot in purchasing residential units in Istanbul.

Istanbul’s competitive landscape

The residential and commercial real estate industry in Istanbul is fragmented, extending a highly competitive environment to capture limited property demands by national and foreign property buyers. Lack of available land and open spaces in the Istanbul city center has forced residential developers to shift towards the outskirts with premium and large-scale projects. The Housing Development Administration of Turkey is leading mass housing regeneration and construction projects, with an aim to offer social housing for low and middle-income local families.

Turkish real estate developers are coming up with unique architectural plans and investment opportunities for foreign investors with a significant yield on investments and capital appreciation. 

Final thoughts

Real estate prices in Istanbul have attracted global attention and have become a focal point of interest for an array of investors wishing to own a house in this transcontinental city. Factors such as urban renewal, infrastructure development, mega airports, and modern transportation systems have contributed to the increasing demand for properties in Istanbul. While many believe that its strategic location and natural resources are sufficient to drive the real estate boom, the city is likely to be the number one destination for real estate investments in the near future. 

If you wish to explore real estate investment opportunities in Istanbul or buy a holiday home with sea-views in this stunning city, connect with our real estate experts here.

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