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Residential Real Estate Market in Turkey - Growth, Trends, and Forecast (2020 -2025)

  • ID: 4986925
  • Report
  • February 2020
  • Region: Turkey
  • 120 pages
  • Mordor Intelligence
until Sep 30th 2021
Turkey is an attractive country because of its transportation facilities, tourism and entertainment opportunities and convention tourism. Istanbul, as a renowned city, draws the attention of investors from all around the globe. Istanbul where Europe and Asia meet emerges as a haven for real estate investments which is rising star full of real estate opportunities and stands out as a haven for high value-added and profitable real estate.

High interest rates and economic restraint have had the impact on the economy and one of the impacts is a decline in real estate prices - and a decline in the Lira. The house sales in Turkey in May 2019 dropped by 31.3 percent year-on-year and totaled to some 82,252 units.

The overall residential housing market has remained stagnant, while growth in house prices throughout Turkey and in Istanbul was below inflation. Excess supply created through urban transformation projects especially in Fikirtepe and Kadıköy have influenced the restricted growth in residential property prices overall. The surplus of supply over limited demand for housing aimed at upper-middle- and upper-income groups continues to exert pressure on prices. Most demand for housing in Istanbul is concentrated on the middle-income group for which segment there is an insufficient supply of housing.

Despite the decline government introduced incentives and legal amendments, particularly for foreigners, continue to maintain their contribution, emphasizing that the upward trend in sales to foreign investors.

The decline in real estate properties sold continues in 2019. The number of housing units sold fell by 21.7% in first half of 2019 on YoY basis to 505,796 units. Though Housing Index in Turkey increased to 114.60 Index points in September from 113.10 Index points in August of 2019. Housing Index in Turkey averaged 76.02 Index points from 2010 until 2019, reaching an all time high of 114.60 Index points in September of 2019.

Key Market Trends

Increasing FDI Flow in the Residential Real Estate Market in Turkey

The number of house sales to foreigners has accelerated in Turkey due to Legislative amendments that eased citizenship with investment limits for foreigners, campaigns launched by real estate developers and banks, and spiking foreign currency brought an annual record a 78.4 percent increase in 2018 compared to the previous year.

According to official source the country's most populous city, Istanbul, has continued to be the top choice for foreign buyers. Residential property sales to foreigners in the city of September 2019 increased by 7% year-on-year to1924, compared to just 1799 in September 2019. On the other hand, when it comes to nationalities, Iraqi citizens continue to top the list of foreign buyers in residential properties. Iraq was followed by Iran with 509 units, Russians with 285 units, Afghanistan with 183 units, Saudi Arabia with 157 units and Germans with 155 units in May 2019.

Also, Chinese investment in Turkey has increased dramatically, which is expected to increase in the coming years. They generally invest in luxury property, beautifully designed five-star managed apartments with services and excellent facilities.

Decrease in Sales of New Homes in Residential Segment

In Turkey, new home sales refer to the first-time sale of a house that was bought by flat received for landownership agreement made between buyers and firms or persons that build residential. New Home Sales in Turkey averaged 48758.25 units from 2013 until 2019, reaching an all-time high of 74815 units in October of 2018 and a record low of 23265 units in June of 2019.

Overall residential sales for Turkey suffered a decline of 21.4% in the first half of 2019 compared to the same period of 2018. The decline in mortgaged sales was 58.9% in the same period. Overall sales and mortgaged sales in Istanbul declined by 16.2% and 61.2% respectively in the same period.

The proportion of first-hand sales in overall sales between 2014 and 2018 stands at 46%-47%.

Competitive Landscape

The residential real estate market in Turkey is fragmented and has a highly competitive environment in order to capture limited demand between the property owners. Lack of available land for development in city centers, particularly in Istanbul, has forced residential developers to shift towards the periphery with large-scale projects. The mass housing development is also increasing rapidly. The Housing Development Administration (TOKI) is leading mass housing development and regeneration projects, with a focus on providing social housing for low and middle-income households. Improper city planning and poor infrastructure due to rapid urbanization have created a demand for earthquake-resilient homes in Turkey.

Turkish property developers have established their international offices for attracting prospective foreign investors and promoting their projects. Investors from Qatar, Russia, Iran, Saudi Arabia, Turkic Republics, U.A.E and Azerbaijan have shown their keen interest in Turkish projects.

Reasons to Purchase this report:
  • The market estimate (ME) sheet in Excel format.
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1 Introduction
1.1 Study Assumptions
1.2 Scope of the Study

2 Research Methodology

3 Executive Summary

4 Market Insights

4.1 Current Economic Scenario and Consumer Sentiment
4.2 Residential Real Estate Buying Trends - Socioeconomic and Demogpaphic Insights
4.3 Government Initatives, Regulatory Aspects for Residential Real Estate Sector
4.4 Insights on size of real estate lending and loan to value trends
4.5 Insights on interest rate regime for general economy, and real estate lending
4.6 Insights on rental yields in residential real estate segment
4.7 Insights on captial market penetration and REIT presence in residential real estate
4.8 Insights on affordable housing support provided by government and public-private partnerships
4.9 Insights on real estate tech and startups active in real estate segment (broking, social media, facility management, property management)
4.10 Market Dynamics
4.10.1 Drivers
4.10.2 Restraints
4.10.3 Opportunities
4.10.4 Challenges

5 Market Segmentation

5.1 By Type
5.1.1 Condominiums
5.1.2 Villas
5.1.3 Others
5.2 By Key Cities
5.2.1 Istanbul
5.2.2 Bursa
5.2.3 Antalya
5.2.4 Fethiye
5.2.5 Bodrum

6 Competitve Landscape

6.1 Market Concentration
6.2 Company Profiles
6.2.1 Agaoglu Group
6.2.2 Artas Group
6.2.3 Novron
6.2.4 Ege Yapi
6.2.5 Alarko Holding
6.2.6 Soyak Holding
6.2.7 Garanti Koza
6.2.8 Sinpas Group
6.2.9 Kuzu Group
6.2.10 FerYapi
6.2.11 Housing Development Administration of Turkey

7 Future of the Market and Analyst Recommendations

8 Investment Analysis of the Market

9 Disclaimer

10 About Us
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