This week, I will spend a bit of time going over a few thoughts about pricing, as it is one of the most important aspects of my work. It is also the most challenging, as the sands often shift with rapidity, especially in a megacity like Istanbul that also sees no shortages of surprise events on the political, economic, and social side of things. The task of really nailing down sqm pricing is a constantly moving target. It also relies on using a common and mutually understandable terminology between the participants. I think we all understand what “prime” refers to, but when I use phrases – which I often do- such as “decent, but not prime”. It may get a bit fuzzier for the audience. We also have the “nasty hill effect” and the “Bosphorous effect” as well as a host of other determining factors. On the new build front, we have the often hastily put together and poorly finished “Mom and Pop” buildings, then we have the 3-4 star hotel like complexes or “residences” as they are termed locally. Then we have what by North American standards could only be called luxury or ultra-luxury projects. You have to understand all of these to really have an idea about sqm pricing. You see so often in the press realtors boldly throwing out numbers, often very large, without providing much context. One read, “20k USD for Kadikoy” without further explanation. In the end what he was talking about only referred to a handful of historical villas and an uber-luxurious high rise. Not very precise munitions and not helpful in the sqm discussion. But I kind of understand it; he was likely only allotted 100 words, so you cannot really delve into things deeply with that.
I think back to my days in Budapest and how precisely the agents seemed to be able to quote the average sqm prices. 1500 euros in the 5th District, 700 euros in the 8th District and 1500 euros for new builds (this was back in 2015). The only factor that would make the prices jump up was a river view. Otherwise it seemed to be a very staid and predictable market. Perfect for the Hungarians, who seem to love getting into the minutiae. But it made sense there; neighborhoods often seemed quite similar, at least from physical point of view and prices were in a simple linear equation involving inner ring (closer to river) and outer ring. After a week or two, you could develop a pretty solid and workable comprehension of the main points. And what I also liked about the realtors was that when you went to re-sell, if you were shooting for a bit of a spicy price, they would give you a good grilling, by saying, “Don’t you know that this price is high for the 7th? Do you think you are in the 2nd District”? They more or less stood their ground and acted in some ways as arbiters deciding on market price. One thing Hungarians and many ex-Soviet countries citizens do not like to do, is to work for free, even if they are in a commission-based employ. So, they would give you your estimate and you could take it or leave it.
Anyway, that represents much of Europe; staid, predictable and to a certain extent, logical. There is also lots of accurate data and everything is recorded in a precise matter, so it takes a lot of the guess work out of things. Finding a European apple to the Istanbul apple is a fruitless task (groan lol). I think the most natural comparison comes with some of the larger Asian cities. Yes, most of them are much higher-priced, but they offer a lot of similarities and might shed some light on maybe why when we say something is “expensive” in Istanbul it may not be in the larger global context. I suspect that is the case. Of course, we as locals, always make this kind of assessment, but I wonder at times if this denial of world-wide real estate trends serves us well in appraising the market. W from Tapei, wrote that not prime, but decent in Tapei can run over 10K USD per sqm. 20K in prime areas. 40-50 percent less for older buildings, but still 5-6 K in non-prime areas. Tapei is a city of 4 million. Much wealthier than Istanbul but likely a city with fewer HNWI. And intuitively we can assume that the ones buying the 5-6k properties are not high earners. It must be really hard also for young people to get a foot on the ladder. That seems to be the case almost everywhere. They are also the ones at the most risk. If they overpay when market is at the top, they will be wiped out if there is a crash.
B from Texas. but with a China connection, quoted similar prices for most Mainland cities with a population over say, 5-10 million. Of course, Beijing, Shanghai will be higher even. Everyone knows the Singapore and Hong Kong story. Bangkok may be a neat correlative. Similarities in economy. Undisputed centers of the country where wages are very different than in the hinterlands. Dense population and of course both EM. I hope someone in the group can provide some insight on Bangkok pricing as I do not really have many ideas and it is hard to find by google search; “decent, but not prime Bangkok” might serve me up a link to a steak house. Or maybe something less wholesome.
So, back to Istanbul. I will throw a few descriptors, qualifications and elaborations at you to guide you to where we arrive at the below sqm price updates as of late-winter 22.
This usually refers to a handful of streets in these kinds of neighborhoods: Cihangir, Galata, Bebek. Nisantasi. Kadikoy, Etiler and a few others. On these few streets, you may be looking at as high as 5K USD per sqm. Higher still if a new build. Throw in a Bosphorous view and you might be looking at 10K. Therefore, I get a bit silent when someone asks me for a sea view place in one of the best neighborhoods in Istanbul with a budget of 250K. That really would be a one in a million and I doubt if you would find a realtor in town willing to put much leg work into that. Now, on the periphery of prime, it is doable, so do not lose heart completely. But sea view any time is tough.
Decent, but not prime.
This is really the portion of the market in which we inhabit. Usually within a few hundred meters of the prime areas in Besiktas, Beyoglu, Sisli, etc. A much easier entry level.
Prices seem to be edging up to 1300-1400 USD per sqm for unrenovated properties. Throw in another 350 USD per sqm for renovation.
Renovated places, done well, always seem to come with a premium and there are not many to choose from. They would start at 2 K in most areas and maybe would be a bit more in areas such as Mesrutiyet, Bomonti and certainly Tesvikiye. A reasonable swathe of Tesvikiye is probably more accurately categorized as prime. A few streets in Bomonti probably get that nod as well.
“Mom and Pops” starting from 2K. These can vary a lot based on the quality, with some edging up to 3K.
3-4 star hotel-like projects (Mint, Ressim Modern, Genyap Link) start from 3K and are on their way fast to 4K, where I feel they will run out of gas, at least for foreseeable future.
Luxury projects mostly start from 6K. Ultra luxury projects, such as Zorlu can top 10K.
The above might all be a bit repetitive for those who have been with me for a while, but essential for newcomers. Also, for the veterans out there, I think you will notice some subtle and not so subtle differences in the numbers, so maybe it is useful after all. I suppose you could consider it as a “report card” on your property. Teacher likes to give outs As haha. We have to accept that there will be a sprinkling of Bs, but we should keep in mind that not all properties appreciate at the same rate, nor do neighborhoods, for that matter. I assume most of us are looking at a 5 year time frame, so many of us are still in the first quarter. I do not see any cause for panic at this point. I am sure if there were, you could read into what I am saying. Apart from a reasonably handy Black Jack player, which involves less bluffing, I am not to good at keeping a poker face.
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