After a steady but unspectacular 2012 for Istanbul real estate, many investors are wondering what is likely to happen in 2013. Although I do not claim any great prescience, I think that if we analyze the trends it looks very positive for the Istanbul property market to accelerate its upward trajectory.
One of the the main reasons for this is the reduced cost of borrowing now being offered by Turkish banks, which is mainly the result of positive developments and signals from the big ratings agencies. As loan rates plunge, the length of mortgages can be extended, thus increasing purchasing power. Of course, rates are still hovering around 10%, which seems quite high to people from the western world. However, it is much lower than it has ever been in Turkey and it seems that these will go lower yet. This opens the door for a lot of new possibilities; people will be able to buy to let as the monthly mortgage payments may more easily be covered by expected rental revenues. In addition, those who have been on the sidelines as renters, may also get fed up with rising rents and calculate that maybe it is time (for those that can raise the down payment) to take the plunge and become a homeowner.
Another positive headwind would appear to be a potential avalanche of demand coming from the Arab world, as buyers from there seek a liberal Muslim haven from the instability in their own countries. All of the above are new developments and cannot be guessed exactly as of now, though they do seem to be trends that are not going to recede any time soon and which may in fact gather steam. In short, if mortgage rates further decrease and there is brisk demand from the Arab world, it should signify a dynamic few years for Istanbul.
The overall state of the Turkish economy will also play a key role in the direction of prices. The estimates seem to range from a low of 3%, with the OECD leaning to a more optimistic 4.5% (keep in mind that the US is spluttering along at around 2%, Europe just above zero and the UK is now possibly falling into recession yet again) If the Turkish consumer feels confident that the economy is humming along, there will be an increased demand for housing, which will probably be felt most acutely in the city center, due to traffic congestion and high energy prices for the outlying suburbs.
So, what does all this figure to suggest for the investor. I think we could expect double digit capital growth, with some very nice upside potential.
Happy hunting in the New Year!!!