Keith’s weekly property news April 30-2023

The re-build question as it relates to older buildings:
To re-build or not to re-build, that is the question. And it certainly has been the question post February 6 and the twin earthquakes. Many buildings built more than 20 years ago will, de facto, be considered risky structures, as they were not built according to the latest earthquake construction code. Of course, this does not mean all of them are unsafe or poorly constructed. However, they are likely to come under scrutiny for future demolition, whether that be next month, in 2 years or in 10 years or more. So what happens if your building is slated for “de-commisioning”? Well, the truth is I wanted to do a much more in-depth analyses of this, but it is still way too early. New information emerges every day. We also have an election coming up that could impact this significantly, so rather than try to chew this off all in one bite, I think it is better we address the issue here today and keep updating on it in future sessions, as new information comes online, which it almost certainly will.
The government has announced a plan for Istanbul, “Yarisi bizde”, which translates as “Half the cost on us”. In this program, every year a hundred thousand or so buildings will be demolished and re-built every year and for many years to come. This would be fantastic in many ways. It would ease a lot of financial burden for lower income people who live in high risk areas and structures. This is just one of the many programs being discussed, but applications are already underway for this. We will update on all the other possible programs at a later date.
But for our purposes, let us just stick to some simple math to see how it affects the investment. The most important aspect is always the value of the underlying land. If the value of the land is low, proportionately, the re-build cost and any profit you may gain from having a more valuable, new building may be eaten into. To illustrate this point, let us take two extremes for 100 sqm apartments in two very different locations.

CASE 1:

Tesvikiye re-build (high land value)
7 million lira. Current market value of 30-40 year property.
2 million. Re-build cost.
12 million lira. Value of 100 sqm new build, “Mom and Pop” style in Tesvikiye.
So, as you can see, for 2 million of further investment, your ROI would be conservatively, 20 or 30%.

CASE 2:

Avcilar re-build (low land value. You can substitute Esenler, Buyukcekmece or many other areas here)
2 million lira. Current market value of 30-40 year old property.
1.8 million lira Re-build cost (I am assuming a slightly lower re-build cost, assuming the Tesvikiye owners will spend more on finishing. In fact, the gap would actually be a bit more, but lets keep it simple)
5 million lira. Value of 100 sqm new build, “Mom and Pop” style in Avcilar. This is a bit speculative, as such great change may affect market prices in unpredictable ways. However, we have to jump in somewhere.
Again, it is not a disaster scenario for the Avcilar home owner, but we do have to keep in mind, the income level is lower and such unexpected and large expense could really be a challenge to those owners.
That is why the “Yarisi Bizde” is a critical component. I have deliberately kept the above absurdly reductionist, but we can discuss in more detail in the session.
Airbnb update:
Winter and Ramadan have past and we now enter the high season, or at least are heading into it, in May. I suspect tourism numbers were off by minimum 20%, probably more, from this time last year, but we still have to wait for April numbers. There is a general consensus that this is linked to the earthquakes. We will keep a close eye especially on April and May tourism arrivals. A possible over-supply issue may also have an impact, though I am much less certain about this. If I were an Airbnb operator, I would sit tight for the moment, maybe tweak my prices to make sure they are very competitive during this apparent slight downturn. Again, as this is all a bit of an unknown -how much earthquake news could impact beyond short term- it is very much a wait and see period still. You can contact me directly if you have any more questions on this subject. As loathe as I am to do it, probably in May I will offer a zoom seminar on how to optimize your Airbnb. I may not be as proficient at is as I once was (we had Istanbul number 1 on Tripadvisor for many years), but I still know plenty of good hacks I and am quite in-tune with market pricing.
Negotiations on the secondary market VS negotiating with developer.
There are a lot of paradoxes and intricacies when negotiating for property in Turkey. It is not quite the Grand Bazaar where the first price the guy throws at you is laughable, but sometimes it can feel close to that.
With developers (larger ones) you often get a much higher price at the outset. Then the discounts start rolling in. 10% off for cash deals. 18% if you sign today and so on. 22% because you are the first Hawaiian we have had this week. You get the idea. In this market, we are just looking for a fair deal, in a project not very over-sold to just Middle Eastern buyers. I often have a quick scan of the names lying on excel sheets in the offices of sales staff. If I see a really high percent of “Al-this or Al- that”, I get concerned. We like to see plenty of Turkish names there, although we accept that some of the luxury projects may have a higher representation of foreigners.
Over-pricing is also rampant on the secondary market. This is mostly a result of a fragmented market of real estate agencies and the mis-representation of property details. This leads to a lot of inconsistency in pricing. In Turkey, there are small, independent real estate agencies on every corner and they often bend to the desires of the property seller, fearing loss of the portfolio. In many other parts of the world, the big agencies dominate the playing field (which, of course, comes with its own set of problems), but the plus side is they are usually reluctant to waste their time marketing over-priced properties and usually have more leverage with sellers in reasoning with them. Of course, they are often more knowledgeable, skilled and better-trained. They often confront the owner with cold, hard, and more or less reliable data, when discussing a list price. This does happen, of course, in Turkey, too, but only with a handful of the most reputable agencies. So far, my favorite agency (besides ourselves lol) is KW, with Re-max a distant second. There are several other local chains that are quite good, as well.
I remember when I was selling my personal properties in Budapest some years back. I wanted a slightly ambitious price on the asking side. My realtor looked at me stony-faced (A Hungarian specialty) and said, “But Mr. Boyle, properties in non-panel buildings in the 8th District are zelling for a maximum of 1500 Euro per sqm, I cannot justify an asking price of 1700 per sqm”. I was like, “Gees, have you never heard of a rising market?” But he stood firm. I went to a second agency and got a pretty similar response. In the end I did convince them to at least list the property the property for a few weeks at the price I wanted. A week in, the furtive agent called me and asked if I wanted to drop my price. I said no. We eventually sold for a bit less than asking. So, the moral of the story is that it would have been hard to jack the prices up with these agencies in Budapest. They were not a monopoly, but they constituted a kind of consensus, or acted as a breaker on the market. But, again, these were mostly larger agencies that controlled that market.
As a small agency, we can only expend energy on what we feel are the 10% of properties that are listed at a fair market price. We mostly let the other 90% go, the ones that are over-priced by 20% or more. We make some exceptions if the property has some outstanding trait. Because, even if we get 10 or 15% discount on a property that is 20 or 30% over-priced, it is not like we have accomplished anything. Therefore, we focus on those at, or below market. We don’t, and don’t need to sell 50- or dozens of properties a month, so narrowing it down like this makes sense. Of course, the trajectory of negotiations in these cases is far different. We may get 5% off or we may get nothing off the list price. We look at the whole number and if we like what we see, it’s trigger time. Apologies to veterans of my zooms, as this is a bit repetitive.
Upcoming elections and the CBI, sales to foreigners
One of my least favorite subjects is CBI speculation. But here goes. If the opposition were to win, there is a very, very high probability that the CBI program would be scrapped entirely at some relatively near future date. People would likely have a month notice to get their purchases to the 400K USD threshold and their certificate of conformities issued (enough to get you on citizenship path). So, the door could be shut from mid-June or any time afterwards. Also, if the opposition wins, there may be further restrictions on foreign buying. In my opinion, it is highly unlikely they would go full throttle and ban all sales to foreigners. That would seem to be quite draconian and out of line with decades of policy on Turkish property.
If the ruling party were to win, I feel that major changes or dismantling of the CBI is also quite likely, though the time frame would be less certain. There is a small chance the program would just roll merrily along in its current form (inshallah). These are just my thoughts, but they represent the middle ground of industry insiders I have spoken with.
As promised, here is the second segment on square meter pricing in Istanbul neighborhoods. This week, we will look at what we affectionately dub “Ingridstan” or Merkez neighborhood, which lies between Bomonti and the Osmanbey neighborhood and extends up to the Marriot and the Sisli Mosque in the north and down to MOC in the south ( :Merkez Mah. SQM prices

Category 1. High end, luxury or lifestyle new construction.
These actually do not exist in Merkez Mah. The reason is that probably the land values were already too high many years ago and it was cheaper for developers to develop in Bomonti (and easier, as Bomonti was more industrial)
If such a project were to be done, it would be at least the price of a similar project in Bomonti, but less, naturally, than Nisantasi.

Category 2. “Mom and Pop” new construction:

These can be anywhere from 0 to 20 years old. They usually are very light on facilities. You would be lucky to have underground parking. However, they often have pretty decent locations and can be good value for the money. We sometimes have to come in and fix up a few rough patches, but that is often worth it. Look on the bright side. You get to put your creative stamp on it. These properties usually have elevators.
3250-4000 USD per sqm There are some slight variations due to the precise location of the property in question, view and more.

Category 3. Buildings older than 25 years:

This is a hard category to nail down pricing, as there is such variety of buildings and standards. Some have more classical features and are more elegant. Some are just ugly. Others well-maintained, others not. Again, here, for the sake of argument, we are assuming somewhere in the middle.
1700-2200 USD per sqm. Most likely renovation will be required, anywhere from quite moderate to an A to Z. This should be factored into your equations. That can add anything from 100 USD per sqm to 500 USD per sqm. Of course, the higher end will produce a superior final result. If the property only needs some tweaking, the lower range number should do.

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Keith’s weekly property news April 30-2023

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Keith’s Weekly Property News April 16-2023

Unrealized gains in RE;

curb your enthusiasm:

There is nothing like spending a few heady days and nights with a young crypto baron to distort your views on investment returns. However, only a statistically insignificant number of people were skilled, or lucky enough, to have bought BTC when it was in the single or double digits (the “strategy” that sent KK into the stratosphere of riches un-spendable in multiple lifetimes). He had a few great one-liners I’ll never forget, but I had to rebuke him – in as avuncular a manner as possible – when he kept talking 2X, 3X and so on when referring to his real estate purchases. I noticed a popular and smug salesman from one of the top property agencies in Turkey, name withheld, wink wink, has also seamlessly finessed the typology of the crypto world on youtube videos into his assessment of property returns in Piyelepasa, of all places. More on that later. When you start regurgitating 3X claims in Piyelapasa, you are likely heading into the world of “unrealized gains”. Actually, unrealized gain is a strange term, but let us assume that it means basically getting out of an asset, whether it be stocks or crypto or real estate and getting proverbial “cold, hard cash”, with which you could use to spend or mis-spend on whatever you wish. Of course many clients ask me what the current value of their properties might be. I always give an estimate, but with lots of caveats.
If you are really a short term investor, then this is probably a much more relevant issue for you. But I believe most clients these days are on average, 5 year investors. A very logical time frame when you put all the factors together. So, you see the hype on the internet, with some of the more exuberant commentators straight-facedly, yet almost too insistently, belting out claims that such and such an area has gone up 3 X or whatever. Naturally, you want a stress test on your investment or at least be able to scribble down a number on your personal ledger -and that will help you sleep better at night, without having the security of stuffing said assets under your pillow. So before you move those “unrealized gains” closer to the “realized” columns, at least mentally, consider a few things.
1- Turkey is a less liquid market than some. Call it average or bit below average. I think a reasonable selling time is 3-6 months. If you need to liquidate in a month, that is not good news. Try to avoid getting in that situation.
2- Before you are about to bump it all up to 3X, do a final tally on all exit costs. You might have capital gains, you will have agency commission. You will also likely have fees associated with repatriation of funds, the main one being exchange rate cost – not very high, but a cost nonetheless.
3- Maybe the market is on fire, or that is what the cheerleaders on YouTube are saying. How will it be in 3 months or 6 months, when you likely, actually will be closing on your property? You have read the fine print, “Current stock valuations are not an indication of future values” and so on and so forth. Curb your enthusiasm. Or as Ezra Pound penned, more ominously, “pull down your vanity” – though I’m pretty sure he was not referring to net worth projections, lol.
Also, if you are in that position to sell, do not just look on the local websites, where all aspects of a property can be mis-represented or prices can be inflated. Do not just ask the real estate dude who sold you the property. He probably thinks if he says it is 3X. you are likely to buy even more from him (or her). If my realtor – and, yes, I do use for myself as well- tells me that my property has gone up 3X in the last year, I would lock him in the room and say SELL IT right now and I will give you 10%….would not even matter if I used for CBI or not. Such would be unexpected enormity of the gain that I would almost say anyone who experienced such a gain would be ill-advised to hold on to it. Remember, it is not crypto and nothing will go 10X etc, or almost nothing. But of course, my agent will not be able to sell at 3X what I bought last year, but he doesn’t lose much by saying it anyway. So, although I have seen great gains on some properties in the past few years, and certainly pretty huge gains on properties bought a long time ago. I do caution against immediately applying X multiples

Airbnb update:

The numbers look a little softer than I would like to see them. End of Ramadan is fast-approaching, so the real litmus test is upon us. I always have to keep in mind that Middle Eastern, Iranian guests etc tend to book very much at the last minute and then they also come in pretty huge numbers. Unlike some Americans, who book months in advance, and often plan so extensively you get to wondering if they are planning a full-scale invasion, or a “special military operation” at least. Years ago, I once had one US gentleman send me a 19 question, 2 page list (prior to even booking, mind you). I wondered how it would actually be when he got boots on the ground in the hostile environment. I thought it best for everyone, and judiciously left query without reply.
In all seriousness, at least 80% of the clients for Airbnb are non-Western, so it delays the outlook for upcoming occupancy a bit. Suffice it to say, if your numbers are low for May (lets say, less than 60%), you should pick up the phone and say to me, “Houston, we have a problem.” Likely, you would get that call from me beforehand anyway. At that point, I would give my outlook on mid-term or longer tenancy situations, which are actually my homeostatic mean comfort zone anyway
If numbers do come out low, as I have said before, there are only 2 possible causes…supply has become too much OR earthquakes impacted more than expected. The former is a stickier issue. I suspect the latter will be forgotten over time and tourism numbers will return to their trend of growing every year.
Cleanliness, Property maintenance. What to expect.
I do not want to drive too much traffic away from Turkey and to Ladislas’ pursuits in other continents, but parts of this video are really good and the guy Louie seemed very correct on many points.
https://www.youtube.com/watch?v=P2pl37espYw
I liked his idea about getting regular cleanings done on the rental units. If I were renting out slightly lower end units, I would build it into the rental fee. If Im doing higher end, I might do the same or just pay out of pocket. Why is it such a good idea? For many reasons, maybe one or two are a bit sly, but oh well…
1- A stitch in time saves nine. Some kind of dirt cannot be cleaned out after a few years. Same can be said for mold. Also, if it is a furnished unit, the damage can be documented earlier, as the cleaning person will likely notice it, particularly if you tell them to keep an eye out for it.
2- If a place looks in pretty much perfect condition, you can bet anyone visiting the property will respect it more. It’s just human nature. If I walk into a barn, I am not going to ask my host if I should remove my shoes. I might not even ask where the washroom is. I mean, you get my point. When I worked as a painter in college, my boss used to always say, “Clean, boys, clean”. I understand the value of that better now.
3- If the property is really being abused, the cleaner will surely let you know, even without being prompted.
We have been lucky not to experience property depreciation due to extreme wear and tear, as we have mostly avoided the sub-prime rental market. In any event, paying that extra 30 or 40 bucks a month, or passing it on to the tenant, to have the place cleaned at least once a month, is probably money well-spent when it comes time to re-sell. It will not add an X multiple, but it is good practice. A more detailed and heavy extra day or two cleaning once a year would also be good. When I think back over the years, we only had one truly awful tenant. Oddly enough, he was a young Dutch guy, corporate type. I mean, usually the Dutch are so fastidious, I was in shock when I saw the place. It was one step short of faeces on the wall kind of thing. It did look like a place inhabited by a serial killer. If we had had our cleaning lady in there regularly, we probably could have saved many lives ( :
Lastly, for property maintenance, I always tell people to set aside 10% of the income for future repairs. It is highly unlikely that you will spend this on average year after year, but you may have to replace an old how water, heater combi boiler, so….After several years, you should have an excess and that can be used for upgrades etc.
If you have a newly renovated or new property, most years, you will only be spending a hundred or two hundred bucks.
I had planned to do a more extensive report on sqm pricing in various neighborhoods throughout Istanbul. However, I will split it over several sessions of zoom and zoom notes due to time constraints. In any event, the below gives an idea to newcomers the types of property categories and how they should be evaluated. I started off with an easy one; Ferikoy.
For the sake of our numbers, we make a few assumptions. There is a roughly 20% discount on sqm prices of properties, say, over 150 sqm. Properties under 50 sqm, a bit arbitrary, tend to be 20 % higher sqm prices. Pretty much the same world-wide in dense metropolitan areas.
So, for our numbers below, we are assuming a property anywhere from 70 to 100 sqm, without any amazing added advantage, like a great sea view. Nor any disadvantages, like being in the basement or a 7 floor walk up.

Ferikoy SQM prices:

Category 1. High end, luxury or lifestyle new construction.
These properties come with all the bells and whistles and can correspond anywhere from a 5 star to a 7 star hotel. There might be a shopping mall below, and definitely have pools, gyms, restaurants, valet parking and often much more. The top end in Istanbul would be the Zorlu Center.
In Ferikoy, this kind of development does not exist…yet. The closest thing would be Terrace Feri, a very good quality, bespoke project. It has underground parking, a lovely court yard, swimming pool (indoor), reception, security and more.
3250 USD per sqm and 3750 Prices per sqm, depending on floor. For example (the quoted net here is 150, but it is actually 140)
https://www.hepsiemlak.com/en/istanbul-sisli-yayla-satilik/daire/8496-4520
This development is almost a sub-category, well below the very top end where absolute entry prices, depending on location, start at 4 to 4.5 K USD per sqm and can go way, way up. There are many projects throughout Istanbul with similar characteristics to Terrace Feri and they are priced quite differently from true luxury projects.
Category 2. “Mom and Pop” new construction.
These can be anywhere from 0 to 20 years old. They usually are very light on facilities. You would be lucky to have underground parking. However, the often have pretty decent locations and can be good value for the money. We sometimes have to come in and fix up a few rough patches, but that is often worth it. Look on the bright side. You get to put your creative stamp on it. These properties usually have elevators.
2000-2500 USD per sqm There are some slight variations due to the precise location of the property in question.
https://www.hepsiemlak.com/istanbul-sisli-pasa-satilik/daire/30486-1665
Category 3. Buildings older than 25 years.
This is a hard category to nail down pricing, as there is such variety of buildings and standards. Some have more classical features and are more elegant. Some are just ugly. Others well-maintained, others not. Again, here, for the sake of argument, we are assuming somewhere in the middle.
The pricing for these properties in Ferikoy is well below adjacent Bomonti, Kurtulus, Merkez, etc.
1200-1500 USD per sqm. Most likely renovation will be required, anywhere from quite moderate to an A to Z. This should be factored into your equations. That can add anything from 100 USD per sqm to 500 USD. Of course, the higher end will produce a superior final result. If the property only needs some tweaking, the lower range number should do.
Maybe something similar to below.
https://www.hepsiemlak.com/istanbul-sisli-pasa-satilik/daire/92051-1156
We will have special guest JFK joining us tonight to discuss his US distressed property fund. I kid you not.

Properties will be distributed in meeting. If you like, PM me and I will send them to you directly.
We invite you to join us for:
#IstanbulInsights with Keith
On Sundays at 20:00* Istanbul time
*13.00EST/ 19.00CET/
20.00TRT/ 02.00SGT (Monday)
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‘Just Click’ the above link and be part of the Istanbul Insights with Keith’s property market updates.
Every Sunday we will share more info about the best property deals of the week, market developments, followed by Q+A time.

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Keith’s Weekly Property News April 16-2023

Keith’s Weekly Property News April-2-2023

Ramadan Kareem!!!!
Ramadan is the holiest time of the year in the Muslim faith. Practicing muslims fast from dawn to dusk for a 30 day period. It is an incredible feat of discipline and self-abnegation. Just try it and you will see what I mean. In addition, Ramadan is a family time and the pace of business slows down much like it does over the holiday season around Christmas. As a result, much travel and many economic decisions are delayed until after this period. In the last zoom session, I mentioned about post-earthquake malaise in the market, but I neglected to mention the impact of Ramadan. For Airbnb properties, which have cooled off in the past few months, I believe we will get our first true glimpse of how things will be going forward by the middle of April. If the numbers are still lacklustre, there can be some cause for concern. Likely we will see a pretty sharp rebound, as the only headwind has been the earthquake and I do not see why that would have more than short term impact. The elections coming up only affect the local market and should not have any impact on both sales to foreigners as well as tourism flows. Nonetheless, the great tragedy of February 6th reverberates through the nation and much does not feel as it did before. After the rampant inflation that has been keeping everyone on edge, the sheer destructive capacity of the earthquake has been a cruel addition to worries and anxiety of every day life.
It is hard not to bang your head against the wall some days when you are dealing with Turkish real estate agents. About half, at best, are highly competent, engaged with what they are doing, seeking to understand the market of their focus, and keen to do the best for all parties involved in a deal. Amen. Those are the guys and gals who make it possible to get out of bed in the morning. Unfortunately, the other 50% are completely inefficient, for lack of a better euphemism. Their gross incompetence leads to hours and hours of wasted time, of the clients, of lawyers involved, of sellers and more. We often wonder why they are in the business at all. Myself and Tiger have a few choice expressions for them. I save them in my phone according to their own particular vice…”dimwitCan”. “timewasterAhmet”, “sleazySuzy” and so on. It saves me time not answering their calls. However, unfortunately, the market is so fragmented that hundreds of these people pop up on the scene every year (and often disappear just as quickly). They rarely have good connections with the sellers, so getting even the most basic information is pulling teeth. We may get a title deed or some info about the tenant. Floor plan? Dream on. A proper discussion on the sqm pricing in the neighborhood? Forget about iiiiit. Accurate measurements of the property? 50-50% at best. Accurate pinned locations? Only if it suits them, or it is a Monday, or god knows what really. Every problem is completely solvable, until in the 11th hour, when it is absolutely not solvable.
Yet, we do have to deal with these people due to our peculiar position as a “buyer’s agent”. We primarily became a buyer’s agent over the last several years with the CBI. Most of our clients buy the property and hold for at least 3 years, but much more likely 5 years (and longer, we hope). But this basically means we have very little portfolio of our own, so we often have to reach out to these “fly by night-fly by the seat of their pants” agents. Luckily, we have been around long enough we have a pretty good network of agents that we enjoy working with, yet again, due to the fractured market, they often don’t have the property we need at a particular time. Enter the clowns. It is a huge drag in our efficiency, primarily because negotiations and all the pre-sale stuff we do takes a lot of time and to have it all come crashing down at the final moment before laying down a deposit, usually because some critical fact has been either selectively or negligently omitted, is a huge disappointment for both our clients and for us. If we are in that late stage work it means we believe in the property and we want our clients to buy it. We are pretty aggressive, as we have been through every dance move before and we know that obstacles can crop up at any moment that will either kill the deal or reduce its attractiveness. We want to get this out in the open as soon as we can, but sometimes the deliberate obfuscation prevents that. That is why I always caution patience and realism. No matter how good and smooth it looks like things are going, a deal only has a 50% chance at best of moving forward prior to legal due diligence, valuation reports and so on. Owners raise prices. The older brother comes in to quash the deal, the tenant who was supposed to sign a departure date at the notary. balks. The agent sells to a higher bidder. Take your pick.
So much has changed in the property market in Istanbul and Izmir in the past 2 years that I could easily write a book about it. I think back to the winter of 2021 when on the non-renovation side of the business (i.e. sales and everything else) it was just me and a part time student running the whole show. Yet, it was a much easier time. Tenancy issues had not clogged up the system, and we liked a lot of the prices we saw. We had what we called “Wild Wednesdays”, where, just for a laugh, we would have viewings of 10 or even 12 properties in a single day. Our record was 18 in one day!!! It would take us a month to get that number now when we filter out the more aspirational pricing, tenancy and tax issues, etc. My day, somehow, seemed so simple. I would wake up very early, like 530. Answer emails and whatsapp messages. Contact a bunch of agents to put together viewings, hit sahibinden and try to flush out the viewings list for the day. By 11 or 12, we had the days’s viewing list and I would usually share the duties with aforementioned student. We did not even have a massive amount of clients that winter, but fast forward a few months and we regularly had large crews showing up mid-day to join the viewings tours, and always eager online buyers following along virtually. People would show up at MOC café looking for help opening bank accounts, asking where to get best crypto rates, where to get diapers, and where the best live jazz was. Pretty crazy, indeed. At that point, of course, we hired many more staff and that trend continued for the rest of 21 and towards the end of 2022.
Now, we rarely have more than 1 or 2 clients at a time “in country” and, post-covid, the online frenzy has dropped off (though does remain a feature of the real estate market much to my surprise). Property management absorbs much more time of course. Nalan handles the bulk of that work with unparalleled tenacity. This was also an unusually slow winter and we certainly took our foot off the gas, but everything seemed to be pushing us in that direction. Anybody who has spent any time around me probably knows I can be pretty curmudgeonly about what I feel are high prices, and I do feel that has been pretty rampant in late 2022 and early 2023. Add to that, the now-rampant intransigence of tenants further slowed us down. I mean, we had so many negotiations break down on this point, after so many hours put in. It just became a frustrating and entirely new element for us to deal with and a new layer of uncertainty that left an unpleasant after taste. Finally, February 6th. the twin earthquakes. Whatever animal spirits we may have been able to muster, met concrete reality of the destruction and havoc that was wreaked on the country in the space of 12 fateful hours. With that, came new waves of uncertainty, self-doubt, introspection, and melancholy. The rubble has literally yet to be all removed (estimates are that will be completed by late April). How this evet would affect the property market was very unclear, but what was clear is that it could have far-reaching implications. In this environment, abundance of caution seems the best approach, even if it means we have to choke off sales and throttle back on offers we make to clients. We believe there will be a day when the animal spirits come back to the fore, but on this early Spring day, it is too early to say we are there.
Clients also relentlessly ask me, is now the time to buy? 2018-2021 I was giving out raging “buy” signals. 2022 I entered a period of scepticism, particularly in the latter half. 2023 has been a continuation of that. Then I questioned myself and these assumptions. We did plenty of deals in 2022, so how did that match with my scepticism? Last night, quite fortuitously, I got my answer. I was watching a youtube video trying to make sense of the pervasive financial gloom and doom caused by inflation and rising interest rates. After getting mind-fu%^ed by the King of Gloom, Nouriel Roubini, I switched channels and by chance hit a video with Charlie Munger, the lesser-known right hand man to Warren Buffet. He was talking about market timing and what he said rang quite true. Nobody can time the market very well. That is just a myth. Just as it is a myth that there are rock star hedge fund investors who always outperform the indices. My guess is if you just stuck your money in a tracker of one of the indices you would outperform most hedge funds, mainly because their fees eat up your bottom line. I have certainly heard those arguments. Anyway, back to topic….
Munger says, “My way in life is not in predicting the little short term differences between the Russel Index and the Standard and Poor’s Index. I do not have an opinion about which index is better at any given time. I never even think about it. I’m always just looking for something that’s good enough to put Munger money into it.”
So, time to buy or not? If you can find something worth putting “Munger money” it, go for it. In the Turkish real estate market, there is almost always something of interest. Unfortunately, at times, you just have to dig a lot more for it. That’s a bit of animal sprits returning.

Properties will be distributed in meetings. If you like, PM me and I will send them to you directly.
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Keith’s Weekly Property News April-2-2023

Keith’s Weekly Property News March-19-2023

Still more of the “wait and see” on most fronts of the real estate market. February was one of the slowest months on record in the past several years, with sales numbers in all categories showing significant softening. I believe this is likely to be the calm before the store. However, the calm could last for a while yet. Many Turks go into a shell prior to elections, and with this one being the most important one in memory, likely this will exacerbate that trend. The market will likely remain quite inactive until June, so it could represent an interesting time to be seeking properties. I think interest in newer properties is very high, but affordability is an issue and no doubt Turks are also waiting to see what happens in terms of much anticipated government stimulus of one variety or another. Until that is all much more clear than it is now, numbers of sales can be expected to remain low.

Strength Testing For Buildings Throughout Istanbul:

The municipalities are making the rounds and performing earthquake safety checks on thousands and tens of thousands of buildings. Ones that are deemed to be “high risk” will be slated for almost immediate demolition (within 3 months). This is something we are also keeping a close eye on and will update throughout the process, as more information is gathered.

Airbnb Outlook:

After a blazing run for 18 months to the past two years, Airbnb has seen a pronounced slowdown in the January to March period. That is not unusual for the winter months, but I believe March number were certainly impacted by the February 6 earthquakes. April will be critical in determining how the market will play out in the coming months. It is unlikely that the earthquake will have a long term impact on tourism, but there may be short term effect. Also, an increase in supply may bring down the numbers a bit. I will be following closely and updating all concerned parties on a regular basis. This is the one disadvantage of Airbnb, namely that it is subject to the news cycle, and of course to ebbs and flows in supply, as well as legislative policies. In any event, we are watching over this carefully. The properties that have done well will likely continue to do well, but those that have been struggling may face increased pressure. In the Airbnb model, the cream rises to the top. Finally, pricing is crucial, especially in a competitive environment. Reviews and overall ratings are also critical. I have noted a strange phenomenon in the past. Turkish guests seem to give much lower points and often are quicker to write more critical reviews. This might be something to keep in mind when accepting guests. I am not really sure why this is, but it does seem to be the case. Another tip…If you have middle eastern or Iranian guests, be very clear about it if there is no elevator in the building.

Property Management:

Rise In Materials And Construction Costs:

As we are undoubtedly about to witness a construction boom the likes of which we have never seen, it stands to reason that all forms of construction costs and materials are set to rise. It has already been a dizzying experience try to keep on top of renovation costs for the past 1.5 years, so hopefully at some point we will see some stability there so there is greater visibility when planning projects. The overall costs are still quite low vis a vis Western world prices, but the gap has narrowed.

Trend Towards Prefabricated Houses And Land:

As I noted in the WhatsApp group, there has been a discernible interest in land, particularly within driving distance of Istanbul. There are government incentives for people who want to buy prefabricated homes and many are on offer for as low as 20K USD for small, 40 meter units. This industry is bound to grow exponentially in the coming years, as it combines many current trends and is, rather conveniently, affordable.

CBI Outlook And The Elections:

It has been no secret that the opposition party is against the CBI program. If they win the election, we could see meaningful changes to the program or see it eliminated entirely. That should hardly come as a surprise, yet I emphasize this is speculation. If the CBI were important for me, I would not delay.

Ikamet (Residency) Issues:

It came to my attention, that the government has stopped issuing residencies on the basis of rental contracts alone. I have heard many stories of applications being rejected. The path to residency through investment is still open, but that may see some changes as well, based on the same logic of CBI.

Property links will be shared in the zoom session, which will be short and snappy tonight. I have put in a sprinkling of offers in secondary cities such as Izmir, Bursa, Kocaeli, and Mersin.
I believe some of these cities are excellent value propositions and are a great way to diversify if you want to have multiple, small investment properties in Turkey.

Properties will be distributed in meeting. If you like, PM me and I will send them to you directly.
We invite you to join us for:
#IstanbulInsights with Keith
On Sundays at 20:00* Istanbul time
*13.00EST/ 19.00CET/
20.00TRT/ 02.00SGT (Monday)
Via Zoom:
https://us02web.zoom.us/j/7931208182?pwd=ZndocVNmbXAyTE5uMnNscC9sK0xSZz09
Password for logging in: 1234
‘Just Click’ the above link and be part of the Istanbul Insights with Keith’s property market updates.
Every Sunday we will share more info about the best property deals of the week, market developments, followed by Q+A time.

For more information:
https://www.mybricksrealestate.com/keiths-weekly-property-news-march-19-2023/

Keith’s Weekly Property News March 5-2023

Almost a month has passed since the unprecedented double earthquakes of 7.8 and 7.6 struck in several provinces in Turkey. The extent of the damage and loss of life is still being assessed, as are the plans to re-build and also to further earthquake proof many cities, including, of course, Istanbul. Every day, there are headlines about ambitious new plans to re-locate millions of citizens, create safe cities parallel to cities like Istanbul, demolish certain areas and much more. All I can say at this point is that we have to wait til things settle and we will have a clearer idea of how this will all play out. Definitely, we are in a wait and see period. However, some patterns will start to emerge and perhaps some new areas for investment will come to the fore. In tandem with our ongoing relief efforts (updates on that later), we will be monitoring the market to look for shifts in trends and look at cities that will be net benefactors from the massive transitions that will occur internally in Turkey for the years to come. One thing is for sure, and that is that we are in for a period of frenetic activity in the construction field, one way or another.

For CBI clients, we may want to consider that at least it is an increased possibility that there will be changes, too, to the CBI coming up in the months ahead. Although there has been no definite comments made on this, we are all aware that CBI programs world wide are subject to legislative changes. Turkey is of course no different. With this in mind, I have put together a game plan for those who want to get it done quickly and safely. It is actually quite a reproducible model. It involves buying one property in Istanbul and then drawing on secondary cities such as Bursa, Kocaeli, Izmir and others. We feel there is great value in some of these other cities and it is certainly easier to source properties. If clients are willing to give up on the “one shot” CBI dream property, this is an excellent way to go. In addition, it spreads out your risk, while allowing you to access markets that might actually outperform Istanbul in the coming years.
Although we have done a steady sprinkling of one shot CBIs, it became harder when the limit moved to 400K USD. For that mark, we really want something special, yet we are having a hard time finding it. When it was at 250 K USD we could pick up properties that were well located and were at least fair market price, even if they did not have all the bells and whistles. At 400K, we really want to see that, but we just are not. The model of multiple properties, spread out over a few different cities, will get you very decent yields, let us say 5-6% (while hoping for better), sqm prices with plenty of legs left for growth, Airbnb potential in some cases, and of course, access to a wider pool of properties from which we can select from. As a team, we actually have the capacity to close way more CBIs than we do, often getting bogged down by trying to fill the order in Istanbul and in neighborhoods of Istanbul where client prefers (and which are naturally harder to source due to more demand and the aspirational pricing of owners). I guess, to put it in a nutshell, if you want to get the CBI done safely, yet quickly, embrace our approach. Put your faith in us and you want have friends smirking at you that you over paid for CBI in Turkey just to get a passport.
Even though we keep reading headlines about rental increases, on the ground, with our rentals, we are encountering a fairly typical slowdown at this time of year. Compared to the Fall, when properties could rent in a matter of days, we are certainly seeing that move up to a matter of weeks. We will keep an eye on that.
Of course, at least for the short term. AIRBNB will be under some pressure, with reduced bookings. Some folks will probably cancel or delay their trips due to the earthquake news. Of course, this should not produce a long term threat to tourism, which will see its day back in the sun. It is hard to know how much this season will be affected. Again, I will be updating on this regularly.
Recently, we have been looking into additional earthquake insurance for properties. For everyone who owns a property in Turkey, it is mandatory to have the DASK insurance, which costs only 50 or 60USD a year. The payout in the event of damage in an earthquake only amounts to a few hundred thousand lira in most cases. While this is not enough to cover the re-build cost, it is possible to get additional “konut sigortasi” Our initial research leads us that approximately 750USD yearly would be enough to cover the full cost of re-build, though of course there would be some variance from property to property. If you consider the provisional rebuild cost number to be about 70K USD for a typical 2 bedroom flat, you can consider if it is worth if for you. You may want to keep in mind the Istanbul risk map, as well as the type of structure that you own or will own, to ascertain if it is worth it for you.
Finally, I just wanted to update on the relief effort that was spearheaded by group member, Alex Negrea. So far, we have delivered goods of all varities to earthquake survivors and have raised in excess of 25K USD. We are coming to the end of purchases and deliveries. Alsex will be updating us all on the whatsapp channel designated for that effort. Again, the most heartfelt thank you to those who contributed financially and otherwise.

And the preview properties. A little heavy on Halide Edip and Ferikoy this week, but that is where the value seems to be bringing us. (to be shown in meeting) our operations in the usual capacity.

Properties will be distributed in meeting. If you like, PM me and I will send them to you directly.
We invite you to join us for:
#IstanbulInsights with Keith
On Sundays at 20:00* Istanbul time
*13.00EST/ 19.00CET/
20.00TRT/ 02.00SGT (Monday)
Via Zoom:
https://us02web.zoom.us/j/7931208182?pwd=ZndocVNmbXAyTE5uMnNscC9sK0xSZz09
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‘Just Click’ the above link and be part of the Istanbul Insights with Keith’s property market updates.
Every Sunday we will share more info about the best property deals of the week, market developments, followed by Q+A time.

For more information:

Keith’s Weekly Property News March 5-2023

Keith’s Weekly Property News April 17 -2022

This week everything will be abbreviated, including our zoom session, which I will have to end at 21.15 sharp.
Basically, as I am sure everyone knows, it has been announced that the CNI amount will be raised from 250K to 400K USD. Beyond that there is not much we know for sure, nor will we til the decision is published in the Official Gazette, along with all the relevant details.
There has been much speculation, which essentially centers around 3 points:
Will people who have their Doviz Alim Belgesi (Or exchange certificate from the Central Bank) automatically be accepted in the 250K USD regime. Keep in mind, to get this document, you already need to have the property details of the property or properties you intend to buy.
It is believed, but not confirmed, that people who have applied for the “certificate of conformity” will continue on with their citizenship process without any effect or change. I also believe this to be true.
Whether or not there will be some future date extension for people to complete the CBI program, or a deadline. I am very unsure of this, leaning slightly towards the opinion that there will not be, though hopefully I will be proven wrong.
I repeat that the above items are speculation. There is even speculation that the decision will be reversed or not published at all. I am highly skeptical of this.
Unfortunately, there is not much we can do apart from wait for all the details to be published, likely this week, but again not guaranteed to be.
By way of advice, I cannot really even offer clients much. We have clients who are travelling to Istanbul this week. With quite a bit of luck, we may be able to beat the clock, especially if there is some kind of extended deadline.
One thing for sure is you should be careful about agencies or developers trying to get you to sign onto deals very quickly with the guarantee that they can get you the deed ina few days and apply for the passport. This is a clear falsehood. No one can make such guarantees. There are time farmes for each step, from wiring money to securing valuation reposrts to getting an appointment to close at the registry. Yes, there aqre ways we can TRY to expedite all of the above, but guaranteeing it is just misleading.
For those who really want to close out their CBIs the secondary market is the slow way to go. That is why we have taken steps to source deals from developers, which are in theory faster. However, if that kind of property does not appeal to you, we understand. I suppose in any event, the practical thing to do is to carry on your property searches.
We are currently working one to one with many clients who have their POAs and Turkish accounts funded or at least open, in the belief that it may be possible to get them over the line.
Everyone has to make their own decisions regarding what is the best step for them. Getting a POA issued remotely? Doing the same with the account? Buying online, and so forth. Some will also be in whether it is 250K or 400K, so me advising people in all cases does not seem reasonable as everyone has much different motivations, budgets, timelines and buying preferences.
If you really do want to get it done and done fast, reach out to me and I will try to offer quick but safe solutions. For example, we may want to introduce escape clauses with developers, meaning that if the amount gets raised to 400K mid-process, we have the right to have deposit refunded. In many cases, it may not be accepted, but we can at least try. This will not work, period, on the secondary market.
So, in a way, folks, that is it for updates at the moment. Tonight , we will discuss in more detail how we may want to proceed, in theory, at such a time.
We also have the highly problematic “dangling” CBI, where the client has purchased maybe one or two properties, but has not reached the 250K mark. Obviously, we are leaving no stone unturned for these clients.
Property sales in March were very high, the highest number on record at over 130.000. Turks view property as the only hedge in these uncertain inflationary times. I expect one of the original aims of the CBI, to sell the over-supply of new builds on the periphery of Istanbul or other cities, has largely become superfluous. The need for hard currency no doubt still exists, but we must also consider that there are many non-CBI buyers of Turkish property and the proliferation of new passports being given largely to individuals from a few nations, was becoming a bit of a political hot potato. Nonetheless, there is little doubt that foreign buying will continue, though the CBI numbers will likely drop significantly.
Unfortunately this week we will be doing without a staple of our weekly zoom sessions, the presentation ofm property picks. This is being done mostly on a 1 to 1 basis, but we hope to return to our original format next week. This week we will do more Q&A and let Aybike, CBI lawyer, share a few thoughts. I thank everyone for ntheir patience in waiting for me to get to their whatsapp messages this past week. I believe I returned to everyone. However, if you are really in buying postion, ping me again tonight and we will do extra work and assign staff to your request.

Properties will be distributed in meeting. If you like, PM me and I will send them to you directly.

Properties will be distributed in meeting. If you like, PM me and I will send them to you directly.
We invite you to join us for:
#IstanbulInsights with Keith
On Sundays at 20:00* Istanbul time
*13.00EST/ 19.00CET/
20.00TRT/ 02.00SGT (Monday)
Via Zoom:
https://us02web.zoom.us/j/7931208182?pwd=ZndocVNmbXAyTE5uMnNscC9sK0xSZz09
Password for logging in: 1234
‘Just Click’ the above link and be part of the Istanbul Insights with Keith’s property market updates.
Every Sunday we will share more info about the best property deals of the week, market developments, followed by Q+A time.

For more info:

https://www.mybricksrealestate.com/keiths-weekly-property-news-april-17-2022/