The Neighbourhood Watch – Galata

Galata is one of the magical neighborhoods of Istanbul that conjures up a mystical past. The Galata Tower, in fact, is arguably the most iconic of symbols in this city that is resplendent with them. Its stocky, tough yet elegant stature gives testament to the city’s durable character. Built by the Genoese in 1348, it has withstood numerous earthquakes, fires and so forth. Although little of what remains from the Constantinople area still stands today, Galata has managed to retain an oddly gothic feel, with narrow winding streets and plenty of lung-busting hills.

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Those medieval streets

Those medieval streets

It has also become a center for fashion, architecture and design with many smart and sleek offices peppered throughout.   It pushes the boundaries with some of the highest real estate prices with inimitable names such as Dogan apartment, the I-Pera projects, Kamondo Han, and Galata A.S. to mention only a few. An area that 10 years ago was plagued by wandering groups of glue sniffers (tinerci) and plenty of trash, has now almost completely transformed into a very frequented tourist area and an address of the fashionista and legions of Istanbul hipsters, artists, and musicians. Galata is home to many famous actors, designers and alternative artists. Increasingly, it has become a place where the Istanbulu elite have weekend pads.

Perched at the corner of the Golden Horn and the Bosphorous, it is not hard to see why the Genovese booked this spot for their famous lookout tower. In many ways, it is the gateway both geographically and culturally to the city, both then and now. It also retains its commercial feel, as a place where lots of to and fro on prices is exchanged in the music shops on Galipdede St.

Just a few years ago, it was a struggle to find a decent restaurant, whereas nowadays there is a chic café on every corner and many good restaurants, including the Kiva and Enginar restaurants, which specialize in Turkish food.  Try the Nardis Jazz  Club for a chilled out night.

Galata is now superbly connected with the rest of the city in terms of transport. Utilizing the new Sishane line, you can go all the way out to Sariyer at the north of the Bosphorous and in future it will be extended South with a connecting link to the airport. The Tunel line connects you to the Galata Bridge, where you can carry on with the tram until the airport. It also has easy walking access to the old town and evening walks over the Golden Horn mingling with the fishermen on the Galata Bridge are a very cool past time.

The Location

The Location

The Galataport project, which is still a few years away, promises to add further shine and star power to the area, with its plan to offer the multitude of services and attractions necessary to keep the mega-liner crews and passengers entertained.

Although many of the buildings of Galata still require refurbishment, when one considers that this neighborhood was practically untouched by this trend all but 10 years ago, the pace of change is frankly staggering and shows little signs of abating. It leaves little doubt that this will become one of the most well-known tourist areas within the next 10 years and will become an almost household name such as Montmartre, Soho, or Las Ramblas.

Kiva Restaurant

Kiva Restaurant

Given this trajectory it is quite predictable that real estate prices have risen dramatically in the past years and seem set to move upwards, albeit at probably a more subdued speed. As there’s not much scope to create more building stock in these areas we expect to see a similar capital growth progression as Cihangir with possibly a 5-7% per annum property price inflation. Rental returns are good but not eyepopping coming in at approx 6-8%, though short term holiday lets can be much better if done well.

One of Lilimonts slick offerings!

One of Lilimonts offers!

Currently, for the in-demand properties, one could expect to pay a minimum of 2000 Euro/ sqm and go well upwards of that for anything with a view. The highest square meter price I have on record is about 8000 Euro/ sqm for a property with a lift, stunning views and an inspired architect’s interior finish.

The rents follow suit, with nicely finished properties of between 60-80 sqm costing a minimum of 1000 Euros monthly with peak prices for a very high end Bosphorous View Penthouse reaching 5000 Euros. Expect a good average sized 2/3 bed apartment to cost 1500 – 1800 euros per month.

If you fancy a Galata pad, get in touch with me – www.lilimont-istanbul-realestate.com

The Neighbourhood Watch – Cihangir

One of the must-see sights in Cihangir is the mosque that gives its name to the area. Sultan Suleiman commissioned the building of this mosque with the great architect Mimar Sinan. Legend has it that he built it for his son, Cihangir, who was often bed-ridden, so he could watch the ships pass by on the Bosphorous. The view is nothing short of stunning, if you have 30 minutes on a quiet day just go and sit there, you don’t have to do anything else. In fact, one of the very reasons for Cihangir’s rise to real estate prominence is the fact that the views are amongst the best in the city.

The location

The location

Cihangir is now one of the prime neighborhoods that have undergone dramatic change over the past 15 years. Once a rough and ready home to alternative artists and long-dwelling locals, it has been propelled into a well-known domicile for famous Turks and expats of all kinds, yet has managed to retain its essentially artistic core. Turkish soap opera stars and film directors are in evidence on every street corner cafe. The Firuzaga Tea Garden in the centre is all bustle but on the coldest of days. New cafes, yoga centers, pilates studios, and bakeries are now a familiar part of the urban landscape.

In the same vein as London’s Notting Hill and New York’s Greenwich Village, its property regeneration progressed slowly over a number of years. The government did not have money for extensive regeneration projects 15 years ago as they do now, and Cihangir has been alone in finding its feet. This organic process has been a positive as it has not attempted to direct it on any pre-determined route which can often leave a neighbourhood without its sense of community and history. In contrast, Cihangir is all about these values.

The Mosque with it's view

The Mosque with it’s view

The buildings, many of which are being restored or have already been so, offer flavours of Greek, Italian and French architecture, with high ceilings, bay windows, hand-made Turkish tiling, with the odd marble staircase. They tend to be reasonably sized and look quite elegant. As with a lot of Beyoglu and central Istanbul, Cihangir was mainly populated by well-to-do Europeans and Turks in the early 20th century who were often owners of the many trading businesses or worked in shipping, thus having the resources to create and decorate these handsome properties. The area fell into a 60-70 year decline through a myriad of political and economic problems, and only in the past 15 years has it rediscovered an admiring wealthy audience once again.

Wouldn't you want to live here?

Wouldn’t you want to live here?

Fancy

Fancy living

The café, bar and restaurant scene is possibly the best in Istanbul. An evening can start with cocktails in one of the hip bars or cafes such as Zenka with its cool ambiance, moving on to the White Mill Lodge and its great hidden garden and finally ending by getting down and dirty with the underground night crawlers at the infamous Mini-Music Hall!

So what of Cihangirs future? My view is that we will see a steady progression in property value combined with a slickness that normally wouldn’t be associated with Central Istanbul outside of Nisantasi. It is evident on view of local municipality works such as pavements and curbs as these tend to be of a better level and finish than neighbouring wards. Now that the community is moving back once again to its wealthy European roots and additionally with the influx of the Turkish media crowd the pressure is on to raise the local living standards. I have found properties for senior International execs both for purchase and rental in Cihangir, when at one time these guys would have been safely ensconced in Bebek or Etiler never to be seen downtown. The amount of large scale regeneration and infrastructure projects, such as Taksim Square redevelopment in the immediate vicinity raises the International bar considerably. My view is that prices will rise but without the aggressive energy witnessed over the past 10 years. Maybe we’ll see 5-10% year on year capital growth of property with a possible rental return range of 5-7%… not bad in a developed low-risk neighbourhood,  especially now that money can be well levered with a mortgage . Cihangir is here and is not going anywhere South for the foreseeable future!

If you like the sound of the above and you want to own property in Istanbul within a five-minute walk from the very centre, then you are probably not too startled to hear that prices start out at around 2000 euro/ square meter. Majestic Bosphorous view properties in prime location and well-restored buildings have been known to eclipse 6000 Euro/ square meter. The average price would be about 3000 Euro/ square meter at time of writing.

The rents start out at around 1000 Euro/ month for something smart, but not too large, whilst properties commanding the coveted view, of large size (140 sqm and above), and in fine condition can be upwards of 4000 Euro/ month.

www.lilimont-istanbul-realestate.com

2013 What lies ahead for Istanbul Real Estate

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.

All good fun but don't do the Western 125% of value thing!

All good fun but don’t do the Western 125% loan to value thing!

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.

I've heard this guy wouldn't mind a pad..

I’ve heard this guy wouldn’t mind a pad..

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!!!

www.lilimont-istanbul-realestate.com 

Negotiating and purchasing property in Istanbul

I just want to make a few notes here on subjects that frequently come up in discussions with clients. It may seem like basic information to people experienced with the Istanbul property market.

In essence, the process of buying a property for a foreigner in Istanbul is relatively straight-forward, though there area few areas that we should give special attention to.
So, after scouring the streets and having done all your homework, you have found a property that suits you. Normally, at this stage you would enter into negotiating the price of the property. As you know the market by now, you will have some idea of the value of the property. Turkey, like all countries, has norms for negotiating.

Buying a property is quite different from buying a rug in Sultanahmet, where prices can be  wildly overvalued and negotiations can start at 50% or less than the asking price . Professional real estate agents will usually not keep things on their books that are very overvalued, as it would only lead to a loss of their time and energy running around with clients. In my experience, you may be able to get 5-10% off the asking price and your estate agent will usually have a pretty good idea beforehand where the price could end up. Any property that is 20% higher priced than the market price should definitely be considered over-priced and should be avoided, and it is probably not even worth entering into negotiations as it is a sign that the seller is not realistic.

haggle till you drop in the bazaar

haggle till you drop in the bazaar

There are also properties which are very clearly priced to sell, and we should not expect wholesale discounts on those properties. Again, generally speaking, I find it useful to make the initial offer 10% under the asking price and see where that leads. The important thing as in any serious purchase is to negotiate in earnest. If you reach the magic number that is in your head, you in a sense should ‘feel’ committed, even if you are not yet legally or financially (InTurkey, you do not put down any money to enter into negotiations, though that, too, may change in the future).

Usually, I will ask the potential buyer what number they have in their head, and If I feel it is not realistic, I will dissuade them from making an offer that is too low as this will probably end in a waste of time.

Not as interested in your low offer as you may think..

Not as interested in your low offer as you may think..

Now, if your offer is accepted, it is quite normal for a small deposit to be paid quite quickly after that. For this deposit agreement (usually around 5% of total purchase price) you must outline the time frame and general conditions for the sale. In the case for foreigners, permissions must be obtained from the military, so we always put in a clause that the deposit is refundable if for whatever reason permissions are not granted (though I have never heard of such a case).

Get the wonga out

Get the wonga out

At this point, we suggest that the buyer contacts a lawyer and has the lawyer review the deed to check if it is ‘clean’ or free of any encumberances.
Once the permissions are received (anywhere from 4-8 weeks), both parties can proceed to the land registry to transfer the title deed, which only takes an hour.

Of course, there are many variations on the above information (such as purchasing off-plan, etc), but most clients fit into the above scenario.

If anybody would like to share their purchase experiences with me, feel free to drop me a line.

www.lilimont-istanbul-realestate.com 

The Renovation Trap

I often walk into a property that a client or friend has recently renovated with a slight degree of trepidation. I have many things to consider, is it worth telling the truth and alienating a friend…or a client? Have they done what is logical in relation to the market and should I tone down any subjective reaction I may have to what they have done with the property? I rarely enter into detail about what they have spent. That is of less concern. I worry about the final product.

At times, I have had good reason for this fear, as I have seen many a fine property degraded by a poor or personalized renovation. But, happily to say, in Beyoglu particularly in the past few years, I have mostly been happily surprised with property renovations rather than disappointed. There are a lot of creative and bright people around and they invariably come up with something great, at times even jaw dropping and inspirational.

Here’s an example – 

This property is simple with easy clean design, without getting to engrossed in high design. Please see the full listing and photos on http://www.lilimont-istanbul-realestate.com/for-sell/residential-apartment-cihangir-3/

The problem with a poor renovation is that in addition to the expense, it often actually decreases the value or salability of a property. Quite often, it would have been better to leave the property un-renovated and to sell it as is. The paradox, too, is that the same people who implement a poor renovation are the ones who also expect a high premium for their dubious efforts. Of course, there exists a fine line between having a renovation budget and cutting corners. It is also a combination of the quality of materials and the workmanship involved. As finishing and design standards can be a bit low, it is imperative to ensure that the these are in line with the value and location of the property and that the materials used are neither too far above the market norm, nor too far below. Unless the owner has zero need for a future resale it is imperative to assess the salability of a property before embarking on a costly renovation.

Here’s another good one – 

This apartment utilizes a lot of the Turk Ottoman influence invoking an Agatha Christie era without getting too fussy. http://www.lilimont-istanbul-realestate.com/for-sell/residential-apartment-aynali-cesme-3/

I work with a group of International developers who have developed properties throughout Europe and their view is that in an area experiencing redevelopment, such as central Istanbul, an influx of owners from different countries tend to raise the stakes regarding renovation and quality finish. For example, an owner from Berlin may insist on a very high finish level and a Roman owner will quite possibly want to utilize a higher degree of design. This has happened in central Istanbul over the past 10 years and it’s readily evident that local tradesmen and architects are upping their game to meet these requirements. An International influence will also help direct the design trend in-line with the current ‘zeitgeist’ as opposed to lagging behind, which in itself will attract buyers. It is a combination of current International design with a Turkish cultural foundation that provides the most salable properties.

To undertake a renovation project without paying heed to current trends is to invite potential disaster. It is a bit like a surgeon performing surgery without being updated on current research in his or her field.

As a team, my partners and I have now renovated countless properties over the past 15 years, we can confidently say we know how to refurbish an apartment economically and to a degree that allows an easy onward sale. http://www.lilimont-istanbul-realestate.com/

The Tarlabasi File (part 1)

A stones throw North of Istiklal Street in central Istanbul lies the Tarlabasi neighborhood comprising of over a 1000 relatively small buildings and quaint townhouses. Many years ago these properties were inhabited by Greeks, Armenians, the Jewish community, and a host of other ethnic minorities. Created in the latter half of the 19th Century by the trading classes from these far flung places who dealt in the bazaars by day and in the evening returned to their families in the close knit Tarlabasi community.  Major political events led to the emptying out of these neighbourhoods and further events in Turkey, mainly massive inward immigration to Istanbul from the countryside, led to this becoming an area predominantly inhabited by Kurdish\Anatolian\ Roma (gypsy). The Tarlabasi neighborhood went into a long period of decline as the new immigrants did not have the financial means to keep the building stock well maintained. Many were also unaware of the original features in the properties and painted over, knocked down or otherwise degraded the historical integrity.

Historically ornate Tarlabasi

Up until the last 5-7 years, it appeared that the decay of the neighborhood was irreversible. It became a no-go zone for most Turks. It was the ‘Bronx” of Istanbul.

  

But then fortune’s wheel started to spin slowly in favour of regeneration. Brave local buyers with some International experience saw run-down neighborhoods abroad that were this close to the centre of a major city were subject to similar cyclical rises and falls and found the prices for this real estate in the city center too good to pass up. Also, due to the classical Greek, French and Italian architecture of the properties in the area, English men, mad dogs, and a few persistent French nationals started to invest in the future of this goth-land.

Tarlabasi has always been an interesting, yet controversy-plagued area. And throughout this so-called gentrification period ( I prefer the term regeneration), it has been no different.

The construction giant, Calik Holding, has joined forces with the Beyoglu Municipality and has purchased over 270 buildings over 8 blocks (Tarlabasi re-generation scheme www.tarlabasiyenileniyor.com/ ). The plan is to give Tarlabasi a massive face lift and raise its profile on par with many of the most chic neighborhoods worldwide. The mayor of Beyoglu, Ahmet Demircan, has called it Turkey’ s Champs De Elysee. Salesmanship and bravado aside, it is a mega-project the likes of which Turkey has never seen.

click on the master plan below for a larger view-

But, alas, as in the past, Tarlabasi has has been a harsh master and has often shone its light on some only to leave others in its shade. Many local residents have opposed the development, although it should be noted that many are also in favour of it, a lot have sold their properties directly to the developer. In an area where rumours spread like cricketeers on a patch of green on a mild punjabi afternoon, the municipality probably could have handled the PR end of matters with more aplomb.

There were lots of questions about where displaced peoples would end up. And some rumours persisted over the total final build area.

In any event, it is hard to imagine a perfect solution to the problems that have dominated this neighborhood for so long. As one local resident, Mustafa, said to me a couple of years ago, ” What should happen? Should nothing be done until the buildings turn to brick dust? Already, they are almost falling down on our heads. If something is not done soon, there will be nothing left to protect.”

In my blog next week, we will leave aside the thorny issues of the past and do our best to soothsay Tarlabasi’s future, however quixotic our enterprise may be.

The Tarlabasi Gang!