 | The attractiveness of the property market in Turkey has not slipped the attention of foreign investors. As they analyse the potential for huge gains, it is inevitable investors looking for a good deal will dash into the market. But how does their arrival affect the market? Firstly, let’s look at the positive aspects: |
1) Plots will be bought. When the projects developed by local contractors are considered, the building plots are predominantly purchased on terms of giving a percentage of the flats/houses to landowners. Foreigners will not get involved in such complex issues where the potential for profit could be diluted.
On the contrary, they will want to buy the land, then build and sell the properties at 100 per cent profit. This helps achieve lower costs.
2) Increase in supply. Investors will help overcome the shortage of supply of housing in Turkey, particularly in İstanbul. This will help deliver the need for quality housing.
3) For a 100m2 house that is sold for 100,000 USD in Turkey, the cost would be 50,000 USD. That means the profit is 100%. If we consider that companies usually sell prior to starting the construction, the net profit would reveal even more. Such a profit would be unimaginable for such foreign investors.
The negative aspects are:
1) Plot prices will rise. Foreigners will want to undertake big scale projects in Turkey and that requires huge plots of land. The influx of demand for land will ultimately force land prices up. Development land with bigger square metres will have more potential to yield a larger premium compared to smaller plots.
2) Project prices will increase. The biggest expense of any house building is the building plot. Considering that plot prices will rise, the prices of new projects offered for sale will also become more expensive based on square metre scale.
3) Second-hand will be affected, too. As demand for new houses grows, there will also be a subsequent price hike in the second-hand housing market.
4) Rents will also rise. The rise in housing prices will unavoidably raise rents, too.
