One question everyone asks, when thinking about investing in Istanbul, is ‘how much return can I expect to receive?” and so this article sets out to explain how real estate investment works, and how to get the best return on your investment.
First of all, there are two ways in which you can get a return on your property investment. These are rental income and capital appreciation. Such returns are generally tied in with the security of a country, therefore the safer the country (in terms of policital and financial stability) the lower the risk, thus the lower the income, compared to a more volatile country, where the risks may be higher, and thus returns too are higher.
It is thus important, when buying in Turkey, to recognise the stability and security of the country, which is classed as “an upper-middle income country, with an impressive economic and social development performance since 2000.” (*World Bank).
As most investment properties in Turkey are in Istanbul, we shall focus our attention there. Over the past 5 years, house prices in Turkey have increased, on average, by around 15% annually, however new properties in Istanbul have increased by around 25% in the same period.
Properties in Istanbul generally offer more social and leisure facilities than those in traditional Turkish cities, which increase their rental income and resale value, coupled with ongoing Governmental capital investments such as new transport links, retail facilities, education and health establishments etc., all of which combine to increase property values.
Another factor to consider when buying property for investment is property size. In Istanbul, families tend to be smaller, with many people living alone – having left their birth city for the improved life and employment opportunities Istanbul offers. Property maintenance fees are calculated based on the size of a property, plus of course, running costs increase according to property size, thus we advise that you focus on 1 or 2 bedroom properties, when buying for investment.
When it comes to rental income, of course this can fluctuate enormously, depending on the quality of the property, facilities nearby etc, but we can say that, on average, rental income in Istanbul is around 6% of the property price, per year. In order to maximise your rental income, we advise that you should choose a project with proven highly sought-after properties. Usually these can be close to a university or hospital, or similar, and almost always within a modern complex which offers leisure facilities, leading to a healthy and more relaxed lifestyle.
We can therefore conclude by saying that, in order to obtain the most return on your investment, you should make an informed choice, by having the most comprehensive and up to date information at hand and by dealing with a recognised Property Specialist who has a unique relationship with proven builders and who are able to guarantee the best price. Choose wisely – choose UD Turkey!