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Arabs buying more property in Turkey than ever before

8th August 2017

Why Turkey Is Seen as a Safe Haven




Sales to non-Turkish buyers represent only 1.5% of total sales, but they are growing by leaps and bounds in the luxury sector. According to Orhan Vatandaş, an analyst at Reidin, a real estate information company that focuses on emerging markets, foreigners accounted for 42.3% of sales of luxury "branded" properties residences in Istanbul in the first five months of 2015.


Most of the new buyers are reported to be from the Middle East, particularly Iraq, the Gulf states, and Saudi Arabia. With much of region consumed by political and social unrest, its moneyed elites have begun looking to Turkey as a safe haven.





Arab visitors who once came to Istanbul to shop for clothes are now coming to shop for apartments. “Three to four years ago, there were few Middle Eastern buyers to speak of,” says Cameron Deggin of Property Turkey, a real-estate company. “Now they are 70 to 80% of the foreign buyers in Istanbul.”


Turkey has experienced its share of political turbulence over the past couple of years. In the summer of 2013, a wave of antigovernment protests swept through the country. An election this June left the country with a hung parliament, depriving the ruling Justice and Development Party (AKP) of a majority it had held since 2002 and paving the way for early elections later this year. A Kurdish insurgency in the southeast and the war raging in neighboring Syria have raised concerns about the country's security.


Even so, to visitors and investors from most Arab countries Turkey appears to retain its appeal as a comparatively stable, prosperous Muslim democracy.



With their budgets ranging, on average, between $150,000 and $500,000, according to Deggin, most Middle Eastern buyers have tended to look for properties on the city’s fringes, where high-end housing is cheaper and more abundant, but where commuting times can be prohibitively long. Inundated by waves of migrants from the country’s interior for decades, Istanbul’s sprawl is relentless. Today, the distance from Pendik, a district on the Asian shore, to Büyükçekmece, on the European side, is about 62 miles. During rush hour, a car ride from one to the other can take longer than a flight to Berlin.



Risks and Rewards



The frenzied pace of development also comes at a risk to property owners. A balcony with views of seemingly protected parkland one day can end up facing a construction site the next.


The market for Turkish luxury properties has been resilient and should remain so, says Kerem Tezcan, director of research at BGC Partners. In 2008, when demand dropped amidst a recession, it recovered swiftly. Today, unlike the rest of the market, it remains relatively immune to the prospect of currency depreciation and interest-rate hikes, says Tezcan. “Most people who are potentially interested in this kind of property, they're not affected by any currency depreciation or any interest-rate related risk," he explains. "Sales might slow down, but I don’t expect any sharp decline in prices.”


That kind of bullishness, multiplied by speculation, however, has driven asking prices for some of Istanbul’s top properties right through the roof. An almost 6,500-square-foot historical Bosporus yalı, or wooden mansion, currently home to a pair of waterfront restaurants, has been placed on the market for $80 million.


Some appear ready to part with that kind of money. The emir of Qatar, Sheikh Tamim bin Hamad al-Thani, reportedly paid €100 million, or $110 million, for a waterside yalı earlier this year.




Where Foreigners Are Buying




To escape long commutes, foreigners—undaunted by prices that occasionally rival those of neighborhoods in London or Paris—are increasingly flocking to properties in the city center. “Now that Turkey has been tried and tested, the bigger money has started to come,” says Deggin.


The most expensive districts for branded luxury properties, according to Reidin figures, include Beşiktaş ($876 a square foot), Üsküdar ($666 a square foot), and Şişli ($647 a square foot).


At Maçka Residences, a new project near Nişantaşı, one of Istanbul’s most fashionable districts, prices range from $1.1 million for a 750-square-foot studio to $22.5 million for a roughly 10,800-square-foot penthouse. All the interiors are designed by Armani/Casa. The penthouse comes with a 4,300-square-foot terrace affording a view from the Bosporus Bridge to the Golden Horn.



 


In a city that boasts the seventh-highest number of billionaires in the world (after New York, Moscow, London, Hong Kong, Beijing and Mumbai), the demand for such properties appears to be keeping pace with supply. Of the original 96 Maçka residences, says Ebru Dağlı, a company sales executive, all but eight have found owners. A Saudi family owns two of the three available penthouses and several flats. Wesley Sneijder, the Dutch soccer player now with Galatasaray, a local club, reportedly owns a rooftop apartment.


“Most of the foreign buyers here are interested in leisure,” says Ms. Dağlı. “Turkish buyers are more interested in investment and in secondhand rental.”


European buyers still invest primarily in holiday properties on Turkey’s Aegean and Mediterranean shores, but they too are starting to turn up in Istanbul. At L’Ist, the housing development that includes the Trifonovs’ new home, about 30% of the owners are foreigners, most of them European, a local sales representative says. Of the 150 units, all priced at $1 million and above, only 18 remain on the market.




Source: www.mansionglobal.com








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