Whether buying a second home, moving to Istanbul, or making an investment, it's

crucial to understand the region's of Istanbul in order to make a healthy decision.

Let's have a quick look at the current state of the property market in Istanbul.

Summary of the current status of the real estate market in Istanbul

Since 2014, the majority of international buyers have invested in Esenyurt,
Beylikduzu, and lately, Basaksehir. These are suburbs of Istanbul, and were heavily
marketed by international agents as a new Istanbul. The reality is that developers in
this region paid agents 10-15% in commission. This commission is added to the price,
meaning investors are overpaying to begin with, and are investing in a region that
has an oversupply of apartments, yet not enough local Turkish demand to meet this
supply. The difficulty of access to the city centre, the low demographics and the lack
of government investment on infrastructure has meant Turkish investors avoided
these regions en masse. Hence international buyers have struggled to resell
investments in these regions.

2020 passed by as a good year for Turkish investors. With interest rates at an all time
high, at the start of 2020, nearly 25%, investors preferred savings accounts. This
caused a slowdown in local demand, ensuring a marked decrease in prices during
2019. A small earthquake at the end of 2019, changed the mindset of investors and
homeowners. 2020 started with homeowners looking to upgrade their old
non-earthquake proof homes to modern apartments (note Turkey only introduced
the Earthquake construction laws in 2004). This caused quite a stir in the brand new
and off plan property market. The end of 2019 saw a gradual decrease in the Central
bank’s interest rate, from an all time high of 19.75% in July 2019, to 12% by the end of
2019. By the end of 2019, the property market had reversed most of its losses.

The pandemic at the beginning of 2020 and the resulting lockdown saw a sudden
halt to the entire economy of Turkey. With the number of cases reducing, the
lockdown came to a gradual stop. With this, the government felt the need to put jolt
into the economy. Interest rates came down drastically - from 12% in January 2020, to
8.75% by June 2020. The government didn’t stop there - they offered payment free
mortgages to the Turkish consumer, with zero payments for the first 12 months of
the loan. This was offered with most state as well as private banking organisations. In
addition these were only made to brand new property, under construction or
completed within the last 12 months. Stock levels in good locations never fell quicker.

Today “central” Istanbul stock levels of brand new apartments are exceptionally low,
and demand is expected to increase. The Izmir earthquake in late 2020 as well as the
pandemic, has focussed the mind of many Turks. Suburban parts of Istanbul, where
stock levels were always too high, and demand too low, continues to suffer from the
same historic problems.

Moving on to our regional analysis of the Istanbul real estate market - a good starting
point to understand the locations of Istanbul is with this annotated map below:
Esenyurt - A classic case of oversupply
Esenyurt continues with the classic case of oversupply in an area that does have
healthy demand for budget real estate. Esenyurt is a clutter of skyscrapers, giving it
an impressive skyline. However the district is a target for low demographics and has
a large international population. Resale has traditionally been difficult here due to
the combination of these reasons. Rental return is also exceptionally low, averaging
2-3%.

The serviced apartment and branded complexes are the safest concept in this
region. This is where a management team will be within the complex, and this is
generally available on projects built by major developers. The smaller developer does
not have the experience or know how to provide this type of service - this does not
mean small development, but the type of developer that set up fairly recently and
would not have the knowhow.

Esenyurt saw an average price rise of 28% in 2020, which is not bad. However,
considering some parts of Istanbul saw gains of 60-70% on a Turkish lira basis, puts
this gain into perspective.

Beylikduzu - An idyllic western town of Istanbul

Beylikduzu is an exceptionally large district made up of the southern portion of the
E5 between the two lakes of Istanbul. This gives it a huge coastal line, making it a
family holiday home favourite. In fact, traditionally the coastal lines has been a
holiday home destination for middle class Turks since the 90s.
Much of the rise in Beylikduzu has been driven by "branded" projects in Yakuplu and
Beykent. Standard buildings have not seen the same rises. Beykent has heavy
demand both internationally and locally, with its private schools, malls, and private
hospitals. Its proximity to the E5 make it an important satellite town for commuters,
who rely on the metrobus system to get to the city centre fast. Beykent saw an
incredible 41% gain in 2020. Due to height restrictions, a well controlled level of
supply exists, and we are expecting to see 30-40% gains in 2021.

Yakuplu is situated on the coast and has boomed due to the ever expanding and
popular West Istanbul Marina. Yakuplu saw a 54% boom in 2020, and we are
expecting this to continue due to a lack of supply in the region.

Buyukcekmece - a retirement and villa town

Buyukcekmece is the penultimate district in West Istanbul. Whilst the district does
have a busy and congested town centre, much of the region is made up of holiday
homes and villas. Holiday homes are centred around the coast line neighbourhood
of Mimaroba. New secure compounds have lined this coast, providing access to
sandy beaches and incredible views across the sea of Marmara and the
Buyukcekmece lake. Due to the heavy restrictions on construction in this area (in
terms of height and density), supply has not met demand.
Basaksehir and Bahcesehir
These two regions are investor favourites, but the important attributes of location,
early phase of construction, and brand name builder, are very important here. This
combination ensures resales are always fast, for a quick exit route no matter what
the market conditions. The cheaper options will never provide a decent return, and
resales take traditionally longer in my experience. In recent research, we found that
return on investment levels reached 30 years, making it much more logical to rent in
the region then buy.

Basaksehir and Bahcesehir are the closest satellite towns to the new airport, with a
government objective of growing both into a population of one million plus. Parallel
to this plan is to grow it with a master-plan - hence the broken thinking of the past of
building first, bringing infrastructure later, is not in place here. Basaksehir is home to
one of Istanbul's biggest malls (Mall of Istanbul) and Istanbul's biggest state hospital
(3,000 beds). The metro linking the region to the city centre is already operational
with construction for expansion already having started. Bahcesehir also has a metro
construction linking it to the city centre at Sisli. These are all large scale public and
private investments adding up to billions of dollars.
Maslak, Levent, 4. Levent, and Sisli - Istanbul’s premier business
district
Istanbul’s premier business district starts in Sisli (pronounced Shishli) and extends
North to Mecidiyekoy, Levent, 4. Levent and ending in Maslak. Sisli is prime city
centre and in exceptionally high demand for residential and commercial space.
Development in this region is rare and usually quite expensive as vacant land no
longer exists.
Bomonti is a region which was a ghetto just five years ago. Today, it is an elite
residential region, with skyscrapers like Anthill, Divan, and Bomonti Hilton (the
largest Hilton in Europe). The residential towers average in excess of $4,000 per
square metre.

Bomonti's popularity gained with the construction of two road tunnels, one which
leads directly to Besiktas, and the other leads up to Kagithane. Two very important
tunnels. In addition, Taksim is 9 minutes away, Nisantasi (a very elite area) is a 10
minute walk away, the Taksim metro (M2) is a five minute walk. Bomonti today is an
important, yet still growing region.
Maslak, Levent and 4. Levent regions are exceptionally expensive and primarily made
up of office space. Buyukdere Avenue is the main boulevard and is lined with 40-60
storey skyscrapers. This prohibitively expensive region can no longer be seen as ripe
for investment. The M2 (Taksim) metro line runs directly under this boulevard.
Directly behind this front line is the surprisingly underdeveloped Kagithane region.

Kagithane - Seyrantepe - Istanbul’s rapidly expanding

technology district
Whilst most people know Seyrantepe due to the famous mall, most people are not
aware of it being called Seyrantepe. International buyers are miscommonly told this
region to be Maslak or the Vadi district. These two zones are gradually merging,
along the Cenderre river banks. Starting in Seyrantepe, incredible developments
have cropped up along the river, working its way south towards the Halic river. Whilst
prices have topped out in Seyrantepe, moving further south offers an opportunity for
real value.

While the new M7 metro line opened in Q4 2020, the pace of development has
quickened now that the potential of the new line is realised. The M7 metro line runs
east from this region into the city centre at Sisli, and terminates at the Bosphorous in
Besiktas. This line is of crucial importance to Istanbul as it will be the first East to
West metro line link for the city centre.

The new Airport is also easy to access from this region, with a direct highway link
from Kagithane to the airport - the D020. The airport is to be served by a metro line
due to open next year, and with a station in Kagithane (M11 Gayrettepe - Istanbul
Airport metro line).
Gaziosmanpasa (GOP) and Eyup - Central Istanbul’s working
class haven
GOP and Eyup are traditional working class regions providing easy vehicular access
to the city centre of Sisli. Both suffer from low quality housing stock from the rapid
expansion of Istanbul in the 60s and 70s. All of this stock is not earthquake proof and
is in need of urgent replacement. Hence the government focus in this area is
combining parcels of land to form larger plots, and thereby creating high rise
developments. In GOP this has primarily occurred near the E6 (TEM) highway. In
Eyup this has happened sporadically in and around the new M7 metro stations.

Map showing a close up of the M7 metro line running through the regions
In both regions, it is highly recommended to be near the new metro stations or with
easy access to the main routes. There has also been much development around the
Hasdal exchange of the E6 highway. This is driven by the new three-level tunnel, a
direct road and metro tunnel which links the region to the Anatolian side
uninterrupted.

Coastal route - Atakoy, Bakirkoy, and Zeytinburnu

The coastal route provides enticing sea views as well as excellent transport links to all
parts of Istanbul. The region also provides a fantastic lifestyle to residents with
excellent and varied amenities of all kinds. These regions are prime for the upper and
middle classes.

The front line has seen heavy development of mega compounds - these are without
doubts future landmarks of Istanbul. These provide full uninterrupted sea views
across the Marmara sea, the Prince’s islands, and across the historic peninsula. They
are once in a generation developments, with no further land remaining for
compounds of these kinds.

The uber modern Marmaray train line provides high speed access to all parts of
Istanbul, and runs without interruption under the Bosphorous, the Anatolian side,
and all the way to Ankara as a high speed trainline. This has made these regions even
more attractive to frustrated commuters.

Despite being in the upper bracket in terms of price, these developments are prime
for investment. They will be easy to rent, and with strong demand from the local and
international market, the resale value will always be there.
The crossroads of Istanbul - Bahcelievler and Topkapi
These regions are always attractive to the middle classes of Istanbul. Providing easy
access to the E5 means multiple transport options to all parts of the city, but most
importantly to the city centre and business district. The region is traditionally heavily
dense, with narrow streets, and lack of underground parking the main issues.

This changed over the last five years, with old warehouses and factories moving to
the suburbs of Istanbul, large compounds have replaced them. This has driven
growth in the area, with prices remaining reasonable considering the location.

Media Highway - Bagcilar, Kucukcekmece, and Gunesli.

The Media Highway (Basin Express in Turkish) is the highway which connects Ataturk
Airport, the E5 highway, and the E6 highway. Here is a detailed annotated map of the
region:
It is one of Istanbul's most important highways, and today it is the focus of the
government's plans for a new business district. The current business district (as
described above) is over capacity, and is exceptionally busy. Hence Istanbul needs to
develop new commercial districts. The government has two plans, one of which is
Media Highway, the other is Atasehir on the Anatolian side, which is now well known
as Istanbul’s financial district.

Key facts about this crucial region:

Media Highway currently has around 20 developments from the cheap to the
expensive, under construction to recently completed. Depending on the precise
location within the zone, the price can vary from $1800 per square metre to $2500
per square metre.