Fundamental Dynamics That Shape Real Estate Prices in Turkey

The real estate sector is one of the locomotives of the Turkish economy and attracts the attention of both local and international investors. While the acceleration of urbanization, the increase in mega projects and various legal regulations create great opportunities, there are actually many different factors that determine prices. In this article, I aim to provide a solid guide for those considering investing by examining in detail the most important dynamics that shape real estate prices in Turkey.

Economic Factors: Inflation, Interest Rates and Exchange Rates

Changes in inflation rates in Turkey can increase housing prices by directly affecting construction costs. Rising production costs increase the costs of real estate projects, causing prices of housing for sale or rent to move upwards. Interest rates also determine the affordability of mortgage loans. While a low interest rate environment increases demand, high interest rates make it harder to use credit, causing demand to slow down.

Fluctuations in exchange rates also affect foreign investors. During periods when the Turkish Lira loses value, real estate in Turkey becomes more attractive to investors with foreign currencies. Economic growth, employment rates and per capita income are also factors that increase housing demand.

Location: The Most Critical Factor Determining Real Estate Prices

One of the most important factors in the real estate sector has always been "location, location, location". Apartments close to the city center find buyers with higher prices per square meter. Proximity to transportation networks, being on the route of the airport or metro lines also increase the value of the property. Especially in large metropolises like Istanbul, newly developing neighborhoods (such as Başakşehir, Beylikdüzü) come to the fore with large-scale projects. Public transportation facilities in these areas, social facilities such as shopping centers, schools and hospitals create an extra attraction for buyers.

Supply and Demand: The Impact of Population Growth and Urbanization

One of the main determinants of housing demand is the population growth rate and urbanization. The high population density in big cities keeps the need for housing constantly alive. The production rate of the construction sector and urban transformation projects directly affect the amount of supply. In cases where supply is limited and demand is high, real estate prices increase rapidly. Urban transformation projects can transform old buildings into modern housing, making the area valuable again and causing prices to increase.

Infrastructure and Development Projects: Investments That Increase Real Estate Value

Large-scale infrastructure projects are among the important factors that increase real estate values. Projects such as high-speed train lines, new highway connections, metros and airports create economic vitality in the surrounding areas. The areas around Istanbul Airport in particular have gained value due to the impact of these projects. Port and logistics center projects are also among the factors that increase the investment potential of nearby real estate.

Demographic Factors: The Impact of Young Population and Family Structure on Housing Demand

Turkey’s young population is one of the most important dynamics that keeps real estate demand alive. Newly married couples and young people migrating to big cities for work or education increase housing demand. Demographic factors such as family structure and household size also affect demand. For example, while demand for 3+1 or 4+1 apartments increases for large families, 1+1 and 2+1 apartments may be more popular for singles or newly married couples.

Legal and Political Factors: Regulations Attracting Foreign Investors

In recent years, Turkey has introduced regulations for the sale of real estate in exchange for citizenship to attract foreign investors. Such regulations have increased the number of investors, especially from the Middle East, Russia and European countries, and have caused prices to rise in the market. Zoning plans, licensing regulations and government incentives are also important political tools that affect real estate prices. For example, VAT reductions or advantages in title deed fees are factors that increase investors' interest.

Psychological and Trend Factors: The Power of Prestigious Locations to Increase Prices

Some areas may find buyers at higher prices than others because they are seen as symbols of prestige and reputation. When neighborhoods with sea views, the Bosphorus coast or preserving historical texture come together with luxury housing projects, demand and therefore prices increase. Investors may also make hasty decisions in order not to miss the opportunity in increasingly popular areas. This situation leads to an increase in demand and prices in the short term.

Natural Factors: Earthquake Risk and Safe Housing Demand

Since Turkey is located in an earthquake zone, security concerns are at the forefront in housing preferences. Buildings that are built in accordance with earthquake regulations and have had ground surveys conducted are sold or rented for higher prices. Especially in big cities like Istanbul, many urban transformation projects aim to create earthquake-resistant structures, which increases real estate values.

The dynamics affecting real estate prices in Turkey have a complementary structure. Factors such as location selection, infrastructure projects and economic stability determine the course of prices in the long term. It is of great importance for those considering investing to conduct comprehensive research and receive professional advice by taking these factors into consideration.

In the future, the dynamism of the young population, the continuation of mega projects and the increasing interest of international investors are expected to keep the real estate market alive. Choosing the right project in the right location is the key to achieving long-term and stable profits in the Turkish real estate market.