Turkey boasts arguably the best-performing real estate market in the world and 2016 has shown to be no exception. Growing population, mega projects, growing income per capita, urban renewable projects, and ease of buying property are the main driving forces behind the rapid growth of the real estate sector in Turkey. However, experts have long warned of a dangerous bubble emerging.

In 2015, house prices in Turkey rose faster than any other country in the world, rising 26% in Istanbul, 16% in Izmir and 12% in the capital, Ankara. The price of newly built homes increased by 17.4%. The market is by some measures in very good health. With a low reliance on mortgages and with individual real estate debt low, your average Turkish citizen buys responsibly and sustainably. In Istanbul, the beating heart of the Turkish real estate market, rents in the first half of 2016 have declined by about 2% to 5% compared to in 2015, although this has been blamed more on the decline in the lira than on a reflection of a weakening in demand for property, as it is not uncommon for rents to be priced in foreign currency.

The total number of houses sold in the property market reached 1.3 million in 2015. Istanbul had the highest share (18.6%) of house sales with 239,767 sold house in 2015. Istanbul was followed by Ankara with 146,537 (11.4%) and Izmir 77,796 (6%), according to the Turkish Statistical Institute.

The Turkish government amended the reciprocity law in 2012 that opened the door for foreigners to buy property in Turkey. In 2015, 22,991 houses were sold to foreigners In Turkey according to the Turkish Statistical Institute. Istanbul ranks first with 7,493 sales, Antalya with 6,072 sales, Bursa with 1,501 sales and Yalova with 1,425 sales.

Land sales appear not to have been affected by currency fluctuations due to the fact that pricing is generally done in Turkish lira. New infrastructure developments in and around Istanbul, including new highways and public transport, have led to increases in property prices, improving access to areas previously less attractive to commuters. The construction of the third Bosporus Bridge in particular opens up new areas of Istanbul for development. Without a shadow of a doubt, Istanbul is currently seen by international real estate investors as a winning bet.

Real estate sales to foreigners reached $4.3 billion in Turkey in 2014.

Did you know?

Turkey’s real estate & construction sectors make up around 6% of total GDP. These sectors’ share of GDP is forecasted to reach 10% by 2025. Of total FDI ($16.5 bn) in 2015, $4.1 bn was in real estate, dropping from $4.3bn from the previous year, but a significant increase from 2012 and 2013, which saw $2.6bn and $3bn, respectively.

The one issue dampening this good news is that there has long been a growing concern of a housing bubble in Turkey and, recently, commentators have once again been sounding the alarm. This is down to a number of factors. Most importantly, many in the construction sector are borrowing at a loss to push forward construction projects. Added to this, loans are often denominated in foreign currencies. With the lira weakening, these foreign currency loan repayments threaten to stall major projects. In addition, the Turkish economy has shown signs of losing the pace of its hitherto impressive growth. Given the crucial role the real estate market plays in the Turkish economy, this could have serious knock-on effects.

Nonetheless, with Turkey’s population growth showing no signs of abating, demand for housing will remain, providing a counter balance to any potential shocks to the market. Moreover, with international interest in Turkey, particularly Istanbul, still bullish, any downturn will be countered by mitigating factors. The Capital Markets Board of Turkey is now on the point of approving a real estate bridge scheme to facilitate the entry of foreign capital into Turkey’s real estate market. This project has already attracted considerable interest from key international players in the market.

Shopping Malls

There are currently 360 shopping malls in Turkey. The total gross leasable area was 10.5 million sqm across Turkey at the end of 2015. It is expected that 2 million sqm will be added, the total gross leasable area will reach 12.5 million sqm by 2019.

Istanbul is the epicenter of Turkey’s giant shopping mall sector. Istanbul’s total gross leasable area is over 4 million sqm. There are 103 shopping malls in Istanbul, 37 in Ankara, and 22 in Izmir.

The rent for per sqm in shopping centers increased 14.5% in 2015 compared to the previous year.

The total investment volume of the Turkish shopping mall sector stands at $52 billion ($15 billion foreign investment) as of January 2016. However, there is still room for investment in the market since only 57 of Turkey’s 81 cities have shopping malls. The Shopping Mall Investment Association predicts that 40 new shopping malls, worth $3 billion in potential investment, will be constructed by 2019.

Did you know?

Turkey ranks 34th of 102 countries listed in the Global Real Estate Transparency Index 2014. Turkey was listed as “most improved” on the transparency index in 2012. However, the country was unable to maintain momentum in 2014, and the Turkish market was described as semi-transparent in the 2014 index.

Istanbul International Finance Center

The construction of the Istanbul International Finance Center is set for completion in 2016. The project, which began in 2012, will bring together a number of key financial institutions under one framework and will provide a shopping center, living areas and a congress center. The cost of the project is around $2 billion. It will also provide employment for 30,000 people. The construction of the office space for the center accounts for 62% of all current office space construction in Istanbul and will surely spur on demand in the surrounding area. Projects such as these are part of the reason why Istanbul holds such promise on the international real estate market.

Did you know?

Office construction licenses obtained throughout Turkey increased by 27% and reached 7 million sqm by 2015.


The increase in prices is put down to a combination of an increase in foreign investment, the increasing population and a slightly slowing pace of construction. Nonetheless, the construction industry is still strong, with new luxury developments promoted by the government and the government also consistently pushing forward the building of new affordable housing across the country. However, its growth slowed down compared with previous years, growing by roughly 0.4%, compared to 2.2% in 2014, but Turkey still constitutes roughly 10% to 12% of the global construction market.