The Global Investor’s Guide to Buying Property in Turkey

Turkish property experts, Property Turkey, highlight key factors for foreign buyers of Turkish investment homes, including costs and potential yields

Turkish real estate has been on a sustained upward trajectory for several years, with increased interest in tourism and short-term holiday rentals owing to Turkey's affordability as a destination, particularly in comparison with other major tourism hotspots throughout Europe.

However, buying an overseas investment property comes with costs, such as hiring a property management firm to handle bookings and maintenance, tax obligations linked with Turkish property ownership, and the need to ensure revenues easily cover the cost of the investment.

In this guide from the Turkish property experts at Property Turkey, we explore some of the key factors foreign national buyers should consider when deciding whether to buy a Turkish investment home and analyse some indicative costs and yields.

Insights Into the Turkish Real Estate Boom for Landlords and Investors

Like many countries with an enviably warm climate, beautiful beaches, and affluent coastal towns and cities, Turkey has attracted the attention of investors, second homeowners, and tourists keen to find beachfront properties and luxury villas at a fraction of the market value in other destinations.

Properties close to white sandy beaches are anticipated to appreciate significantly in the coming years, with market values set to almost double within the next 24 to 36 months. This will provide investors with returns far above average, even ignoring rental revenues.

Regions such as Dalaman, for instance, have benefited from government efforts to improve local infrastructure and extend capacity to cater to the influx of seasonal tourists. The newly expanded airport, three modern marinas, and a high-quality golf course add to the amenities.

Getting in early as an investor in areas that are due to become substantially more popular provides a unique opportunity to secure an investment property at a relatively low price, with strong expectations that homes in the region will appreciate rapidly in the near future.

Demand for holiday homes is high but is coupled with a strong domestic rental market. This means that, while investors may gain higher returns during the summer tourist period, they are also not solely reliant on foreign travellers and have a broad rental market they can tap into.

Property Prices and Rental Returns for Investors in Turkey

There is no doubt that, despite market activity, properties in Turkey remain affordable by international standards, with many experts speculating that, on average, properties increase annually in market value by at least 10%. Currently, you'll find that:

• The price per square metre for a city centre apartment for sale in Turkey is around 19,900 TL (£445), compared to £1,071 in the UK—making properties 58% more affordable. Rental homes outside the major cities are equally attractive, with listing prices 57% to 61% lower than a similar home in Britain.
• Real estate prices in Turkey compare favourably to many other international locations popular with investors, at as much as 48% lower than Spain, 49% cheaper than Portugal and 46% lower than France.

Investors can, if they wish, choose to purchase a qualifying property to apply for residency status, often where this would be advantageous from a tax perspective—although the benefits may depend on whether the investor lives some or all of the time in Turkey or is a non-tax resident.

Average Rental Yields in Turkish Real Estate Markets

Rental and holiday properties in areas like Istanbul, Ankara, Izmir, Bursa, Adana, and Antalya have among the highest rental yields. Your preferred locations may, though, depend on the types of tenants you expect to let your investment property to and whether you'd prefer a holiday villa, a city apartment for professionals or a larger family property.

Across Turkey, all types of investment properties are generating gradually higher rental yields – meaning investors can earn a larger net revenue from their investments, despite the nationwide increases in property values.

Data shows an average rental yield of 6.52% at the end of last year, with apartments in Istanbul attracting the highest 9% rental yields. Properties in Ankara, Bursa, and Adana were all recorded as achieving average yields above 7%.

This year, these trends have continued, with statistics from June 2024 showing average rental yields of 7.13% as of quarter two – an increase from 6.36% in Q1. Annual returns are as high as 9.72% in some neighbourhoods in Istanbul.

Understanding the Costs of Property Investment in Turkey

We often consult with investors looking to diversify and expand their real estate portfolios, purchase an investment property in Turkey with the intention of relocating in the future, or who are keen to leverage the high-demand rental market to achieve sustained returns.

Alongside the costs of buying a property in your chosen city or region, it is important to be mindful of the taxes, property ownership costs and ongoing responsibilities associated with buying an investment property.

These include:

• The inclusion of between 1% and 18% VAT, normally within the stated sale price. This may depend on the area, whether you are buying a new-build or resale property, and your residency status.
• Additional costs of between 5% and 8% of the purchase cost, including property registration fees, property taxes, agency fees and legal expenses.
• Municipal property taxes, normally between 0.1% and 0.6% of the property's value as calculated by the local administration.
• Wealth taxes, which may apply if the property is worth over 5.25 million TL (£117,750), with progressive tax rates of 0.3% to 1%.

Rental income is usually taxable at the standard income tax rates, which start at 15% and extend to 40%. Investors should also account for utilities, internet and phone lines, and the costs of local services such as waste collections.

Provided you have clear oversight of the market value of an investment property you wish to buy, the ongoing costs of running, letting and maintaining the property, and have checked that the rental values associated with the property type and location will return a profit, you can move forward with confidence.

Finding Your Ideal Turkish Investment Property

Now is undoubtedly a good time to buy, at a point when demand for quality housing is high, and the appeal of premium rental properties and holiday homes creates a healthy environment for investors.

Read more about Property Turkey – Buying a Property Abroad in Turkey as a Rental Investment

About Property Turkey: With 20+ years experience in the Turkish real estate market, team Property Turkey are your experienced, friendly and independent overseas real estate consultants. Our head office is located in London, UK with regional operational offices in: Bodrum, Fethiye & Kalkan, Antalya and Istanbul.

***
Source Company: https://www.propertyturkey.com/