Turkey, Economy

Prices turn property developers to Istanbul's outskirts

Real estate experts say available land for housing in central Istanbul has gone, pushing investors to turn to outlying districts

Prices turn property developers to Istanbul's outskirts

By Nilay Kar Onum


‘Istanbul’s streets are paved with gold,’ runs a Turkish saying.

This saying has rung particularly true in Turkey’s financial and cultural capital – especially over the last ten years. But now, according to some real estate experts, the city lacks enough places for new homes to be built and existing land has become very expensive to buy.

And now these rising land prices are causing a slowdown in the building market, as landowners hold on for better deals.

“All the land investors, including large or small-scale companies, cannot easily find free space in Istanbul … land owners are trying to sell their plots in return for high prices,” says Ali Agaoglu, chairman of the executive board of Istanbul-based Agaoglu Construction Company.

“Those who are looking for free space tend towards Istanbul’s border districts, as they cannot find it at the center of the city,” says Nazmi Durbakayim, president of Istanbul Contractors’ Association (INDER).

Among these prime sites are Sancaktepe and Tuzla districts near the eastern border of the city’s Asian side plus Silivri and Catalca districts on the European continent. They are not close to the center of the city, where business areas are concentrated, but they remain relatively free spaces on which to build new houses.

Beylikduzu on the European side is another sought-after district. The district has become popular, especially after Turkey’s devastating 1999 earthquake, after which people preferred to move to new buildings in the district. This popularity has continued to increase.

Sedat Cavusoglu, a real estate agent in the district, says: “There has been rapid development here. For example, some land, which cost 50,000 Turkish liras ($17,323) seven years ago here, is now being sold for one million Turkish Liras ($346,450).”

Land prices have directly affected house prices in the city.

Housing prices in the city have increased 27.57 percent as of June 2015 year-on-year, above the country average of 18.96 percent, according to data from Turkey's Central Bank.

Despite the high prices, the need for new buildings has been increasing every day as the city grows. According to figures from the Turkish Statistical Institute (TUIK), Istanbul's population was 12.5 million in 2007; this number increased to over 14 million last year.

Another reason behind the increasing demand is people's desire to live in new, modern buildings with better social facilities.

"People want much more comfortable places with green areas, parking lots, and social facilities. They got bored with the city's busy traffic, its chaos and noise," says Fatih Koca, board chairman of the Istanbul-based Global Real Invest Company.

However, the increase in land prices will disrupt the sales of lands in the next five years, according to some real estate experts.

"Landowners delay their sales in hope for their lands could be sold for higher prices. This situation makes the sales already slow," Durbakayim notes. 

“We predict the numbers of new buildings will decrease because of the land problems in the next two-to-three years,” Koca says.

According to TUIK figures, over 225,000 houses were sold in 2014; this number was 103,000 in 2008.

When new housing projects are built in the further districts of the city, transportation problems emerge for many people whose workplaces are located at in central districts, says Nuran Zeren Gulersoy, a professor at the Urban and Regional Planning Department of Istanbul Technical University.

The solution is the holistic development of these far districts, according to Gulersoy.

“If all districts develop as if they are small cities, which have all the [necessary] social facilities and workplaces, then daily work can be easier and transportation problems disappear,” Gulersoy notes.

She also says there should be a limitation of the population of big cities.

“When the population is high, big cities can face these kinds of problems. I think Istanbul’s population should be limited somehow. So, many problems would be resolved automatically,” she adds. 

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