In the scope of the “World Cities Index” study that we prepared in the last month, we discussed the real estates that are situated in the most central and most demanded locations in 50 major cities which stand out across the world, that appeal to the high-income group, are namely called as “Prime Location” and “Prime Property”.
Our study is based on the issue that how many square meters of luxury houses can be sold in these 50 cities and how many years will be the annual gross rental income and depreciation period of the investment to be realized. In this sense, we have compared the purchasing power of 1 Million Euros in different parts of the world.
We know that after the global economic crisis that started in 2008, there were serious decreases in housing prices throughout the world in the following 3-4 years. Housing prices reached an upward trend in the general sense as of 2011-2012.
While housing production remains at an extremely limited level, especially in the major cities of Europe, it is seen that there have been serious increases in housing prices due to factors such as historically low interest rates, increasing migration movements, and the refugee crisis.
Among the 50 cities of the study, Monaco has stood out as the most expensive city, as expected.
Housing prices lead the way in the cities where population density is high such as Singapore, Hong Kong, Toky, and Pekin that are located in the Far East. Since the housing supply in these cities is extremely limited, it is known that people live in houses called “micro houses”. In fact, we see that there are mostly houses with an area of 15-25 sqm in these cities.
Despite the Brexit effect, London is still an important center of attraction. Cities such as Paris, Geneva, Munich, Berlin, Amsterdam, Luxembourg, Milan, Vienna, Rome, Hamburg, and Zurich, which have a high-income level and offer wide opportunities in terms of social, economic, and employment, are among the top European major cities.
When we look at the USA, we see that big cities such as New York, San Francisco, Boston, and Los Angeles are at the top of the list. It would be appropriate to state that the housing market in the USA has different dynamics compared to Europe and the Far East. While the limited stock of land in Europe particularly raises the housing prices, we can say that there is no problem in this sense in the USA, the construction sector is generally active and the housing production is high.
When central locations and luxury segment dwellings are taken into account in the same way, Istanbul ranks 45th in the list with an average housing unit price of 4.000 €/sqm (40.000 TL/sqm)
At this point, it is worth mentioning that we created the Istanbul data of our study by considering the houses in districts such as Zincirlikuyu, Levent, Maslak, Sarıyer, Ataköy, Bakırköy, Göktürk, Kadıköy that appeal to the high-income group.
When we examine Istanbul in particular, it is seen that housing production, which accelerated since the beginning of the 2010s and continued intensively until 2017-2018, slowed down significantly after 2018.
With the impact of citizenship program that provides the right to acquire citizenship with an investment of 250,000 USD, the decrease in the housing stock with the interest reduction campaign in 2020, the fact that the earthquake risk leads the investors to the houses built after the earthquake, and most importantly, the increase in construction costs, high increases have been experienced in housing prices in Turkish Lira.
As a result of the depreciation of the Turkish lira against the foreign currency, it is observed that Istanbul remains relatively reasonably-priced for foreign investors when compared with a similar scale major cities, and an average of ~250 sqm of housing in the luxury segment can be purchased for 1 Million Euro in Istanbul.
When we examine the much reasonably-priced houses other than the luxury segment, we observe that the purchasing power for houses is higher compared with other 50 cities, and the gap is widening in favor of Istanbul in the comparison of houses that can be purchased for 1 million Euros.
According to the report announced by Zingat.com in May 2021, the 10 districts most preferred by foreign investors in Istanbul are listed as follows:
In the light of the research we have carried out, we can say that investing in Turkey and Istanbul is still attractive for foreign investors, and the interest of foreign investors will continue to increase in the coming years. The existence of foreign investors in the market will also lead to price increases.