Istanbul market

[Evren Erem]

Hi, I have not seen/read any discussions (apart from some old chats going back 2017-15) on an interesting market: Istanbul. Any interest?

 

[diyhelp]

Turkey will always be a popular tourist destination but I dont think the political scene is helping the prospects for Turkey at all. Restrictions on free speech (been there for years in reality) and more of a dictatorship than an elected government.

 

[Evren Erem]

Turkey will always be a popular tourist destination but I dont think the political scene is helping the prospects for Turkey at all. Restrictions on free speech (been there for years in reality) and more of a dictatorship than an elected government.

Hi, thank you for your valuable point. Let me make three points: 1. If you noticed I have mentioned specifically 'Istanbul' market, not the real estate market in Turkey. There is a huge difference between two. I do not think I have enough room to explain them. 2. 'Democracy', 'free speech', etc. are relative terms in my opinion. The West have surely established concepts since the Ancient Greek. But the mistake is applying these Western concepts to a not totally Western society. Why the West are struggling to understand China? Personally, I am not happy with the way the Turkish society have been governed. In your terms, you are right: there is no 'free speech', the treatment and discrimination of the minority people are not acceptable, etc. it is a long list anyway. But it is all about the perspective that you see the things. I would suggest to check how Clause Levi-Strauss had challenged the Western views of so-called 'primitive'. 3. From 'pure' business point of view and in my very personal opinion Istanbul market is quite unique and exciting: marvellous capital appreciation, decent yields and very good exit strategy. Thank you.

 

[FWL]

From memory, is Istanbul seen as a city which links East and West cultures via a very iconic bridge?

You make some very good points and it is all relative to expectations on the ground. An improvement in what many might see as Western values can only help the attractions of the Turkey property market in general but Instanbull is different - probably similar to London's role in the UK property market?

 

[Evren Erem]

Hi, you are very much right: it is not a geographical bridge, but also historical and cultural bridge between the West and the East. I would highly recommend Bettany Hughes' book: 'A Tale of Three Cities: Istanbul' (it is 700 odd pages though). I am glad to see that you have agreed with my argument that there is a sharp division between Istanbul and the rest of Turkey. Good analogy: London and the rest of the UK.

 

[realdeals]

The London market tends to lead the rest of the UK but in term of property prices as a multiple of income it is in a different league!

 

[Evren Erem]

The London market tends to lead the rest of the UK but in term of property prices as a multiple of income it is in a different league!

I am afraid there are certain points that I disagree with you. If you compare two markets, i.e. London and Istanbul, there is no doubt that Istanbul can easily beat London market in terms of capital appreciation per annum, 'net' yield and exit strategy (as you know stamp duty has heavily affected the UK market, particularity the coastal areas). There are also some studies showing how the London market has been overpriced. London market is totally relying on the name of 'London', otherwise from any angle it is not a investment destination. If you are considering the income on the basis of the currency, this is the only point I agree with you, needless to say GBP is much stronger than Turkish Lira.

 

[Longterminvestor]

There is a lot of doom and gloom surrounding London at the moment and how Brexit might impact investment, commodity and money markets. Europe has been trying to power grab from London for many years with limited success so Brexit is just another bandwagon for them to jump on. However, it is not clear yet whether London will still maintain its position at the head of the table with US investment markets.

If this position is really under threat then this will reduce the attractions of London and demand from wealthy professionals working in the financial sector. Agree with you, London is over valued on traditional measurements - at the hight of the last London property market rally we saw the rental yield on some expensive homes fall below 2%, madness!

 

[Evren Erem]

In my very personal opinion, London market is in a dark tunnel and you are very much right: it is directly related to the Brexit process. The yield was never perfect in London (to my best knowledge always in the region of 3%-4%),but now it is less than this as you have stated. Besides this is gross yield. It is not a coincidence that international investors started to pay interest in Liverpool, Manchester, Birmingham, etc.

 

[PostBrexitInvestor]

I wonder why nobody has set up a property fund focusing on the likes of London, Istanbul, etc - leading lights in countries around the world. The likes of London and Istanbul for example do not reflect the underlying property markets of those countries and are in effect property markets within property markets. Investing in the "UK market" is not the same as investing in London.

 

[Longterminvestor]

"Istanbul can easily beat London market in terms of capital appreciation per annum"

I find that a rather bizarre statement - are you suggesting that Istanbul has beaten London for property price increase every year? Or it will beat London every year going forward?

Im intrigued to find out what you base that forecast on?