42 MARCH 2013

!anks to a new real estate law and a building boom rippling out across the city, there has never been a better time to invest in Istanbul

EYE ON ISTANBULIT’S A SIGN OF THE TIMES WHEN JENNIFER LOPEZ DECIDES to buy an apartment in Istanbul. Last year, the US singer-actress bought a luxury suite at the Metropol Istanbul, part of the colossal Ataşehir Finance Centre on the Asian shore of the Bosphorus.

“In the future, I want to spend more time in Istanbul, which I admire,” she told the assembled Turkish press. “I am already excited about looking at the unique view of the Bosphorus and Princes’ Islands from my "at.” She’s come a long way from the rundown residential block in New York she once sang about, that’s for sure.

Due to be delivered in 2015, Lopez’s new apartment will form a small part of one of the biggest projects in the world – a new 700,000sqm mixed-purpose development, home to a 250m-high tower, scores of luxury residences and the Catwalk, a 400m-long shopping street. #e

$gures are impressive, but there is clearly demand for a development of this size: more than 75 percent of the apartments have already been sold.

#at there is a building boom underway in the city should really come as no surprise to those with an eye on history. Istanbul has been a crossroads for commerce, development and trade for centuries.

First the Ancient Greeks came and built temples and a giant acropolis on the Golden Horn, before the Romans and Byzantine rulers reshaped the city to their vision as Constantinople.

#e city once again prospered as the capital of the Ottoman Empire when Sultan Mehmed II and Sulieman the Magni$cent built vast imperial palaces and residences to re"ect their growing power, alongside beautiful mosques from which to spread the values of Islam.

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“TURKEY IS EXPERIENCING A VERY DYNAMIC AND BOOMING REAL ESTATE MARKET THAT HAS BEEN UNPARALLELED IN ITS HISTORY.”

REAL ESTATE ISTANBUL

Now another era of construction is under way. Real estate developers are making the most of Turkey’s surging economy (the fastest growing in Europe) and the country’s increasingly young population (62 percent are under 34). Previously, entry-level and !rst-time buyers had limited options – most new developments were luxury projects targeted at high-end income groups – but with a number of new projects in the pipeline that is all set to change.

“Turkey is experiencing a very dynamic and booming real estate market that has been unparalleled in its history,” says Cindy Uriona of Istanbul-based Luxurion Real Estate Group. “"e country has a low !scal de!cit and in#ation is under control – falling from 29.75 percent ten years ago to 6.16 percent last year – so all the signs for growth are in place.”

With economic and political problems mounting in neighbouring countries, developers have also been given a rather timely boost from the capital, Ankara. Last year, the Turkish government passed new legislation allowing all nationalities – with the exception of Greeks and Syrians – to purchase property in Turkey. "e previous reciprocity rule, which only permitted foreigners to buy homes if they were from countries where Turkish residents could buy property, is now being phased out. "e bill also permits foreign buyers to purchase double the amount of land than they were previously allowed, increasing it to 0.6sqkm.

“"e market in Istanbul has changed dramatically over the past eight months, because of the new law,” says Janet McGovern, a senior property consultant at Knight Knox International. “Demand is at its highest for residential and commercial property, and will continue to escalate. Buyers from the Middle East and Asia are now purchasing large amounts of property – demand has increased, so prices are starting to rise.”

FROM THE LEFT: Just a portion of Istanbul’s busy

skyline; a breathtaking view over the Bosphorus and

city; singer-actress Jennifer Lopez bought a luxury suite

at the Metropol Istanbul.

44 MARCH 2013

director of specialist property investment company Colordarcy, adding that principal buyers are from Russia, Germany, England, Azerbaijan and the GCC. “Demand has undoubtedly increased as a result. In 2010 we achieved forty Istanbul sales, in 2011 this shot up to 100, and in 2012 we saw an astonishing 285 transactions completed.”

Another boon for developers is a recent modi!cation to local tax law involving new-build property. New legislation means that more property will fall within Turkey’s standard 18 percent tax band. “"is will inevitably push prices up in areas where land value is high,” continues McKenzie. “So expect the prices of apartments less than 150sqm to rise considerably as developers pass these prices on to buyers.”

So with all this activity, where are the best places to buy? And what can you get for your money? Primarily, Istanbul’s prestigious high-end districts are found along the Western European shores of the Bosphorus from Cihangir to Tarabya throughout Beşiktaş where land is scarce and real estate agents can charge top dollar.

Farther west, up-and-coming areas like Esenyurt o$er prices as low as US$50,000 for a studio apartment – the equivalent of a new Audi A6. As well as having the lowest entry point of all the best locations in Istanbul for a !rst-time buyer, this developing zone is close to Istanbul Atatürk Airport and it only takes !%een minutes to drive downtown. Similarly, in the nearby working-class suburb of Beylikdüzü, buyers can !nd property for as little as $70,000, although the recent migration of middle-class commuters and graduates has led analysts to forecast annual growth of 15 percent for the area.

Analysts have deemed the change in legislation a critical move. "e lure of Turkish property has increased tenfold primarily because the Eurozone – hampered by a cycle of low or no growth, mounting debt and government-imposed austerity measures – is o$ering little competition. According to the Knight Frank Global House Price Index, Turkish property prices are the third fastest growing in the world. “"ere are a number of more localised factors that are also making this crucial di$erence,” says Luxurion’s Cindy Uriona. “Mortgage rates are highly competitive, banks have money and are lending at very high ratios, typically at 85 percent for twenty years.”

Indeed, the country’s Association of Real Estate Investment Companies has forecast that property sales to foreigners could nearly double to $4 billion this year. “In my experience, investors feel more comfortable to take advantage of low-priced property, high capital growth and a strong rental market,” says Loxley McKenzie, managing

REAL ESTATE DEVELOPERS ARE MAKING THE MOST OF TURKEY’S SURGING ECONOMY (THE FASTEST GROWING IN EUROPE) AND THE COUNTRY’S INCREASINGLY YOUNG POPULATION (62 PERCENT ARE UNDER 34)

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REAL ESTATE ISTANBUL

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At the other end of the scale are the increasingly glamorous northern suburbs of Ortaköy, Arnavutköy and Bebek. “Bebek is a particularly attractive area where you get a sense of the old Istanbul,” says Colordarcy’s Loxley McKenzie. “It is located on the European shores and is part of a group of a!uent neighbourhoods – but buying here will set you back $10 million for a six-bedroom villa.” For something more a"ordable, a three-bedroom apartment in a converted yali (an original 19th Century mansion) can be picked up for around $425,000.

As a guide to other prices on the western shore, four-bedroom apartments can cost from $250,000 in the industrial area of Büyükçekmece, up to $650,000 for similar apartments in popular Zekeriyaköy, famed for its village-like atmosphere in the midst of the city. Upwards of this, buyers tend to look in the business districts of Maslak and Levent.

On the Asian side, the suburb of Kartal is the focus of many projects as the government plans to build a third bridge to cross the Bosphorus – with four-bed apartments going for $250,000. For the smart commuter, this and the up-and-coming area of Üsküdar are two of the most sought-a#er areas in the city. Currently, a tunnel is being built under the Bosphorus to connect the expanding Metro line from the old city of Sultanahmet to Üsküdar – creating a vital link in a city renowned for its chronic transport problems. Another upcoming project is the development of Emaar Square, from the Emirati construction group responsible for the already successful Tuscan Hills development on the opposite side of the city. When complete, it will include a $ve-star hotel, shopping mall and more than a thousand luxury residences.

While most expat owners traditionally put down roots in the more picturesque quarters near Beyo%lu and Taksim, urban regeneration now means previously o"-radar neighbourhoods are also open for business. Federico Villatico, an Italian who came to Turkey to take a job with the United Nations, is one such buyer. He plans to move from his rental &at in the Galata neighbourhood to the apartment he bought in Balat, an enclave of old Greek, Jewish and Armenian culture in the Fatih district along the Golden Horn.

“I like the neighbourhood,” he says. “It is the old Istanbul, but also the price was more a"ordable for me, especially compared to the ever-rising Beyo%lu prices. 'is area in particular tends to be the most popular with the expat community, because it retains the old-fashioned look and feel of Istanbul. It’s a real contrast with modern Istanbul, especially around Levent, which features skyscraper a#er skyscraper and more modern residences usually preferred by the very rich.”

Still, with skyscrapers like this shooting up across the city, there are problems with such an expansive property boom. Regeneration has led to criticism that much of Istanbul’s old history has been razed to the ground, but if developers can adhere to the new quality standards set down by the government – implemented in part to deal with increasingly stringent safety standards – then Istanbul could overtake London to become the gold standard for real estate investment.

“'e fundamentals look strong, so we expect continued upward pressure on prices,” says Istanbul-based expert Keith Boyle of Lilimont Istanbul Real Estate. “Mortgage a"ordability is likely to assist growth, and massive infrastructure projects that are both ongoing and planned will act as further bolsters to real estate. With the con&uence of these forces, the market should remain favourable for investment for a long time to come.” And Jennifer Lopez – singer, actress, now property investor – will be delighted to hear that.

“BEBEK IS A PARTICULARLY ATTRACTIVE AREA WHERE YOU GET A SENSE OF THE OLD ISTANBUL”

FROM THE LEFT: One of Istanbul’s modern cutting-edge developments; 62 percent of Turkey’s population is under 34-years-old; an example of old Istanbul.

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