Cameron Deggin on best Istanbul Real Estate Investment segments

As Europe's largest city, Istanbul boasts a population of over 20+ million people and serves as a cultural bridge between two continents. Its rich history is reflected in landmarks such as the Hagia Sophia, Blue Mosque, and Topkapi Palace. Istanbul's vibrant energy is evident in its bazaars, art scene, and culinary offerings. From exploring the Grand Bazaar to cruising along the Bosphorus, Istanbul seamlessly blends tradition and modernity, captivating all who visit and making it one of the world’s top cities for real estate investment.

Turkish economy and future projections

Industry experts and future Turkish economy projections indicate that Turkey is now entering a ‘Buy Zone’ ahead of a significant investment wave over the next five years, which will affect various sectors, including real estate.

Current monetary policies are successfully reducing inflation through interest rate hikes, with expectations that market liquidity will return in the first quarter of 2025. The Central Bank of Turkey has committed to maintaining strict policies until inflation reaches target levels, projecting year-end inflation at 36% and aiming for 9% by 2026. This stability is anticipated to reopen the domestic market and attract more foreign investment.

As a result, Turkish property prices are anticipated to rise, particularly in affordable city centre locations and urban regeneration projects aimed at providing entry-level homes. This trend presents a unique opportunity for investors to capitalise on the growth in Turkey's real estate market.

Cameron Deggin – leading industry expert

With over 20 years of experience in the real estate industry, Cameron Deggin is a recognised expert – successfully investing throughout Istanbul and assisting thousands of clients to do the same. His unparalleled knowledge of the Turkish real estate market establishes him as a leading authority in the field. We sought his insights on the best investment segments in Istanbul's real estate sector.

Best Istanbul real estate investment segments

Considering the current economic climate in Turkey and projections for the next 5-10 years, there are several segments in Istanbul that promise substantial returns for investors. Here they are, in no particular order:

1. Real Estate Investment Funds:

A Real Estate Investment Fund (REIF) in Turkey is a collective investment scheme that pools capital from various investors to invest in a diversified portfolio of real estate assets. Managed by professional fund managers, these funds are licensed by the Turkish Government and monitored by the Capital Markets Board, ensuring security, transparency, and investor rights.

By pooling resources, investors access a diversified and professionally managed real estate portfolio, reducing individual risk and gaining exposure to various properties and markets. This allows for real estate investment without needing large capital or hands-on management of individual properties.

Cameron says: “These licensed instruments have strong support from the Turkish government as they attract larger institutional investors for regeneration projects and value-add sectors like energy and technology. Our real estate investment fund requires a minimum entry of $100,000 and has consistently delivered over 20% per annum in USD terms. This fund is TAX EXEMPT, offering savings of up to 30%. I am personally invested and sit on the management board, making this a great hands-off investment.”

2. Affordable City Centre Residences for Airbnb:

Data shows that after the Turkish Government regulated Airbnb, the number of apartments in Istanbul suitable for short-term rentals decreased from 32,000 to 21,000. With Istanbul being the most visited city in the world in 2023, the demand for short-term rentals has never been higher. Properties approved for short-term rentals are expected to see higher occupancy rates and increased demand.

According to Statista Market Insights, revenue from short-term lettings in Istanbul rose from $0.64 billion USD in 2017 to $1.02 billion USD in 2023, with projections indicating it will reach $1.10 billion USD in 2024 and $1.33 billion USD by 2028. In short, investors with properties suitable for short-term rentals will see greater returns, as the number of available properties has decreased while tourism has increased.

Cameron says: “These 1 and 2-bedroom apartments meet the government's stringent Airbnb guidelines. This segment is poised for significant capital growth over the next 5 years. With entry levels between $190,000 and $250,000, you can consider acquiring multiple units to maximise your returns. We offer full Management & Lettings support – so you can be fully hands-off, earning in excess of 7% per annum in rentals and very steep capital growth as the main reward.”

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3. Developing Boutique Projects:

The Top 100 City Destinations Index 2023, released by Euromonitor International, named Istanbul as the world's most visited city in 2023, attracting over 20 million visitors. The report highlighted that Istanbul saw a 26% growth in international arrivals year-on-year, ahead of London in second place and Dubai in third place.

With the implementation of new Airbnb regulations and a limited supply of projects and apartments that meet the criteria for short-term rentals in Istanbul, the demand for developing boutique, affordable projects in the city's centre has never been higher. These projects present an unparalleled opportunity for developers to sell to investors seeking buy-to-let properties.

Cameron says: “Catering to Istanbul's 20 million+ residents, this segment has the highest demand with the lowest supply. Investing in projects that develop 50-100 affordable city centre homes can yield over 50% ROI in just 2 years. Typically, these projects require a minimum investment of $3 million. We can also explore joint ventures for these projects.”

4. Renewable Energy Sector:

The energy sector is experiencing a transformative shift towards renewable and sustainable sources, creating substantial investment opportunities. This transition is driving growth in renewable energy generation, energy storage, and energy efficiency solutions. The industry is being reshaped by emerging technologies such as smart grids, electric vehicles, and decentralised energy systems.

These innovations are not only enhancing the efficiency and reliability of energy supply but also reducing carbon footprints and promoting environmental sustainability. By investing in cutting-edge technologies and sustainable energy solutions, stakeholders can contribute to a more sustainable planet while benefiting from the growing market opportunities.

Cameron says: “Although opportunities are limited, this sector is strategically crucial for Turkey, ensuring a bright future. Investments here have payback periods of less than 8 years, with a minimum entry of $5 million.”

5. Logistics Warehousing:

The Logistics Warehousing sector is crucial to the global economy, enabling the efficient movement and storage of goods. The rising demand for e-commerce, retail, and fast delivery services has fuelled the need for modern, technology-enabled warehousing solutions. Innovative companies are introducing warehouse automation, robotics, and data analytics, which can revolutionise traditional supply chain models and enhance operational efficiency.

Cameron says: “Turkey is set to become the logistics hub for the EMEA region (Eastern Europe, Middle East, and Africa). With a massive gap in the logistics warehousing sector, strategic investments can be highly lucrative. Minimum investments start at $10 million due to the large scale of operations.”

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