While the real estate markets in European countries, including Turkey, present a negative outlook for the upcoming period with increasing construction costs, difficulties in accessing capital and declining profitability, Istanbul continues its decline in the preference of foreign investors in European cities.
According to PwC’s global report on the real estate sector, Istanbul, which was in the first place in the investment preference of international investors in 2012-2013, has fallen to the 29th place in investor preference.
According to the “Emerging Trends in Real Estate Europe 2023” report prepared in cooperation with PwC and Urban Land Institute (ULI), a decline in real estate values and financing is on the way in Europe, where profitability expectations are declining and recession expectations are increasing.
According to the report, the issues of greatest concern for the real estate sector in 2023 will be construction costs, availability of resources, debt and access to capital.
London, Paris and Madrid in the Top Three
In the list of Europe’s most preferred cities for real estate investment, London ranked first, followed by Paris, Berlin and Madrid. Istanbul was ranked 29th in the list of 30 cities.
PwC Turkey Real Estate Sector Leader Ersun Bayraktaroğlu said, “The high costs, the difficulty in accessing funds and the limited new supply due to these reasons highlight the cities where buyers and sellers can come face to face much more easily in the current market. Istanbul is at the bottom of the list this year, as it has been for a while, for many reasons, not only because the market is not deep and, perhaps more importantly, for real estate areas other than residences not being given the necessary value and importance.”
The Trust Issue Has Been Effective
Bayraktaroğlu stated that the problems in the European real estate markets such as increased inflation, increasing construction costs and access to finance are also valid for the Turkish real estate market, adding that the lack of confidence created by foreign investors due to sudden legislative changes in Turkey is the most important factor in Istanbul’s decline in the list.
Bayraktaroğlu said, “Istanbul was at the top of the list in 2012-2013… We have been at the bottom of the list for a while due to sudden legislative changes, the limitation on foreign currency borrowing, the very serious depreciation of the TL, and differences in tax regulations.” The most important is the legislation. For example, all foreign investors who invested in shopping malls in Turkey were suddenly shocked when they abolished the rental in foreign currency overnight. It is one of the most important breaking points.”
Bayraktaroğlu, on the question of whether they foresee new foreign entries to the sector in the coming period, said, “We do not expect a new international investor inflow. It may come from the Gulf side, it comes in general, real estate will get its share from there, but institutional international investors, namely European, American and Far Eastern investors, are not in the Turkish market at this time,” he said.
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