Turkish real estate investors shift focus to international markets amid domestic challenges

As Turkey’s domestic real estate market faces significant turmoil, investors are increasingly turning their attention to international opportunities. 

Economic instability and regulatory challenges have made the Turkish property sector less attractive, prompting a surge in foreign real estate investments. 

This shift highlights a broader trend where Turkish investors seek more stable and lucrative opportunities abroad, significantly altering the landscape of international real estate.

Turkish investments in foreign real estate have quadrupled

Turkish real estate investors are grappling with soaring property prices and high mortgage rates at home, which have drastically diminished returns on their investments. 

The Turkish market is now experiencing its lowest housing sales in nearly a decade, driven by severe economic and regulatory hurdles. 

In response, investors are actively seeking properties in more stable and profitable markets such as Dubai, London, and Spain.

The impact of these challenges is evident in the dramatic increase in Turkish investments in foreign real estate. 

In 2023, Turkish investors channeled approximately $2 billion into overseas properties, a figure that represents a fourfold increase compared to 2021. 

This trend is expected to continue, with projections suggesting that investments could reach up to $4 billion in 2024.

Turkish real estate ROI has stretched significantly

This trend is not limited to affluent investors; middle-income Turks are also diversifying their portfolios by investing abroad. 

The ongoing economic volatility and exceptionally high inflation rates in Turkey have led to a broader desire for secure investments, as reported by the Real Estate Service Exporters Association. 

This shift underscores the growing inclination among Turkish citizens to seek stability through international real estate.

The domestic market has been further strained by the removal of the 25% rent hike cap, adding to the uncertainty surrounding Turkish real estate investments. 

Additionally, the return on investment (ROI) for Turkish properties has extended to an astonishing 30 years, compared to less than 18 years in Spain and the United Kingdom. 

This disparity highlights the diminishing appeal of investing in Turkish real estate and the growing attractiveness of overseas markets.

In response to these changes, Turkish construction companies are expanding their presence internationally. 

For instance, Fenercioglu has begun catering to the increasing demand among Turkish investors for foreign properties. 

This strategic shift is indicative of the broader trend of Turkish investors seeking to capitalize on more favorable conditions abroad.

The growing interest in international real estate investments reflects the profound challenges facing Turkey’s domestic market. 

As economic uncertainties persist and the allure of overseas opportunities continues to rise, it is likely that Turkish investors will increasingly focus on international markets. This evolving dynamic signifies a notable shift in Turkish investment strategies and highlights the ongoing globalization of investment portfolios.