Stand-off mode: will Russians stay on the Turkish real estate market?

Maria Zharaya, Head of Tranio Turkey

Director of Tranio in Turkey, Maria Zharaya, has been living in Antalya and working with Russian-speaking clients for two years now. In this interview, she explains how the nascent conflict between Russia and Turkey has affected clients’ attitude towards the Turkish real estate market.

Key points

– €100,000: new average buyer budget
– Rising requests for residence permits
– Developers more likely to give discounts
– Main demand: 100 sq m 1- or 2- bedroom flats near sea
– Favourite locations: Alanya and Antalya

Waiting out the storm

Maria, did the tension between Russia and Turkey affect your work?

— Definitely. Clients who were planning to buy property here within the next two months delayed the purchase and are waiting for the situation to develop. It cannot be said that potential clients abandon the idea for good — they still want to buy property and have a second home in Turkey but a few definitively decided not to buy real estate in Istanbul. We are still expecting buyers for viewings during the next couple of weeks despite everything. Their main concern is that regular direct flights to Turkey will be cancelled as were charter flights recently.

Have property sellers in Turkey changed their attitude to Russian buyers?

— Actually, our clients stand a very good chance of getting reasonable discounts from developers because the latter understand that demand from Russian buyers will shrink and become unpredictable in the near future. There is also a chance that Russian citizens who want to sell their property may drop prices by 30% under market level to get rid of this asset, which they now consider volatile.

Are there many clients urgently trying to sell their Turkish property?

— So far none of Tranio’s clients who previously bought property in Turkey have sought our assistance in selling. And according to my peers, these requests are very rare on the market in general. That said, some Russians have said they will sell if there is a buyer, but there is definitely no panic at the moment. Assuming worst-case scenario, like if the countries cancel air travel between each other, it’s reasonable to expect that Russian citizens will get rid of their property.

The conflict between Turkey and Russia could affect the property market

What exactly are owners and potential buyers afraid of?

— They are afraid of the local attitude toward them. However, here on the Mediterranean coast (where most Tranio clients buy) nothing much has changed. Local citizens understand that their wellbeing largely depends on the relationship between these two countries. I also get asked if Russian citizens could be divested of their property. However, this should not concern current owners or future buyers. When buying property in Turkey, foreign citizens get the same title deed as local citizens. If the initial purchase is legal and all documents are in order, no one can legitimately challenge their property rights.

Will Russian sanctions affect the Turkish real estate market?

— Actually, Russian applications for residence permits in Antalya have increased, mainly due to concerns that Turkey will impose counter-sanctions and stop granting residency to Russian citizens. More generally, there shouldn’t be any fundamental changes as Russians are not the main buyers in Turkey, investors from Western Europe and the Middle East (mostly Iran, Iraq and Saudi Arabia) lead the market. There are a lot of buyers from Kazakhstan, Azerbaijan and Uzbekistan and these are the people Turkish developers are betting on.

But if Russian owners want to sell, will there be buyers?

— If the property is liquid, it is not hard to sell. Other owners have the option of letting their property if they don’t want to rush into selling. Turkish citizens prefer to rent rather than buy, so demand for long-term lettings is consistently high.

Growing prices, smaller budgets

Maria, what was the market like before the November events?

— During the five years leading up to the shooting down of that fighter jet, real estate prices have been growing. Just this year, they went up more than 10%.

How active have Russian-speaking buyers been this year?

— Demand from Russian citizens went down and there were certainly less transactions than during the same period in 2014. However this decline in demand is global trend and confirmed in many countries. After the currency crisis of 2014–2015, Russian buying power went down and savings lost almost half their value. If before, potential buyers were looking at property worth €100,000–150,000 and up, now the upper threshold is €100,000. It means that the clients have lower expectations and some have even postponed their purchase until better times.

What property was the most popular in 2015 and where?

— The most popular property is still one- or two-bedroom apartments of 100 sq m in a residential complex with a swimming pool, gym and other amenities. Generally, Russian citizens look for property close to the sea, no more than 1 km from the beach. The purpose of the property remains the same as well — personal use. Favourite locations are still Antalya and Alanya. In Alanya, where the prices are traditionally lower than in Antalya, buyers can expect to find better property, bigger, closer to the sea and with a view. All of this is affordable with €100,000 or even less.

Is Turkish property considered for investment purposes?

— This year our clients have been increasingly interested in Istanbul, Turkey’s leading for residential property investment. Mostly, buyers were looking for buy-to-let residential property. In Istanbul you can get this for less than €100,000. Usually this would be a one-bedroom apartment in a good residential complex. However, there are not many serious Russian investors in Turkey yet and they are very rarely interested in big investment projects. At the moment, it is hard to forecast how the situation will evolve in 2016 — we will have to let events play out first.

Anna Bugayeva, Tranio

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