2021 Real Estate in Review. The Year of Records and Recovery from Crisis
Last Updated: 2023-07-27
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2021 Real Estate in Review
As a professional real estate expert and investor in the Turkish market since 2013, I confess to you, my dear readers, that from the summer of 2020 to the winter of 2021 I was totally frustrated. I found it difficult to motivate the team of Mersat Real Estate, since the frustration was contagious to dozens of consultants and experts in our team, and it was really a hard time.
I thought about circumventing the recession crisis which hit the real estate market, especially the early months of last year, drawing on years of experience in investment and its management in both sectors; real estate and industry. However, with a little patience and market analysis, we, Mersat Real Estate, decided to accept the challenge, because everything was suggesting that there would be an opposite reaction in the market during the second half. As it was translated into a surprising rise and quick recovery for the Turkish Real Estate Market.
It is my pleasure to share with you my own readings of the 2021 real estate review, and my vision for the current year 2022. When we talk about Turkish Real Estate Market, we refer to the engine of economic growth par excellence, and the fastest recovering sector though the instability of 2021. Obviously, buying properties has continued in Turkey, which was just like a Lifeboat that saved the Turkish Economy against currency fluctuation of the Turkish Lira and the consequences of reducing bank interest rate accompanying the pandemic's impact.
According to the data of Turkey Statistical Authority, property sales to foreigners reached $7 billion during 2021, and the real estate sales sector to foreigners ranked third in the list of service exports after transportation and travel services. Sectors bet that Turkey would record high by the end of 2021, they have won the bet obviously. Where the number of real estate units that had been sold broke the previous record 45,500, and recorded 50,000-unit.
On the other hand, the global real estate market was deadlocked, with a serious loss of 70% of property sales to foreigners, where this percentage did not exceed 10% in the Turkish Real Estate Market in 2020 (outbreak peak of covid-19).
Real Estate in Turkey During the First Quarter of 2021
The Black Swan Effect
Following 2020, the world was still under the effect of the (Black Swan), where the spread of Covid-19 affected the whole spectrum of global economic activity which did not exclude the real estate and construction sector.
Throughout the year 2020 to the first quarter of 2021, buying a property was considered one of the most complex financial decisions ever made, as this sector witnessed the worst decrease in the past 100 years.
Towards the end of 2020, COVID-19 vaccines studies have been accelerated, with the start of giving the doses on a limited scale and moving towards normalizing the social life. Hence, the resumption of real estate growth expectations was increased in the first quarter of 2021. As if COVID-19 vaccines were also an economic vaccination to raise the immunity of the Turkish Real Estate Market to fluctuations.
According to figures from the Turkish Land Registry, the year started with 70,587 units. Compared to the same period of ( the first quarter of 2020), a slowdown was observed in real estate sales. The statistics released by the General Directorate of Land Registry and Cadastre in Turkey showed that the number of property sales during the first quarter of 2020 reached 341,000 units, while declined to 263,000 units during the same period in 2021 in parallel with the rise in interest rates at that time.
The reasons behind this decline are: seasonal downturn in the real estate market in winter, the repercussions of the general closure due to the epidemic, the market volatility financial and its direct impact on demand, increased construction costs as a result of the rise in interest rate.
The Second Quarter of 2021
The Slow Advancing Towards Peak
Burhan Kale (Eskişehir real estate agent for 25 years) predicted that the market activity will be doubled by the investments of foreigners and expatriate investors because of the epidemic.
Hence, those who were not able to come in 2020 due to the epidemic, will come to buy by the beginning of 2021. However, it seems that some foreigners and expatriate investors have not packed their bags yet to come to Turkey, even during the second quarter of 2021.
According to data from the Turkey Statistics Authority, apartment sales during the second quarter of 2021 reached 289,760 apartments, an increase of 10% compared to sales in the first quarter of that year, and of 2% compared to the sales in the second quarter of 2020.
It seemed that the Real Estate Market was still under the global epidemic effect, and had not recovered yet. As a result, the income distribution and profit was affected, leading to a change in many investors' preference accordingly.
While the construction industry was affected, housing units building costs were subject to the new market standards, which meant houses price increase and the operational costs of the contracting and real estate sector in general, leading to a slowdown in the pace of home sales according to official reports.
The factors that led to sales decline can be summarized as follows:
The beginning of the year continued to be under the seasonal effect (winter), and the subsequent continued stagnant under the epidemic influence, the volatility of demand, offers lack, and high costs resulting from the rise of interest rates.
The Third Quarter of 2021
Ascending to the Top
Arguably, the third quarter was the beginning of prosperity and recovery from the effects of the pandemic. By the end of the first half, from June 2021 specifically, the Turkish real estate sales index began to increase to about 185% during June 2021 compared to June 2020, and the properties sold during June 2021 reached 4,748 houses.
At the beginning of July, the country witnessed a total lifting of curfew and a move towards normalizing the social and economic life, a state of recovery and a return of confidence in the Turkish Real Estate Market. Along with governmental support programmes, vaccination campaigns, in parallel with laying the cornerstone for the first bridge on the Istanbul Canal, which drew the attention of those interested and wanting more new investment areas.
Real estate sales in July were 230320 sales, and the sales index continued to rise and reached a record high of 307,618 sales during August, the sales index continued to rise an incredible 316,818 sales in September, an increase of 2.86%. Undoubtedly, here we are talking about an income of 2 billion, 209 million, 892 thousand and 290 Turkish Lira in September alone.
During the first three quarters of 2021, the real estate titles earnings reached 14 billion, 483 million, 486 thousand and 736 Turkish Lira, which means a new golden record.
Owing to this rise in the third quarter accompanied by a general economic growth of 7.4% and a 143% increase in the number of tourists compared to the same period in 2020 exceeding 11 billion, all of which increased real estate growth to 4.7% during the third quarter alone.
The Fourth Quarter of 2021
Going up Till Flying High
The demand for real estate purchasing in Turkey continues to rise as companies' offers increase, The Turkish Lira exchange rate has declined and the value of the property which guarantees Turkish Citizenship is reduced, as well as the data of Turkey Statistical Authority confirmed this move.
In November, 178,814 houses were sold, the highest monthly sales figure in 2021. While 1,265,000 apartments were sold within 11 months since the beginning of 2021, was a high record. Not only this, but also sales to foreigners culminated in November with more than 50,000 on a monthly basis, and house price growth reached 40 percent.
During the first 11 months of this year, a record 1,265,000 units were recorded for house sales.
The number of real estate sales in the first 10 months of this year increased to 2,410,816 properties, according to the General Directorate of Land Registry and Cadastre attached to the Ministry of Environment, Urbanization and Climate Change.
Moreover, this was accompanied by an increase in rental prices in Turkey, more than 100% in one year for the new rents, and a 20-60% rise in old rents, in parallel with a 60% increase.
This is due to depreciation of the Turkish Lira and the decline in the exchange rate as a result of reducing interest rate, while the offers increased by Turkish real estate companies, which led to a frantic restless race to buy real estate in Turkey.
An Eye on 2021
According to the expectations of the General Directorate of Land Registry and Cadastre in Turkey, 2022 will break new ground, starting with a surge in house prices and the increased demand whereas the offers are limited.
As well as, the demand rates will also rise to new record levels as a reaction to the recession in 2020 until the first half of 2021. Furthermore, investors will take advantage of their investment stock and start one project after another according to houses' new prices and real estate units.
On the other hand, regarding the new features of real estate after COVID-19, the General Directorate of Land Registry and Cadastre says that houses with good ventilation, big balconies and large gardens have already begun to appear in 2020 and continued during 2021, and after the suspension of most projects starting in the fourth quarter of 2021, and will continue in 2022.
As if 2021 has left an effect similar to the domino effect, where each season affects the next season upwards, and 2022 will be affected in the same way definitely.
By: Mr. Abdulkader Tahhan
The Director General of Mersat Investment Group.
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