Istanbul, Turkey's largest city, attracts expatriates from all over the world. By the start of 2023, the city was home to over 700,000 residence permit holders, and as a result, some areas have become restricted for first residence permit applicants. Nevertheless, investor interest in Istanbul remains robust. Explore the top and most profitable sectors for investment in this vibrant city.
Why It Is Profitable to Invest in Istanbul
There are many reasons why foreign investors choose Istanbul.
- Economic Hub: Istanbul serves as the economic epicentre of the Republic of Turkey, housing key institutions such as stock markets, banks, financial institutions, international ports, two airports, and major corporations.
- Continuous Growth: The city experiences ongoing development, leading to appreciating real estate prices. Between July 2022 and July 2023, there was an impressive annual price increase of 91%.
- Vast Population: With approximately 15 million residents and millions of annual tourists, Istanbul boasts well-developed construction, hospitality, and service sectors, creating abundant investment opportunities.
- Availability for Residence: Some neighbourhoods in Istanbul remain open to residence permit applicants, facilitating the relocation process for newcomers.
- Tax Advantages: Istanbul offers low real estate tax rates compared to European countries, making it an attractive option for investors.
- Rental and Resale Opportunities: The city provides advantageous terms for leasing and reselling both residential and commercial real estate properties.
Which Sectors Are Worth Investing In
Among the various sectors available for investment in the Republic of Turkey, the most profitable options include:
- Residential Real Estate: Istanbul's real estate market has shown impressive growth, with an average annual price increase of 25% for new buildings, and a remarkable 91% increase in the past year, as reported by the Endeksa data analytics platform. Central areas command square metre prices ranging from $2,500 to $3,650, with a potential return on investment (ROI) of up to 10% annually, excluding inflation.
- Commercial Real Estate: Investors can explore opportunities in commercial real estate, including hotels, retail spaces, and office properties, which can be utilised for business development, leasing, or resale.
- Tourism: Istanbul experiences a continuous rise in tourist arrivals, surpassing 16 million visitors in 2022. This growth makes investments in the hospitality and entertainment sectors particularly promising.
Production: The city boasts a diverse manufacturing sector, producing items such as furniture, electronics, building materials, and automotive components. Additionally, Istanbul features free economic zones where entrepreneurs can benefit from exemptions on customs duties, VAT, and other privileges.
New buildings in Turkey
Residence Permit and Citizenship by Investment
Obtaining a first residence permit for tourists in Turkey has become less common. However, securing a residence permit through real estate investment remains a more accessible option. There are several districts in Istanbul where the foreign population is still less than 20%. By purchasing real estate valued at a minimum of $75,000 in these areas, you can qualify for a residence permit.
Istanbul is the ideal choice for investors looking to participate in the Citizenship by Investment program. The required investment amount varies depending on the type of investment:
- Real Estate: The minimum investment in real estate starts at $400,000. It's worth noting that this threshold doesn't need to be met with a single property; the total value of all owned units is considered. Furthermore, you have the flexibility to sell these properties after three years without jeopardising your new passport.
- Other Investment Options: If you choose to make a deposit, commit to investment funds, or purchase bonds, a minimum investment of $500,000 is required. Similarly, these funds can be safely withdrawn after a three-year period.
In a Nutshell
Despite the fluctuating value of the lira, Turkey continues to attract investment interest. Istanbul, the country's major economic centre, offers numerous profitable investment opportunities. Foreign capital primarily flows into residential and commercial real estate, investment funds, construction, and tourism sectors. Istanbul stands out as the most favourable city in Turkey for participating in the Citizenship by Investment program.
Cover photo: frimufilms (Freepik)