Inflation in Turkey: An Unparalleled Investment Opportunity
Seek opportunities amidst chaos.
The title may capture attention in an unusual manner, yet it is well-known that periods of economic challenges can be sources of wealth creation, with every crisis hiding a golden opportunity.
This article delves into key aspects of Turkey's economic situation, which demands a deeper analysis:
Firstly, significant inflation in Turkey:
The Turkish economy is experiencing a notable increase in the prices of goods and assets, including real estate, leading to a substantial annual rise in their value.
Secondly, the depreciation of the Turkish Lira:
Holders of the Turkish Lira are losing a portion of their wealth and purchasing power with each passing day, as a result of the local currency's depreciation.
Thirdly, the very high interest rates:
At the time of writing, the interest rate set by the Central Bank of Turkey has reached 45%, and it may exceed 60% when obtaining bank loans, negatively impacting buying and selling activities.
Fourthly, pegging prices to the dollar:
Particularly in the real estate sector, construction companies tend to peg sale installments to the dollar to protect the value of their sales from currency fluctuations.
From the above analysis, it is clear that inflation and high interest rates are putting significant pressure on the Turkish economy. However, the inherent strength of the Turkish economy, which will help overcome the current crisis, is highlighted by its diverse industrial sectors, tourism, and oil discoveries.
Given the current opportunity, investing in real estate, especially through instalment plans in Turkish Lira, presents an excellent investment option. Despite the scarcity of instalment offers in Lira, some construction companies provide these options, offering the possibility to pay between 35% to 50% of the property value upfront and instalment the rest interest-free in Turkish Lira.
The benefits of seizing this opportunity include:
- The value of the property increases with rising inflation.
- The total value of the property purchase decreases for you as a buyer with the depreciation of the Turkish Lira, and the decrease in the value of the installments.
- Benefit from the improved economic situation upon completing the installments, which increases the market value of the property and yields significant profits.
Investors should look beyond the current challenges, leveraging the valuable investment opportunities presented by the tough economic conditions, especially in the Turkish real estate market. These opportunities require strategic vision and the courage to move against the general trend to achieve significant long-term profits.
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Analysis of the Turkish Real Estate Market: Outlook for the Next Five Years
Current data indicates that the Turkish real estate market will continue to grow in nominal prices over the coming years. However, it’s important to distinguish between nominal growth and real growth. While Turkey recorded one of the highest annual nominal price increases globally (about 46.4%), real prices have declined by about 14% per year due to high inflation. In other words, although property prices have risen sharply in Turkish lira, the actual purchasing power of these assets has declined. Still, nominal prices are expected to continue rising due to strong domestic demand and limited supply, while real price increases will depend on inflation control.
From a macroeconomic perspective, the Turkish government has shifted to tighter fiscal and monetary policies since mid-2023 to fight inflation. The official Medium-Term Economic Plan targets a reduction in inflation from over 50% to single-digit levels (around 9.7%) by 2026. Credit rating agencies have responded positively—both Fitch and S&P upgraded Turkey's ratings in 2024, reflecting improved fiscal discipline and growing reserves. These developments suggest that, if economic reforms stay on track, we may see a gradual decline in inflation by 2030, leading to greater currency stability and restored investor confidence.
On the supply and demand side, housing production currently falls short of meeting Turkey’s annual housing needs. Industry experts estimate that only about half the annual housing demand is being met, due to rising construction costs and fewer new housing starts. This supply shortage will likely continue to support property prices despite economic fluctuations. On the other hand, foreign demand peaked in 2022 but dropped significantly in 2023–2024 due to new residency restrictions and a higher minimum investment amount for Turkish citizenship (from $250,000 to $400,000). In 2024, foreign purchases accounted for just 1.6% of total property transactions, down from 3–5% in prior years. However, this demand is expected to recover gradually as inflation cools and the lira stabilizes.
Looking ahead to 2030, the Turkish real estate market is expected to remain strong due to fundamental drivers like a large, young population, urban migration, continued infrastructure investments, and tourism in coastal cities. If the government succeeds in reducing inflation to single digits, investors may enjoy both nominal and real capital gains. If inflation persists, price gains may remain largely nominal, offering limited real return for investors. Overall, the prevailing outlook is that the Turkish market will experience greater economic stability and stronger investor confidence by 2026 and beyond.
Dubai Residential Real Estate Market Forecast to 2040
Residential real estate prices in Dubai have seen strong increases recently, driven by high demand from both local and international buyers. There was a year-on-year increase of about 20% in home prices during the third quarter of 2024, and the average sales price in 2024 rose by about 20% to approximately 1,597 AED per square foot. These significant increases came after a period of moderate growth between 2018 and 2020, confirming the return of momentum to the Dubai real estate market after the COVID-19 pandemic.
Prices are expected to continue their upward trajectory in the medium term, but at a more stable pace. Knight Frank estimates an additional rise of about 8% in 2025, and local real estate developers expect annual price increases of between 5-8% in the coming few years. These forecasts are based on strong and sustainable demand but also consider an increase in supply and a better market balance. Over the long term up to 2040, prices are likely to continue rising supported by population growth and planned major projects, although there may be short-term correction cycles. For example, villa prices currently exceed the previous peak levels (in 2014) by more than 30%, which means the market may experience a relative slowdown or minor correction after periods of significant increase before continuing its sustainable upward trend.
Why Invest in Dubai: Top 9 Reasons
Dubai has emerged as one of the most attractive real estate investment destinations in the world. Known for its tax-free environment, high returns on investment, and luxurious lifestyle, Dubai continues to draw investors from all over the globe. Whether you are looking to diversify your investment portfolio or purchase a property for personal use, Dubai offers numerous advantages.
In this article, we explore the top nine reasons why investing in Dubai real estate is a smart choice, the best areas for investment, the future of Dubai’s property market, and how Baytii can help you invest in Dubai seamlessly.
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