Istanbul Property Market: The Cheapest in Asia

Last updated April 14th, 2022.


Turkey’s currency, the lira, has plummeted over the past several years. In fact, the lira’s decline has been so dramatic that the Istanbul property market is now Asia’s cheapest.

You can now buy an apartment in Istanbul for well under US$1,500 per square meter (around $140 per square foot) outside the city center. Prime, centrally properties are not much more expensive than that.

A search on Turkish a real estate directory, like Zingat, will turn up luxury apartments in Istanbul priced at barely above US$1,000 per square meter. They sometimes even enjoy unblocked views of the Bosphorus and other amenities.

Real estate prices this low are practically unheard of in any large, reasonably-developed global city. But will cheap home values in Istanbul last forever?


Wealthy foreigners, especially from the Middle East, have begun buying up luxury mansions on the Bosporus. They might consider Turkey a safe haven, although we strongly disagree.


Turkish Lira Crash: What Happened?

Our biggest problem here isn’t with Turkey’s property market itself – home prices in Istanbul have hardly changed in terms of lira. Local property buyers wouldn’t notice a major difference in terms of affordability.

However, the lira’s crash means foreign buyers who pay with their home currency are now seeing significant discounts on property in Istanbul, Ankara, and other Turkish cities.

The lira began its multiyear plummet back in 2018 following tariffs imposed by the United States. It was the climax of a huge diplomatic feud between Washington and Ankara over an American pastor’s arrest.

Initially, such a drastic move in the lira was probably more psychological than anything. Yet this event caused Turkey’s currency to fall from approximately 4.50 to the dollar to about 7.00 by August of that year.

Since then, the lira’s depreciation has only intensified. The lira reached all-time lows of approximately 18.00 to the dollar in late-2021.

Basically: tariffs broke open some old wounds in Turkey’s economy. The lira then proceeded to lose around 70% of its international purchasing power over the years, as the nation’s structural issues became apparent.

What will happen with the lira in 2022, 2023 and beyond? Our professional opinion is that it will continue depreciating bar any significant policy changes.


Massive Economic Issues in Turkey

Tariffs themselves did not directly cause the lira’s decline. But among other factors, they renewed existing concerns about Turkey’s economy.

First, the country suffers from a staggering amount of corporate debt. Turkish businesses now owe debt above 65% worth of the entire country’s GDP and rising.


Turkish National Debt 2020s Chart

A chart showing Turkey’s historical, and predicted, debt to GDP ratio between 2015 and 2025 according to the IMF. And considering new developments in the 2020s, the nation’s economic situation will deteriorate even quicker.

It gets even worse once you realize most of this debt is denominated in US dollars rather than Turkish lira.

As such, the amount borrowers owe have effectively tripled over the past five years. Turkish corporate debtors must pay off their loans in terms of dollars. Meanwhile, the lira is depreciating rapidly.

Second, public spending is being wasted on expensive infrastructure projects. Many of them are poorly conceived while few will ever become a net gain for the Turkish economy.

Kanal Istanbul” is just one example. It’s a planned 50km canal that will run alongside the Bosphorus and is expected to cost more than US$10 billion.

The new canal has two big problems though. For starters, the Black Sea doesn’t get anywhere near enough trade to warrant its massive cost. Two, international law clearly says that transit through the Bosporus is free-of-charge, which makes a canal redundant.

Last, yet perhaps most importantly, Turkey has financial management problems that won’t be solved anytime soon.

President Erdogan essentially made himself Turkey’s lifetime leader, following elections in 2016. He is the now the “final word” when it comes to many important decisions in the country, including economic ones.

Nonetheless loved by his conservative base, Erdogan’s strong point arguably isn’t economics though. He holds the controversial view that higher interest rates lead to inflation, and has remained adamant that rates must be lowered.

Erdogan quickly fires any high-ranking economic official who dares to raise interest rates, even though it’s probably the right decision. Turkey has had three different finance ministers since in less than five years, in fact.

The result is that international investors are losing faith in Turkey, and the lira continues its steady decline.


Why You Still Shouldn’t Buy Property in Istanbul

U.S. tariffs might have triggered the lira’s crisis in the first. Unfortunately, Turkey’s problems are immense and go far beyond recent politics.

Quite frankly, Turkey is a total economic basket case. Major structural issues are not being solved and will probably get worse before ever improving.

Istanbul’s property market suffered from oversupply way before the lira crisis too. Large scale urban housing projects were already creating a supply glut many years ago.

Plus, Turkey’s lira has always maintained its worrying trend of depreciation. Did you make the mistake of holding lira during the past 10 years? If so, you lost roughly 80% of your purchasing power.

The lira has never shown itself capable of appreciating over the long-term. I don’t believe that will change within the near future.

In summary: you shouldn’t fall into a Turkish lira value trap. Property in Istanbul might appear cheap, yet the nation’s economic crisis is only getting started.

You shouldn’t bet on a lira comeback anytime soon. Consider buying real estate in places like Malaysia or the Philippines instead if you’re looking to own foreign property along with currency appreciation potential.


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