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Beyond ordinary real estate investment, luxury real estate investment is characterized by comfort, aesthetic design, and exclusive social amenities. But most importantly, the return on investment is often above average. For real estate investors, one of the most important criteria is the rental amortization period. In other words, investors care about how many years it will take for the rental income from a property to pay for itself.
While there isn't a comprehensive study on the amortization period for different types of housing in Türkiye, there are city-based results. In the context of luxury housing investment, we can evaluate this data with a degree of bias.
The average return on investment (amortization) is a crucial factor in real estate investment. While many investors aim for increased resale value, rental income remains important. In this regard, a study conducted by Endeksa for the second quarter of 2022 provides significant data. The study includes average return on investment data for the 30 cities with the highest number of housing sales in Türkiye.
According to the data, the amortization periods in the top 10 cities with the highest number of housing sales in Türkiye are as follows:
In luxury real estate investments, investors may consider these amortization periods. However, it's worth considering that the social and cultural amenities and lifestyle offered by luxury homes can alter the equation. Furthermore, purchasing a luxury home at a price below its market value, a significant advantage, is another factor to consider.
For real estate investors, rental income is a safe haven. However, the significant inflation increase in the last few years has affected the entire real estate market. Those considering investing in luxury properties should also take this factor into account. In a market where 10-20 year terms are discussed, you may have a chance to recoup your investment with rental income in less than 15 years.
The location of a housing project, its proximity to important locations within the city, its development potential, and the demographic profile of the area are all important factors. Specifically in Istanbul, earthquake resistance is crucial. Beyond this, the soil structure of the district or neighborhood is also a key consideration for investors. The advantage of luxury housing, particularly villa-type or low-rise buildings, is that projects often receive top marks for earthquake resistance.
In short, the average payback period for rental properties in Turkey is around 20 years. However, when different parameters are taken into account, an investor who makes the right choices can reduce this period to under 15 years. This requires following the right projects and investing at the right time.
You can contact me to review our luxury property portfolio and learn about potential opportunities.