According to the Housing Price Index for Turkey (THPI 2010=100) data, Turkey’s residential prices have increased 93% in the last five years and the Istanbul Residential market stands out with a 140% increase. Published by the Central Bank of Turkey, the THPI has been calculated by using the appraised values of houses compiled from valuation reports prepared at the stage of approval of individual hous- ing loans extended by banks published by the Central Bank of Turkey.

Currently the THPI increased 17% in november 2015 and Istanbul ranked first with a 24% increase.

Despite the changes over the years, the ratio of the mortgage sales in Istanbul to the mortgage sales in the entire country has been decreasing over the years. The decline in this ratio shows that there has been an increase in the number of qualified housing projects in other cities throughout Turkey.

The recent data of housing loans in Turkey shows that there is a direct relationship between the interest rates and the volume of housing loans. Interest rates on housing loans have increased through 2015 and reached about 1.10% (per month) and correspondingly the volume of loans has decreased.

As of December 2015, there was a housing loan balance of US$ 49.2 billion throughout Turkey. This figure represents 9.5% of total loans.

Despite the slowdown facing Istanbul’s residential market, demand for residential projects targeting lower-middle and middle income groups remains strong.

According to TUIK’s data, in 2015, 17% of the residential units sold in Istanbul are in Esenyurt, followed by 5% in Beylikdüzü and 4% in Pendik and sancaktepe, the regions catering mostly to middle and lower-middle income groups. On the other hand, the data shows the Beşiktaş, Şişli, sarıyer and Beyoğlu districts, which cater to higher income groups, adds up to only 5%.

Due to the scarcity and high price of developable land in Istanbul’s city center, projects targeting middle income groups are often developed in the suburban areas, much of which has been determined by highway development projects.

With the construction of the 3rd Bridge and the connecting north Marmara Highway project; sancaktepe, sultanbeyli, Pendik and Tuzla districts on the Asian side, and Başakşehir, Arnavutköy on the European side of Istanbul present opportunities for developments targeting the lower-middle, middle and upper-middle income groups.

Forward looking; in addition, the urban renewal projects in Istanbul’s residential market o er new opportunities for investors. In the near future, Piyalepaşa, sütlüce and Gaziosmanpaşa on the European side of Istanbul will be the highlights in terms of urban renewal and reno- vation.

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