Turning Istanbul’s Housing Problems into Long-Term Property Opportunities

When you first land in Istanbul, the city feels endless. Glass towers rise next to historic streets, cranes dot the skyline, and “For Sale” and “For Rent” boards seem to be everywhere. From a distance, it can look like a real-estate paradise.

But if you talk to people actually living here, a different story appears:

• Rents that jump sharply when you change apartments

• Families spending a big share of their income just to keep a roof over their heads

• Concerns about the age and earthquake resistance of buildings

• Confusion around how properties are really valued

Recent research by the Istanbul Planning Agency and academic studies on Turkey’s housing market show that these feelings are not just anecdotes – they are measurable realities.

In this article, we’ll walk through the main problems in Istanbul’s housing market – and then show how, for a careful investor, these same issues translate into long-term opportunities.

1. What are the main housing problems in Istanbul?

a) Fast-rising rents and affordability pressure

According to the Housing Problems Research: Current Status and Recommendations in Istanbul (Istanbul Planning Agency, 2021), about 30% of Istanbul’s residents live in rental housing, while around 62.4% live in homes they own. On paper, ownership looks high – but affordability is still a serious issue.

The study finds that, on average, housing expenses such as rent and loan instalments account for 28.6% of disposable household income, and low-income groups spend more than half of their monthly income just on basic needs like food and shelter.

Rent dynamics are especially challenging:

• 95.1% of surveyed residents (owners and tenants) believe general rent levels in Istanbul are high.

• During the COVID-19 period, 41.4% of tenants either could not pay their rent or had to delay it.

• Average rent for long-term tenants was measured at 1,541 TL, while those who rented a home in the last year paid an average of 2,561 TL – a difference of about 66.2%.

In other words, every time you move, you may face a very different – and much higher – rental reality.

b) Supply shaped by the investment market, not by social needs

Like the rest of Turkey, Istanbul’s housing supply is largely led by the private sector. Real estate is not only a basic shelter need; it is also seen as an important investment and wealth-protection tool.

This has two major consequences:

• Housing policies tend to be less inclusive for low-income groups with limited purchasing power

• Mortgage loans, while essential for home ownership, often have monthly instalments above the average household’s ability to pay

Long, inflexible loan structures – combined with economic crisis and the pandemic – push some households towards lower-quality properties or even into situations where they risk losing their homes.

c) Housing shortage and rising construction costs

The same Istanbul Planning Agency report notes that in recent years, high interest rates and rising construction costs have slowed down new housing production. New supply has not kept pace with Istanbul’s growing population.

At the same time:

• New housing is often targeted at higher-income groups

• Households that cannot afford to buy are forced to stay in the rental market, increasing demand for rental homes and pushing rents even higher

This combination – limited supply plus strong demand – is a key driver of price and rent increases.

d) Aging building stock and earthquake risk

Istanbul is a high-risk earthquake region, and building age is a critical concern. Research on housing in the city shows that:

• Around 255,000 structures were built before 1980, and another 538,000 between 1980 and 2000

• Many of these did not receive the engineering and inspection services that became mandatory under Turkey’s 2001 building inspection law, and are therefore considered risky

• About 27% of survey participants live in buildings aged 21–30 years, and 24.7% in buildings 31 years and older

Given the expectation of a major Istanbul earthquake, this is not only a technical issue but a social and economic one as well.

e) Shrinking living spaces and quality-of-life concerns

Experts interviewed in the same report state that increased costs and high profit targets have reduced the average size of newly built or renovated homes. Intermediate spaces such as balconies – which provide a buffer between indoor and outdoor life – are disappearing in many projects.

Interestingly, there is still strong demand in Istanbul for larger dwellings with higher square meters compared to many global metropolises, which means there is a mismatch between what people want and what is being built.

f) Structural and legal issues in valuation

Another layer of complexity comes from how real estate is valued. A 2023 study titled Investigation of Some Real Estate Valuation Problems in Turkey (Koç, 2023) describes:

• Contradictions in real estate legislation

• Application errors in valuation

• Static valuation structures that do not keep up with changing market prices

The study notes that failure to update property market values in line with real selling prices was one of the reasons the 2008 global financial crisis spread through real estate markets.

For buyers and investors, this means that understanding “real value” requires more work than simply looking at an official appraisal.

2. So why do people still invest in Istanbul?

With all these challenges, a natural question is: Why would anyone invest here?

The answer lies in the difference between short-term complexity and long-term fundamentals.

A study on the Factors Influencing Prices of Residential Real Estate in Turkey (Al Habash & Unanoğlu, 2022) shows that housing prices in Turkey – and especially in large cities – are strongly linked to structural macroeconomic drivers such as population growth, inflation, GDP, and urbanisation.

Some of the key fundamentals are:

• Real estate is a core part of Turkey’s economy: the sector accounts for more than 23.5% of the country’s GDP.

• Population growth and urbanisation: Turkey’s population is rising and is projected to reach around 88.5 million by 2030, with a large share of people in the 15–65 working-age group – a strong driver of housing demand.

• Strategic location: Turkey’s position between Europe and Asia, and Istanbul’s role as a major international hub with one of the largest airports in the region, make the city a natural crossroad for trade, tourism and logistics.

• Government support and urban renewal: the government and municipalities are investing in infrastructure, logistics centres and urban renovation. Programs like those of TOKİ (Housing Development Administration) aim to deliver large numbers of residences, while urban transformation projects are replacing older, risky buildings with new ones built to modern seismic standards.

• Legal ability for foreigners to own property: current regulations allow foreigners to purchase land and property, whether or not the land is under the formal infrastructure planning scheme.

At the same time, a SWOT analysis of Turkey’s real-estate market highlights that:

• Land is expensive in major cities like Istanbul, and many existing homes are not eligible for mortgages – a weakness and barrier in the short term

• Earthquake risk is a structural threat in the Marmara region

• But demand for housing exceeds supply, and the quality of new housing is increasing to meet seismic standards – clear signs of growth potential for well-chosen projects.

In simple language: Istanbul is a difficult market for households, but a strong one for strategic, long-term investors who understand the rules of the game.

3. How can an investor turn problems into opportunities?

Let’s look at how each “problem” can become a signal for opportunity if managed correctly.

a) High rents = strong rental demand

Rapid rent increases show that:

• Central, well-connected districts with quality housing are in high demand

• Tenants are willing to pay a premium to stay close to jobs, schools and services

For an investor, this means that a carefully selected apartment in a good location, in a structurally sound building, can generate attractive and resilient rental income – especially if you structure leases and tenant profiles correctly.

b) Shortage of quality housing = room for professional projects

Because much of the existing stock is old or does not fully meet current standards, there is a growing gap between what households want (safe, well-planned, modern homes) and what is available.

Developers and investors who focus on:

• New projects built to current earthquake and energy standards

• Human-scale design with proper balconies and semi-open spaces

• Reasonable unit sizes that match the real needs of families

can position themselves on the “quality” side of the market, not the speculative side.

c) Earthquake risk = clear selection criteria

Earthquake risk is real, but it is also measurable. For investors, this creates a simple filter:

• Prefer buildings constructed after stricter regulations and inspection rules

• Look for projects with clear engineering documentation, soil reports and quality control

• Focus on neighbourhoods where urban transformation is underway or planned

Instead of seeing risk as a reason to avoid Istanbul completely, investors can use it as a tool to select better projects and negotiate smarter.

d) Complex valuation = advantage for informed buyers

Yes, valuation in Turkey has its complications – contradictions in legislation, outdated values, and methodological issues have been documented by researchers.

But this complexity also means that:

• Investors who work with experienced local valuation experts and lawyers can find mis-priced assets

• Proper due diligence (technical, legal and financial) can uncover real value where the headline numbers look confusing

In a market where not everyone reads the fine print, those who do can find better entry points.

e) Macro volatility = importance of the long view

Studies on Turkey’s residential real estate show that house prices are significantly linked to macroeconomic factors such as inflation, GDP and population growth. Short-term volatility is expected – but the long-term trend has been upward.

For foreign investors especially, this means:

• Avoid making decisions based only on a single year’s price movement

• Focus on long-term fundamentals: demographic growth, urbanisation, infrastructure, tourism and currency position

• Use professional advice to structure purchases in a way that balances local risks and your home-country financial reality

4. What does all this mean if you’re thinking of buying in Istanbul?

If you are considering a home or investment property in Istanbul, these are the key messages from the research:

1. The problems are real and measurable – high rents, affordability pressure, aging stock and earthquake risk are documented in official studies, not just headlines.

2. The demand is structural – population growth, urbanisation, tourism and Turkey’s strategic location will keep housing demand strong over the long term.

3. The market rewards informed decisions – investors who understand building age, location, valuation issues and legal details can position themselves on the right side of the risk/return equation.

4. Quality and compliance matter more than ever – new, compliant, well-designed projects in the right districts will hold value far better than low-quality stock that simply looks cheap today.

Istanbul is not a market for blind speculation. But it is a market for strategic buyers who respect the challenges, study the data and work with local professionals who know how to navigate them.

If you are ready to move beyond the headlines – and into a data-driven view of Istanbul’s housing reality – the city’s current “problems” may be exactly what creates your next opportunity.

5. References

• Istanbul Planning Agency (2021). Housing Problems Research: Current Status and Recommendations in Istanbul.

• Al Habash, A., & Unanoğlu, M. (2022). Factors Influencing Prices of Residential Real Estate in Turkey. Florya Chronicles of Political Economy, 8(2), 153–172.

• Koç, V. (2023). Investigation of Some Real Estate Valuation Problems in Turkey. Journal of Advanced Research in Natural and Applied Sciences, 9(4), 854–870.tNew Blog PostNew Blog PostNew Blog PostNew Blog Post