2023 Turkey Real Estate Market Overview

VSP’s 2023 Mid-Year Turkey Real Estate Market Overview research report is published!

Our research report includes the latest data, market overview and and future forecasts regarding the capital markets, real estate investment market, retail, office, logistics, hotel and residential markets, along with the macroeconomic outlook. Our key findings are as follows.


Economic activity has maintained its momentum despite strong challenges. Tightening of monetary policy in order to combat renewed inflationary pressures is expected to be a priority.

While a growth rate of 5.6% yoy was recorded in the Turkish economy in 2022, 4% yoy growth was recorded in Q1 2023 on the back of private consumption, followed by investments. Following the general elections, the direction of monetary policy changed and the policy rate increased to 25% in August 2023 with three consecutive interest rate hikes. Meanwhile, inflation, which followed and upward trend again in June, was recorded as 58.9% yoy in August 2023.


The difficulty of accessing credit is suppressing investment transactions, while investment market performance continues to vary by asset class.

Total foreign investment inflows to Turkey accounted for 4.83 billion USD as of H1 2023, recording a 30.9% yoy fall. While hotels are seen as must-have assets in portfolios in the real estate investment market with their foreign currency-based revenues, logistics warehouses and development lands located in tourism corridors dominated the total investment volume.


There are more signs of improvement in the retail market as the pandemic is left behind.

As of 2023 mid-year, the existing shopping centre supply reached the level of 14.1 million sq m across 455 centres in Turkey. Besides a substantial rise in inflation-adjusted shopping centre turnover figures, footfall entered positive territory in H1 2023 for the first time since the pandemic.


With the opening of the public banking complex of Istanbul Financial Center, Grade-A supply has increased in Istanbul. Prime rents continue to rise as vacancy rates decline in the face of high office space demand.

The existing Grade-A office supply in Istanbul increased to 6.6 million sq m GLA. While the vacancy rate in the CBD decreased to 11.3% in Q2 2023, prime rent rose to 850 per sq m per month with a 143% yoy rise. Computing and technology, e-commerce and aviation sectors took the highest share in total take-up volume.


Logistics demand maintains its momentum, led by retail and 3PL, while available supply is still a significant challenge for leasing activities.

The total existing logistics supply in the Marmara region, including the Istanbul and Kocaeli submarkets, was recorded at approximately 11 million sq m as of H1 2023. Following quiet activity last year, take-up volume 35.6% yoy rise as of H1 2023, retail and 3PL stand out in leasing activities.


While hotel profitability in Turkey shows a superior performance than Europe compared to 2019, price competition is anticipated due to decreasing occupancy rates

In H1 2023, a total of 22.9 million visitors visited Turkey, with a 17% increase compared to the previous year. Tourism revenues reached 21.7 billion USD, with a 27% yoy rise, and average expenditure per capita increased to 980 USD. While occupancy rates fell to 54.2% in Turkey, RevPAR increased to 65.1 EUR rose by 48% in H1 2023 compared to the same period in 2019.


As the total residential sales decreased, the momentum gained last year is being moderated in the residential market.

While the total number of residential units receiving construction permits rose by 17% yoy in Turkey, the total number of residential units receiving occupancy permits dropped by 24% in H1 2023. The construction cost index continued its upward trend, mainly stemming from a sudden rise in demand due to reconstruction efforts in the earthquake-affected areas, while residential sales prices rose by 95.6% yoy in Turkey. The wait-and-see policy during the elections, the timing of public holidays this year, and increasing prices, which tightened the buyer pool, have resulted in a loosening effect on total residential sales, whose numbers decreased by 22% yoy in Turkey and 28% yoy in Istanbul in H1 2023.