Huge Increase in Commercial Real Estate Prices: What Do Experts Say?

Commercial real estate prices increased significantly in the first quarter of 2024. According to the Commercial Real Estate Price Index (TGFE) data announced by the Central Bank of the Republic of Turkey (CBRT), commercial real estate prices increased by 12 percent on a quarterly basis, 81.7 percent in nominal terms and 8.9 percent in real terms on an annual basis. This increase is considered a remarkable development in terms of both economic and sectoral dynamics.
Detailed Increase Rates
While the shop price index across Turkey increased by 11.7 percent in the first quarter of 2024 compared to the previous quarter, it increased by 82.8 percent in nominal terms and 9.6 percent in real terms compared to the same period of the previous year. The office price index increased by 13 percent in the first quarter, increasing by 75.1 percent in nominal terms and 5 percent in real terms on an annual basis.
Looking at the TGFE changes for three major provinces, the index increased by 11.2 percent, 13.1 percent and 11.4 percent in Istanbul, Ankara and Izmir, respectively, in the first quarter of 2024. On an annual basis, an increase of 69.1 percent was recorded in Istanbul, 92.6 percent in Ankara and 81.3 percent in Izmir.
Experts attribute this increase in commercial real estate prices to several key factors:
Economic Stability and Growth: The recent stable growth performance of the Turkish economy has increased the demand for commercial real estate, leading to an increase in prices. The intensification of commercial activities, especially in big cities, has pushed real estate prices in these cities even higher.
Foreign Investor Interest: Turkey continues to be an attractive market for foreign investors. The interest of foreign investors in the commercial real estate market contributed to the increase in prices.
Inflation and Construction Costs: Increasing construction costs and high inflation rates have directly affected commercial real estate prices. Cost increases in the construction industry increased the prices of new projects and increased the value of existing real estate.
Urbanization and Increase in Demand: Population growth and urbanization process in big cities increased the demand for commercial real estate. Especially in metropolises such as Istanbul, Ankara and Izmir, the demand for commercial areas remains at high levels.
Future Expectations
Experts predict that commercial real estate prices will continue their upward trend in the coming period. Economic growth and continued foreign investor interest may lead to further increases in prices. However, increases in construction costs and inflation rates may challenge the balance in the sector. Therefore, it is important for investors to closely follow market dynamics and manage risks.
As a result, these increases observed in the commercial real estate market show that the activity and demand in the sector is strong. Experts state that if these trends continue, attractive opportunities may be presented for commercial real estate investors. However, they also warn that caution should be exercised against possible changes in market dynamics.
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