A ten-year view of Istanbul residential is really three views — demographics, currency, and construction cost — and they do not move together.
Demographics
The most reliable of the three. Household formation in the city continues to outpace completions in the connected districts, and internal migration has been remarkably insensitive to every shock of the last decade. If nothing else in this note holds, this will.
Currency
The least reliable, and the one most often used to sell the market to international buyers. A currency thesis is a bet on the timing of a repricing, not on the asset, and it has produced most of the disappointment we have seen from foreign investors in this market.
If your return requires the currency to do something specific, you have bought a macro position with a building attached.
Construction cost
The one that will decide yields between now and 2034. Costs have stabilised at a level that materially changes what can be built profitably in the mid-market, and we expect that to push supply toward either the top of the market or genuinely dense product, with relatively little in between.
Where that leaves yields
- Rental yields in connected districts hold or improve, on supply constraint rather than on rent growth.
- Capital values become more dispersed by district than they have been.
- The mid-market gap widens, and it is the most interesting place to be building.
None of this is a forecast we would underwrite a single asset against. It is the frame we use to decide which questions to ask about one.