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Description
Project: 5 year rental and sale - 167% profit margin expected.
This four story property is located in the Kuloglu neighborhood of Beyoglu. The property is located adjacent to a historic Hamam (Turkish bath) and near a popular antique district.
The building is currently the empty shell of an abandoned carpenter’s woodshop and requires substantial renovation to create a livable environment.
The ground floor, 1st floor, and 2nd floor are 68m2 and the 3rd is a 35m2 studio with a 33 m2 terrace overlooking the Hamam.
Investment Strategy
This property is located in a quiete neighborhood and would best be utilized by renovating it into residential units. Due to the property being located in an underdeveloped neighhorhood, we feel it would be wise to create 4 separate units with the possibility of combining the 2nd and 3rd floors at a later date when the area rent levels allow for a premium needed to justify a duplex apartment. The building requires a complete renovation including a new façade, new electrical and sanitary systems, a new roof, windows and doors, and all interior finishes. Our intention is to market these apartments towards young professionals and couples without children. The apartments’ quality will be considered above the market average while the immediate location is considered average. We would renovate the building to target the rental market, with the idea of potentially converting them to for-sale units as the neighborhood quality increases.
Timeline
This project has an estimated development timeline of 1 year. We estimate that architectural plans and government approvals to take 5 months with construction occurring within 7 months. Pre-rental agreements will begin during the later stages of construction.
Beyoglu, Istanbul
Place Overseas has primarily focused on the Beyoglu submarket for investment properties due to our belief that the area is the most undervalued area in Istanbul for long term growth potential.
Beyoglu is considered the city centre for the transportation network, social scene and cultural venues, but over the past several decades have seen the city’s elite move to the suburbs where newly constructed housing and plentiful land offered a better lifestyle.
Recently however, there has begun a shift of people moving back to the city centre as roadway traffic has become a major issue and the municipalities have started to undertake action to regenerate much of the problematic aspects associated with living in the city centre.
Istanbul’s highways and streets are at capacity and in many areas expanding mass transit is the only available alternative to relieve this congestion. Beyoglu is very well served by public transportation. Beyoglu‘s mass transit infrastructure includes a regional bus hub, a major metro station, two ferry ports, a light rail line, a funicular, and the Tunel (the world’s 2nd oldest underground trolley). In addition, the Turkish government is currently extending the metro line south to the seaside city of Yenikapi and north to the Maslak business district.
Beyoglu, which is steeped in history from the Ottoman times with many buildings exhibiting classic Greek and Armenian architecture had been discarded for some time by the more well heeled Istanbulites. The area had become a dangerous place to walk late at night despite the vibrant nightlife. Much of the building stock had been left untended and discarded. This however is changing, the Beyoglu municipality has been actively working to redevelop the area while keeping the cultural integrity intact. A critical mass of redevelopment work has begun and the momentum for change in the area is becoming more obvious by the day. Rents have started increasing as high income individuals have become more keen to live there.
Market Segmentation for Beyoglu
1. Young Professionals
Beyoglu is a very popular area among young professionals due to the extensive social and nightlife options found around Taksim. The area’s atmosphere is fast-paced and busy and is accessible by public transportation from nearly every major region in Istanbul. A majority of the high-paying industries such as banking, energy, telecoms, real estate, and medical services can be found near the major Central Business District corridor that includes Maslak, Levent, Gayrettepe, ªiºli, and Taksim and they are all conveniently connected to Beyoglu via the Metro line.
2. International Corporations “buying a hotel room”
International Corporations are a potential client of residential properties that is often overlooked by investors. Many companies look to purchase or rent properties to house temporarily stationed employees rather than continuously booking hotel rooms. With a concentration of international corporations in the vicinity of Beyoglu, this market segment has significant potential.
3. Foreign second home buyers
Beyoglu is one of the most popular districts in Istanbul for foreign buyers of real estate. As a result, several neighborhoods in Beyoglu have reached the ceiling of 0.5 percentage of land in any given district that can be owned by foreigners as described by in the Turkish Foreign Direct Investment law of 2003. The law is changing to allow more foreign persons to purchase by increasing the ceiling to 10%.
4. Couples w/o children
Dual income couples without children are often able to better afford the kind of lifestyle that Beyoglu offers. Many of the same amenities that appeal to single young professionals also apply to professional couples; parks, cafes, upscale restaurants, plentiful retail options, and are all available in Beyoglu.
5. Urban families
There is a segment of families in Istanbul that either prefer an urban environment or find it a necessary due to the location of their jobs and decide to settle down in the core Istanbul neighborhoods. While this segment often cannot afford the price points of many of the renovated or newly constructed buildings that our investors will provide the market with, it is important to take note of this segment and continuously try to find opportunities to broaden the spectrum of potential customers.
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