Do I invest in residential or commercial real estate in Turkey?

There are many types of real estate investment in Turkey, and in this article, we will try to explain the advantages and disadvantages of each of them in order to give everyone who wants to buy property in Turkey and intends to enter the real estate investment field in Turkey a comprehensive overview of the subject.

Commercial real estate investment: The investment is in a commercial office or shop and any type of real estate that is not intended for housing, and this investment is especially frequent in Istanbul.

Residential real estate investment: This type of investment includes types of real estate for housing, such as villas and houses, and is available in all Turkish cities.
What are the differences between investing in commercial real estate and residential real estate?

commercial real estate investment

Pros:
-The property owner does not have to take care of the expenses related to the repair, maintenance, and development of the property. Usually, the tenant undertakes matters of modifying the decor and developing the property in a way that suits his work, which makes it beautiful and achieves the purpose of using the property.
-Good financial profits for a long-term period, as the lease contract can extend for a period of 6 years or more in addition to the possibility of extension.
-The owner does not have to deal with the tenants directly, especially when the investment is relatively large, such as setting up a retail store, so the owner can solve the tenants’ problems or collect rent from them through real estate management agencies that solve such issues without the presence of him.
-Tenants are usually in good financial condition because they are merchants.

downsides:
-Real estate investment in Turkey within commercial real estate requires a lot of money because it needs a large cost.
-Usually, the tenants find another place to run their business under difficult economic conditions, which makes them leave the old place before the termination of the lease contract, which makes the owner’s property vacant for a long time and he has to cover ongoing costs such as water, electricity, maintenance, and many other costs until he finds another tenant.
-Investing in commercial real estate requires a lot of money to invest in this type of real estate, knowing that bank loans for this type of real estate are much less than residential real estate, so you must have abundant money before considering this type of investment.
-One of the disadvantages of this type of real estate is that it is sometimes difficult to find tenants.
-Difficulty selling real estate due to the lack of demand for buying or owning commercial real estate.

When you think of buying property in Turkey for the purpose of commercial investment, you should consider the following points:
-Property space: Tight spaces can hinder workflow and contribute to clutter and lack of organization. The front facade of the property should also show the working area to the clients, while the back part of the property is for storage.
-Availability of parking and transportation: there must be sufficient parking spaces for the employer, his employees, and customers, and the proximity of local bus lines near the property must be taken into account to facilitate the movement of workers and the arrival of employees and customers
-General environment: Although the designs and aesthetic additions are easy to modify, you have to match the general external appearance of your company with your style and brand, as marketing luxury goods in the old office space drives customers away.
-Legal matters: The issues of licensing the real estate and the goods or trade it promotes must be taken into consideration. For example, it is forbidden to sell alcohol within 100 meters of a school or mosque.
-Location: Location is everything. If your company needs an influx of customers, your business must be located on a busy main road. Therefore, you should look at local demographic data as companies that are close to public transportation and congested traffic are more expensive than buildings located on small streets, but as a result, they bring in higher returns.

Residential real estate investment

Pros:
-Ease of finding tenants in residential real estate because people are always looking for houses or apartments to live in.
-The cost of investing in residential real estate is lower than that of commercial real estate.
-Continuity of this type of investment Although the flow of funds may be little compared to commercial real estate, this type of investment continues without stopping.
-The property is not free of tenants, whether or not there are difficult economic conditions.
-Ease of selling residential real estate, especially in areas close to important sites and where there are public service facilities.

Downsides:
-You have to deal directly with the tenants and solve the problems yourself because hiring a property manager can be more expensive than renting.
-Facing problems such as not paying rent on time or not vacating the house when the lease ends.
-Damage caused by some tenants to the property, requires you to repair and maintain the property after the tenant leaves and before renting it to another, so you have to pay the maintenance costs.

real estate investment in Turkey, whatever its kind, will witness a great development in the coming periods, due to new projects in Turkey, which are concerned with developing infrastructures such as transportation and communication lines. This will make real estate investment in Turkey a unique and important opportunity to benefit from the high real estate prices and rents that increase by 10% annually.