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Turkish lira collapse/ real estate prices prediction?

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SusanSharandon

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Oct 17, 2021
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#1
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1 dollar = 17 TL today and the stock market in Turkey halted its operations due to the crash.
I've been keeping an eye on real estate prices in Istanbul for months now as the lira collapsed, but so far they seem steady. I'm assuming real estate works as a hedge for inflation and that also foreign investors might keep the price up, however (probably due to wishful thinking) I keep wandering if we might get to see a dip in the real estate prices soon. What do you guys think?
 
#3
I also have another question related to this topic if anyone has a clue (and pardon my lack of financial literacy, I am trying to learn as much as I can) : the public oppinion seems to atttribute the lira crash to the low interest rate (low interest rate -> many borrowers -> more money in circulation -> prices inflate). However, the interest rate in US for example seems to be even lower than in Turkey and yet we don't see the same chaos. Why? Any other economical reason that I'm missing or tinfoil hat reasons (like Turkey refusing certain monetary interventionism and triggering the wrath of these entities)?
 
#6
Doing anything in Turkey if you are a foreigner right now is for the brave. You maybe able to do your homework and find some mis-priced real estate to invest in but not without downside risk.

Soon Turkey should be starting to see higher exports due to weaker Lira which should lead to a current account surplus in principal ns2. Long term Turkey will do fine as Turkey remains a middle of the road productive country. But something tells me the west wants to see Erodgan fail with his polices.
 
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#7
Update (as I've been keeping in touch with various real estate agents in Istanbul and also constantly browsing through listing on the local Turkish market): the prices for real estate have increased A LOT (aprox 30%-40% from 2 months ago). I feel so confused.

While the lira dropped, the prices were pegged to the dollar. So let's say an apartment was 100k USD two months ago when 1 USD = 10 TL (more or less). it was listed first 1000K TL, then 1200K TL, then 1400K TL, etc, as the lira dropped. The price in USD remained the same (100K). The price in TL increased with the rate. OK. However, once the lira stopped dropping and made a recovery back to the price it was 2 months ago, the goddamn apartment REMAINED at 1400K TL, but now the price in dollars is ~140K USD.

My head hurts and I don't even know how to look at this.
Edit: some numbers
 
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#8
SusanSharandon said:
Update (as I've been keeping in touch with various real estate agents in Istanbul and also constantly browsing through listing on the local Turkish market): the prices for real estate have increased A LOT (aprox 30%-40% from 2 months ago). I feel so confused.
Click to expand...
Asking real estate agents if prices rise is like asking a pimp if his girls are hot... of course they will tell you that prices are always rising, forever and you need to buy now before it's too late.

This is how Turkey ETF looks since 2009 and I don't need to tell you how all the "dip buyers" fared during this time:

1640530587110.webp
 
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#9
SusanSharandon said:
Update (as I've been keeping in touch with various real estate agents in Istanbul and also constantly browsing through listing on the local Turkish market): the prices for real estate have increased A LOT (aprox 30%-40% from 2 months ago). I feel so confused.

While the lira dropped, the prices were pegged to the dollar. So let's say an apartment was 100k USD two months ago when 1 USD = 10 TL (more or less). it was listed first 1000K TL, then 1200K TL, then 1400K TL, etc, as the lira dropped. The price in USD remained the same (100K). The price in TL increased with the rate. OK. However, once the lira stopped dropping and made a recovery back to the price it was 2 months ago, the goddamn apartment REMAINED at 1400K TL, but now the price in dollars is ~140K USD.

My head hurts and I don't even know how to look at this.
Edit: some numbers
Click to expand...
tbh, while turkey can be an opportunity due to the current situation, it could also be an even bigger risk.
I would look there with money i had for gambling.
Otherwise, i'd stick to the safer "eurozone", or some equivalent (UKzone, etc.) where you can expect inflation, political situation and real estate value to be under some control.
Plus, i've never been to turkey, i assume istanbul to be fairly international, but i doubt one can comfortably live there without speaking turkish..
 
#10
SusanSharandon said:
1 dollar = 17 TL today and the stock market in Turkey halted its operations due to the crash.
I've been keeping an eye on real estate prices in Istanbul for months now as the lira collapsed, but so far they seem steady. I'm assuming real estate works as a hedge for inflation and that also foreign investors might keep the price up, however (probably due to wishful thinking) I keep wandering if we might get to see a dip in the real estate prices soon. What do you guys think?
Click to expand...
I think this is wise to consider. I recall during the 1997 Asian financial crisis those who had the guts to buy during that time did very well. Read of guys buying in Bali I believe and never looked back.
 
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#11
maxmmm said:
Asking real estate agents if prices rise is like asking a pimp if his girls are hot... of course they will tell you that prices are always rising, forever and you need to buy now before it's too late.

This is how Turkey ETF looks since 2009 and I don't need to tell you how all the "dip buyers" fared during this time:

View attachment 3054
Click to expand...
I had one of the agents actually advising me to wait, it looks like the prices aren't calibrated yet or something. But I totally get what you're saying and you're right.
I've been thinking about this graph... Isn't it a matter of asymmetry? The graph looks bearish, but how much lower can it go? After all there is some intrinsic value in those businesses (assets, cash flow, etc). However, if it goes up, it can easily double up from here. So if an investor chooses to make a bet, if they lose, they lose a bit, but they win, they win more, with the gain overshadowing the loss (even if the loss has a higher probability of occurring). Like a gambler using math, knowingly calling with bad cards if the payoff dictates that the estimated value is positive (the bet to payoff fraction is smaller than the probability of the hand winning).
 
#13
SusanSharandon said:
I had one of the agents actually advising me to wait, it looks like the prices aren't calibrated yet or something. But I totally get what you're saying and you're right.
I've been thinking about this graph... Isn't it a matter of asymmetry? The graph looks bearish, but how much lower can it go? After all there is some intrinsic value in those businesses (assets, cash flow, etc). However, if it goes up, it can easily double up from here. So if an investor chooses to make a bet, if they lose, they lose a bit, but they win, they win more, with the gain overshadowing the loss (even if the loss has a higher probability of occurring). Like a gambler using math, knowingly calling with bad cards if the payoff dictates that the estimated value is positive (the bet to payoff fraction is smaller than the probability of the hand winning).
Click to expand...
It can go so low that all western investors will leave turkey.
You shouldn't only watch on econimical side but also on political side and who exectly turkey is attacking
 
#15
RexS9999 said:
I think this is wise to consider. I recall during the 1997 Asian financial crisis those who had the guts to buy during that time did very well. Read of guys buying in Bali I believe and never looked back.
Click to expand...
Only diffrence now Agenda 2030 and 2050 a long world wide bear market and financial attack on peoples money (sorry forgat the english word for it)

bluegiraffe said:
Please enlighten us whom it is attacking
Click to expand...
Who is Erdogan blaming for the financial crisis ?
What did he do in the last years ? (coup)
Didn't learned anything out of history ?It repeats 1:1
 
#16
369 said:
Only diffrence now Agenda 2030 and 2050 a long world wide bear market and financial attack on peoples money (sorry forgat the english word for it)
Click to expand...
Please enlighten us when will the new worldwide bear market will happen? Do you also know the date or just sometime between 2030 to 2050?
 
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