14 June 2010

REIDIN.com INDEXFocus Turkey May 2010 Real Estate Sector Analysis -Residential

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INTRODUCTION

The REIDIN.com Turkey Residential Property Price Indices (TRPPI) is designed to be a reliable and consistent benchmark of housing prices in Turkey. The purpose is to measure the average differences in house prices in a particular geographic market.
The monthly REIDIN.com TRPPI uses a stratified median index approach for index calculation with data covering the 7 major cities and their 71 districts, including Istanbul, Ankara, Izmir, Adana, Antalya, Bursa and Kocaeli. The national TRPPI (Turkey Composite Index) is a weighted average of those city indices.
Index series are set at 100 starting at the beginning of June 2007 and are calculated by using a moving average algorithm.

INDEX SUMMARY

The residential sales prices increased 0.26% in Adana, 0.50% in Antalya, 0.52% in Istanbul and 0.45% in Kocaeli; on the other hand, prices were down 0.16% in Ankara, 0.11% in Bursa and 1.17% in Izmir during May 2010.

 The residential rent prices increased 0.15% in Adana, 0.23% in Antalya, 1.04% in Bursa, 0.22% in Istanbul and 0.24% in Izmir; on the other hand, prices were down 0.04% in Ankara and 0.10% in Kocaeli during May 2010.

 When adjusted by inflation rate according to the Consumer Price Index, the residential real estate investments caused a profit to the investors in real terms in May 2010. Accordingly, the rate of profit in real terms is 0.91% in Adana, 0.86% in Ankara, 0.83% in Antalya, 0.85% in Bursa, 0.90% in Istanbul, 0.82% in Izmir and 0.86% in Kocaeli on monthly basis.

DETAILED ANALYSIS

The monthly REIDIN.com TRPPI uses a stratified median index approach for index calculation with data covering the 7 major cities and their 71 districts, including Istanbul, Ankara, Izmir, Adana, Antalya, Bursa and Kocaeli. The national TRPPI (Turkey Composite Index) is a weighted average of those city indices. Index series are set at 100 starting at the beginning of June 2007 and are calculated by using a moving average algorithm.

Table 1.1 REIDIN.com House Sales Price Indices (Nominal, June 2007 = 100)

Table 1.2 REIDIN.com Rent Indices (Nominal, June 2007 = 100)

The residential sales prices increased 0.26% in Adana, 0.50% in Antalya, 0.52% in Istanbul and 0.45% in Kocaeli; on the other hand, prices were down 0.16% in Ankara, 0.11% in Bursa and 1.17% in Izmir during May 2010.

Chart 1.3 % Change in Residential Sales Prices, May 2010

The residential rent prices increased 0.15% in Adana, 0.23% in Antalya, 1.04% in Bursa, 0.22% in Istanbul and 0.24% in Izmir; on the other hand, prices were down 0.04% in Ankara and 0.10% in Kocaeli during May 2010.

Chart 1.4 % Change in Residential Rent Prices, May 2010

When the residential real estate investments and the financial investment instruments are adjusted by inflation rate according to the Consumer Price Index (CPI), it is seen that the investment instrument having the highest monthly real return is the Gold (ingot).

When adjusted by inflation rate according to the Consumer Price Index, the residential real estate investments caused a profit to the investors in real terms in May 2010. Accordingly, the rate of profit in real terms is 0.91% in Adana, 0.86% in Ankara, 0.83% in Antalya, 0.85% in Bursa, 0.90% in Istanbul, 0.82% in Izmir and 0.86% in Kocaeli on monthly basis.

When adjusted by inflation rate according to the Consumer Price Index (-0.36%), the monthly real profit rate of US Dollar, Gold (ingot) and Deposit Rate were 3.97%, 8.94% and 1.02% while Euro and the Istanbul Stock Exchange (ISE-100 Index) posted loss of 2.55%, and 4.54% respectively.

Chart 1.5 Residential and Financial Real Returns (%), May 2010

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