The Istanbul rental market is proving to be a formidable force, even for Turkey's most influential figure in finance - Hafize Gaye Erkan, the head of the Turkish central bank. In a candid interview, Erkan revealed that her family is once again residing with her parents due to the exorbitant cost of rent in Istanbul.
Erkan, with a two-decade-long career in the United States, working for powerhouse banks like Goldman Sachs, found Istanbul's rental prices to be more expensive than Manhattan. The city has been racking up massive inflation rates for months, with the November figures reaching an unprecedented 62%.
Bahçesehir University's study reports a staggering 77.1% rent increase in Istanbul within the same timeframe. To combat this inflation, the Turkish government implemented a 25% rent hike cap. However, experts contend that this move has worsened the situation, resulting in landlords attempting to evict tenants illegally to hike prices instead.
In an attempt to combat inflation, the central bank, under Erkan's leadership, boosted the key interest rate by 8.5 percentage points to a whopping 40%. However, Erkan announced that they have ceased implementing monetary tightening measures.
Additional Insights:
- The average gross rental yield in Istanbul is 7.30%, providing profit opportunities but also underscoring the inflated cost of housing.
- Urban regeneration projects aim to create more affordable housing options and boost the rental market.
- Economic instability, such as the significant loss of the Turkish lira's value, impacts consumer spending and investor confidence.
- Interest rates' gradual increase has disappointed economists and investors, providing additional pressure to the real estate sector.
- Investors anticipate substantial profit gains given the rental market's prospective growth compensated by the need for reasonable housing options.
With Turkey's eclectic economic landscape, managing inflation, housing market stability, and sustainable growth will be among Erkan's significant challenges as a woman shaping the nation's finance sector.
