Over the last decade, the number of available rentals have flooded the suburbs of big cities like Istanbul and Izmir. This flood of excessive capacity resulted from a construction boom mainly driven by low rates, hot money, and the government’s blessing. For renters this provided some opportunities and costs in suburbia.
Advantages:
Renters typically have ample rental options such as size, prices, and community. For example, a renter has options to rent 1-5 bedroom flats in gated communities at a fraction of the cost. In addition, suburbia lets a renter live in a newly constructed building full of amenities and services. In general, rental costs tend to be 20-30% lower than the city center areas.
Disadvantages:
Despite the the new buildings and lower rents, there are many drawbacks to this boom like suburbia urbanization, traffic, pollution, etc. Not to mention, the higher and higher buildings with minimal earthquake standards. Also, with more open space being bulldozed, many green areas are disappearing along with the animals that dwell there. Consequently, the quality of life factor subtracts in some aspects.
Opportunity Cost:
Moreover, in general, the opportunity cost factor could play into a typical renter’s equation. This is usually dependent on the renter’s income and needs. In Turkey, transportation costs, services, commute times, job locations, public transportation etc. are all weighing factors when deciding to rent in suburbia. Nevertheless, the result could be better, worse or neutral for a typical Turkish renter.
However, one thing to note here, in the last year or so the economy has slowed down resulting in a sharp slowdown in new construction coupled with higher rates. The government is aggressively trying to bring down rates, so it can support the construction industry. In the last year and half the moving average for many Turkish cement companies trended downward, but in the last month it has elevated somewhat due to interest rate expectations domestically and abroad. Therefore, this could be a sign that domestic construction will speed up again resulting in more rental options.
All in all, renting in suburbia could be paradise or hell depending on the opportunity costs.
