Profit-seekers set sights on land ahead of urban renewal projects

The prospect of urban renewal projects prompts people to buy properties in central Istanbul without a building permit at a cheaper price to obtain rent revenues from unregistered buildings that are to be redeveloped, a real estate investment consultant has told Sunday’s Zaman. After decades of unplanned urban settlement and unregulated construction, most buildings in Turkey fail to meet basic safety standards though the country’s cities are vulnerable to hig

The prospect of urban renewal projects prompts people to buy properties in central Istanbul without a building permit at a cheaper price to obtain rent revenues from unregistered buildings that are to be redeveloped, a real estate investment consultant has told Sunday’s Zaman.

After decades of unplanned urban settlement and unregulated construction, most buildings in Turkey fail to meet basic safety standards though the country’s cities are vulnerable to high-magnitude earthquakes. That vulnerability was painfully exposed during the Van earthquake in 2011 and the 1999 Izmit earthquake, which killed more than 17,000 people.

Since then, the government has initiated several urban renewal projects across the country in order to avoid risks stemming from unplanned settlement and construction vulnerable to natural disasters.

Nevertheless, the lack of a strong monitoring mechanism that might bar abuse in those projects opens the door for profit-seekers, who have been purchasing unregistered buildings in central Istanbul without a construction permit for low prices and waiting for the value of the property to appreciate.

They even rent the unregistered buildings and exploit the cheap price of the land. Those who purchase property with development rights are obliged to pay much higher prices.

Speaking to Sunday’s Zaman, Hakan Erilkun, the general manager of the real estate consultancy firm AltIn Emlak, said the prices of buildings with just a land deed and no development rights have increased from approximately TL 1,000 to TL 1,500 per square meter recently, suggesting significant demand from people seeking to take advantage of loopholes in the implementation of the redevelopment projects.

Noting that there is a 30 percent price difference between licensed residences and unregistered buildings which only have land deeds, Erilkun said people who opt to buy unlicensed buildings with land deeds benefit both from rent revenues from unregistered buildings and relatively lower prices in advance of urban renewal projects.

The only downside to purchasing those buildings, Erilkun notes, is that banks do not issue loans to individuals who want to buy unregistered buildings.

For example, the selling price of a 100-square-meter licensed building is around TL 320,000 while a similarly sized house without a construction permit is priced at around TL 160,000, Erilkun maintained.

The urban renewal projects have sparked much criticism from several public groups who argue that pro-government firms are favored in tenders and that the large redevelopment projects threaten historical areas and result in devastating social and environmental consequences

SOURCE: TODAY’S ZAMAN