Miami Or Istanbul Property, Which Is Best?

I had an investor call me up the other day to get some advice on where he should invest. He had looked through the selection of properties on our website and couldn’t decide which offered the best return on investment.

This was a tough question and for this particular investor who was focused on getting a fast return on his investment, it all came down to two locations – Miami and Istanbul.

These two cities might be worlds apart but they do share similarities. Not least they are both seeing property prices rise at a furious pace this year. It is also a close run thing deciding on which of them offers the most potential for an investor.

With this in mind I thought why not do some direct comparisons between them. This will by no means be a definitive measure simply because you will have huge variations according to districts and particular micro-markets within the city boundaries. Some good – some bad.

But if we take the average on each of the following important areas we can at least have an overview of what one city offers compared to the other and see which one comes out a winner based on the following criteria.

Property Price Growth

Analysts were saying it would never last, some people were saying it would never happen. Well it did. The Miami property market finally bottomed in the third quarter of 2011. Miami has since become the second fastest growing market in the Knight Frank global prime cities index. Prices in the city have risen a spectacular 19.1% year-on-year.

In Istanbul meanwhile we saw prices climb around 14.% year-on-year in comparison. Not a bad effort but if you had bought a year ago in either country you would have a 5% bigger smile on your face in Miami.

Winner: Miami

Average Rental Yield

Property price growth is very much about short-term thinking. What I like to see are the highest rental yields possible. Supply in Miami is restricted after years in the doldrums which means we are seeing healthy rental yields and strong growth in the value of property. The average net yield of a rental property in Miami is around 7%, though depending on where you invest the yield can be at least 1% higher.

Istanbul property, however, just edges it with an average yield of 8% in the best areas of Istanbul. Again in areas close to the city centre, there is a shortage of available property which is increasing the pressure on price and rents. So when it comes to property that pays for itself, Istanbul just edges it overall.

Winner: Istanbul

Rental Yields Istanbul

At this stage there is hardly anything between these two cities when it comes to the attractiveness of these markets for the investor.

Investment Cycle

So let’s turn our attention to some of the other points that can influence the decision to invest. One of these is the stage the market is at. We can see that both markets are in an expansion phase, but given the length of time Turkey has been growing it is further along that curve than Miami.

However unlike the mature property market in Miami, the price of property is significantly less at $4,569  per square metre in Istanbul compared to $6,300  per square metre in Miami. As long as there is room for several more years of growth in Istanbul, which is still in a developing phase, there is no real difference between the two cities.

Transparency

This brings us to another factor, reliability. Turkey is making great strides in terms of the transparency of its real estate market, but it is not at the same stage as a prime world city like Miami. So for reliability it is hard to see past Miami if you are the kind of investor who shuns risk.

Winner: Miami

Finally we can turn to accessibility, this can make a huge difference in your choice of investment. If you happen to be based in Europe, the flight time to Istanbul can be five hours less than making the trip to Miami.

On the other hand if you are a Canadian or Brazilian property investor, Miami is far more convenient. However if you have a reliable agent any inconvenience related to travel can be wiped out by having a fully managed investment.

So with each of our investment considerations taken into account, Miami just shades it by 2 to 1.

Where will you be focusing your attention this year? East or West? Please leave your comments below:

Kind Regards

Loxley McKenzie
Managing Director

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Categories: Florida Property / Property Invest / Turkey Property

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