Environmental disasters, whether natural or man-made, have a significant impact on the real estate market. In recent decades, the increase in the frequency and intensity of such events has led to major changes in the structure and dynamics of this market. We explain how disasters affect the real estate industry and what strategies are available to recover from them

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Environmental disasters such as fires and floods significantly affect the residential real estate market. Recent earthquakes and floods in some regions of Turkey have highlighted how natural disasters can affect infrastructure, real estate prices and buyer preferences. Let's take a look at which aspects of Turkey's real estate are affected by environmental disasters and what recovery strategies can be developed to minimize their negative impact.

Impact of disasters on the real estate market

The impact of natural disasters on the real estate market has a significant impact on various aspects of the market. 

First, property destruction is one of the most tangible impacts. Fires and floods cause tremendous damage to real estate by destroying homes, infrastructure, and public buildings. This leads to significant financial losses for property owners and insurance companies. 

Secondly, a decline in property values in the affected areas becomes an inevitable consequence. After natural disasters, property values in such areas often fall as potential buyers avoid unsafe and at-risk areas, reducing demand and thus prices.

A third important aspect is population displacement. Residents of affected areas are often forced to move to safer regions, which can cause a surge in demand for housing in those locations and an increase in prices. Finally, changing buyer preferences also play a significant role. After disasters, real estate buyers become more aware of the risks and prefer areas with better protection from natural disasters, which affects the distribution of demand in the market.

Recovery strategies after natural disasters

Reconstruction of natural disaster-affected areas requires a comprehensive approach that includes both technical and socio-economic measures. Key recovery strategies are detailed below.

1. Renovation and reconstruction

Rehabilitation of buildings should start with detailed planning and design that takes into account the new conditions and possible risks. It is important to carry out an expert assessment of the affected buildings and areas to understand the extent of damage and select the best methods of restoration. 

The use of modern building technologies and innovative materials that provide greater resilience to future disasters is an important aspect. This includes the use of anti-seismic structures, special materials resistant to water and wind, and automatic building condition monitoring systems.

2. Raising construction standards

The development and implementation of standards that provide for the mandatory use of anti-seismic technologies in construction in areas of increased seismic activity is a necessary step. Establishing and maintaining certification systems for construction companies and materials ensures their compliance with the new standards and safety requirements. 

Regular training and professional development of builders, engineers and architects in modern construction technologies and new safety standards also play a key role.

3. Establishment of green spaces and infrastructure for risk management

Green spaces help mitigate natural disasters such as floods and hurricanes by naturally absorbing water and reducing soil erosion. Incorporating green spaces into urban infrastructure such as parks, squares and green roofs not only helps in risk management but also improves the quality of life for residents. 

Installing and upgrading drainage systems that effectively handle large volumes of water during floods includes the creation of underground reservoirs, storm sewers and drainage ditches. Introducing fire protection measures in forest and peri-urban areas, such as creating firebreaks, installing automatic extinguishing systems and conducting regular drills, are also important for risk management.

4. Insurance and financial assistance

Government support programs and insurance benefits play a key role in the recovery of affected areas. They help property owners cover the costs of recovery and reconstruction. 

The development of natural catastrophe insurance systems that offer protection and support for earthquakes, floods, and other natural disasters encourages property owners to invest in insurance and increases their financial security. The provision of grants and subsidies for renovation and reconstruction of buildings is particularly important for the socially disadvantaged and small businesses.

Real estate market in Turkey after the earthquake

Turkey's real estate market saw a steady increase in demand and housing prices in the two years leading up to the February 2023 earthquake.  The disaster devastated entire cities and was also a real shock to the country's construction sector.

After the earthquake in February 2023, the demand for real estate in Turkey has significantly decreased. Already at the beginning of March, demand was down by 30%, with sales in the primary market down by 11.2%, in the secondary market by 11.7%, and mortgage real estate transactions down by 13.9% year-on-year. Transactions with foreign buyers in April 2023 decreased by more than 60% compared to April 2022.

Following the earthquake in Turkey, house prices temporarily halted their growth, sparking talk of market stagnation despite lower demand. Nevertheless, Turkish real estate continues to lead the way in terms of price growth. According to the Bank for International Settlements, Turkey ranked first among 58 countries in terms of housing price growth with an annual increase of more than 50%, compared to only 11% in Israel.

Turkey faces a number of economic challenges in 2024. In the second half of 2023, the country moved to tighter monetary policy, including rate hikes, which could reduce domestic demand and slow economic growth in the second quarter of 2024.

Despite the economic headwinds, the real estate market is showing a willingness to recover. The government's focus on inflation control and economic growth indicates a commitment to long-term stability and growth, balancing the effects of tight monetary policy and external economic factors.

New buyer preferences

Turkey is actively engaged in housing renovation with increased quality control, especially after devastating disasters. These measures include:

1. Tightening of building regulations: Turkey is implementing stricter building standards to ensure that buildings are earthquake resistant.

2. State renovation programs: The state is actively involved in programs to redevelop old and emergency buildings, ensuring that they meet modern safety standards.

3. Construction quality control: Tightening of construction quality control and use of new technologies and materials.

Renovation properties have become the most relevant housing choice in Turkey in recent years, especially in the central areas of major cities. 

These properties are being modernized and renovated to meet modern standards of safety and comfort, including improved engineering systems, updated wiring and water supply, and the installation of new security systems. 

New building codes require strict earthquake resistance standards. Renovated buildings are being retrofitted to meet these standards, which provides additional safety for occupants, and the quality of construction is more strictly monitored by the government. 

Modern construction materials and technologies are used in the renovation process, which not only improves the aesthetic appearance of the buildings, but also increases their durability and resistance to external influences.

After the earthquake, the demands of buyers have changed: now almost everyone seeks to purchase reliable housing in earthquake-safe provinces. The greatest demand is resort regions and coastal cities: Alanya, Antalya, Side, Mersin, Kemer.

One of the most attractive destinations for is business class apartments in Antalya:

ANTA HOME NEON:

- A business class complex on the main tourist street of the city.

- Redevelopment project.

- Apartments 2+1, view penthouses, area from 72 m².

- Cost from 130 000 €.

- Located just 3 minutes from the beaches and historical sights.

- Estimated payback on daily rent - 9.8% per annum.

The project has been developed by a reliable international developer Antagroup, guaranteeing high quality construction. 

You can find more offers, current prices and competent advice on purchasing real estate from the developer AntaGroup by clicking here. 

Daria Rogova - Head of Insurance at Visit World

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More articles on the topic: 

Real estate in Turkey - is it still an attractive investment destination in 2024?

Tourist real estate: prospects and opportunities for investors.