Commercial Real Estate Suffers Real-Term Loss Amid Nominal Gains

Turkey's commercial real estate market presented a paradoxical table in the second quarter of 2026, disappointing investors as inflationary pressures pushed the sector into a real bottleneck. While prices rose on paper, the erosion in purchasing power led to a real-term contraction.

Inflation Devours Nominal Returns

Indices based on Central Bank data clearly reveal that return rates on commercial real estate investments have succumbed to the cost of living. The developments observed in the second quarter are highlighted by the following data:

■The Turkey Commercial Real Estate Price Index (TGFE) rose nominally by 29.4% compared to the same quarter of the previous year, but fell by 2.2% in real terms.

■In the Shop Price Index, while the nominal annual increase remained at 29.2%, the rate of real loss reached 2.4%.

■The office segment showed slightly more resilience than other categories, yet recorded a 1.3% value loss in real terms despite a 30.6% annual nominal increase.

Asymmetric Price Dynamics in Major Metropolises

Behind this general nationwide picture, price dynamics in major cities followed divergent paths. The quarterly vibrancy proved insufficient against annual inflation:

■In Istanbul, the commercial real estate price index increased by 5.3% compared to the previous quarter, while the annual increase settled at 27.8%.

■Ankara was the city showing the strongest performance with quarterly (6.4%) and annual (32.5%) increases.

■In Izmir, the quarterly increase was 5%, while the annual nominal increase was realized at 25.7%.

This data serves as a critical warning for commercial real estate investors. Nominal increases of around 30% are no longer sufficient to preserve portfolio value. Particularly in office and retail investments, ensuring rental returns compete with inflation and create a premium over costs has become indispensable for a sustainable investment strategy. Periods of real loss are the optimal timing to review asset composition.