The way the PS4 filesystem is structured to prevent fragmentation means you need enough free space for the entire game... because when it updates it actually copies the entire game.
I bought a 1 TB external HDD for this situation, especially seeing as GT has a big file size. Now I have 25+ games on there, with the ability to change between them with ease plus loads of room for even more.
I definitely recommend this solution, with the baseline 500 GB HD being on the small side.