Turkey has many of the ingredients of an excellent investment location as well as being popular tourism destination with low real estate prices, buy-to-let and a strong re-sale market.
Low Real Estate Prices
The housing market in Turkey was held up behind Europe as a result of the difficulty of obtaining mortgages. The majority of real estate purchases until recently were funded through inheritance or savings, which set a limit on the flourishing property market simply by not being affordable. The Turkish Government is committed to strengthening the mortgage market, which is an important step because short loan terms and high interest rates mean that at the moment only 3% of housing finance in Turkey currently stems from bank credits.
Turkey approves a new mortgage law this February (2007)
This new law is expected to be enacted in May 2007. Provision of mortgages with low interest rates will make housing more affordable and cause house prices to head upwards. The government of Turkish law was passed in January 2006, and confirmed the right of foreigners to buy property under 2.5 hectares in size for personal use or business. It is now possible for foreigners to obtain a local mortgage, further encouraging this emerging market.
Strong Resale Market
Turkey is getting richer, and house prices will grow accordingly with the increasing wealth of the country. The Turkish economy grew by 9.9% in 2004 alone, the highest recorded growth that year within an OECD country. Morgan Stanley's global economics team believes the Turkish economy will continue to outperform the rest of the world, as the growth rate of real gross domestic product (GDP) accelerates from 6.2 percent in 2005 to 6.5 percent in 2006 and then on to 6.8 percent in 2007. Turkish population growth is around 2% per annum with 70% of the population younger than 30, and this is creating a very strong local market with good purchasing power.
Investors would not be reliant on international investors for re-sales, hence strong internal property market demand should increase.
Foreign Investors
Turkey has received a large amount of foreign investment. This investment is being used to rapidly improve Turkey's infrastructure. Property funds based in Europe and the Gulf are also pouring money into the country, with Dubai a particularly heavy investor in Turkey as an attractive destination. Corporate investors are creating new resorts, golf courses and other tourist facilities, while public funds are targeted at improving roads and airports. These are clear indications of a growing tourist economy that will greatly boost capital growth for today's property investments. Huge golf tourism is evolving in Antalya-Belek, which will increase the value of any investment in that region.
Strong Buy to Let market
Over 25 million tourists visit Turkey each year, boosting the property market and creating strong "buy to let" possibilities. Gross rental yields in Turkey vary from moderate to high. Properties in major city centres offer yields of 7.6%, while property in coastal areas can yield from 13% up to an impressive 16%. The low cost of living and affordable and frequent flights from most European cities are making the country an easy place in which to have a second home.
All in all, Turkey has a great deal to offer to buyer - be it for investment, retirement or just a holiday home.
Written by
Nazan Arikan
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