Reforms to property laws, years of solid economic growth and political stability have combined to produce a real estate boom in Turkey. Buoyed by growing investor interest, which is particularly high in top-end developments, property prices in Turkey are rising rapidly, with luxury flats in Istanbul estimated to have more than doubled in value during the past eight years, surpassing $4500 per sq metre.
According to British real estate firm Knight Frank, Turkey recorded the third-highest property price growth rate in the world in the first six months of 2012, outpacing well-established hotspots such as Russia, which is a rising investment market, and Hong Kong, where supply is constrained by space.
International press reports suggest that the current influx of foreign investment could sustain the market in the long term, despite risk factors that include slowing economic growth and inflation concerns. Turkey’s Association of Real Estate Investment Companies (GYODER) estimates that the value of property purchased by foreigners could increase from $2.5bn in 2011 to $4bn next year, even reaching $10bn in the medium term.
While other forecasts are more modest, the real estate market is generating a new wave of interest, particularly among cash-rich investors from the Gulf, Russia and Central Asia.
Erdinç Varlıbaş, the chief executive of local developer Varyap, said Istanbul is becoming “a second London for the Arab world”, following in the footsteps of the UK’s capital city, which has attracted high volumes of investments from the Arab region in recent years.
Turkey’s property boom has been fuelled by the government’s decision to change key real estate laws, and to scrap the ‘reciprocity law’ in particular. The reciprocity law had restricted foreign ownership of local real estate to citizens of countries that allowed Turkish nationals to buy property in their countries, such as the UK and Germany. The government also plans to increase the area of land foreigners are allowed to purchase from 30 ha to 60 ha.
Turkey’s growth story, macroeconomic stability and sound monetary policy have helped attract international property investors to the country. GDP growth topped 5% for much of the previous decade, despite a brief but sharp recession in 2009. Last year, growth reached an impressive 8.5%, although inflation, which currently stands at 9%, is giving cause for concern.
Turkey has also gained greater political stability since its single-party government came to power and replaced a series of fragile coalitions. Additionally, it benefits from its broad appeal to a diverse range of visitors and well-priced real estate.
“Property prices in Turkey are quite low, thus making it attractive for investment,” Alasdair Macdonald, the senior director of Knight Knox International, a property brokerage, told the international press. “Investors could easily get just under 10% capital growth and rental yield of 8% per annum.”
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Register Here×The Turkish Prime Minister Bulent Ecevit has spent the last week in the US hoping to garner support for economic reforms at home and trade concessions for Turkish exports to the US.
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The Turkish Prime Minister Bulent Ecevit has spent the last week in the US hoping to garner support for economic reforms at home and trade concessions for Turkish exports to the US.
