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Property Investment in Turkey

Turkey's EU accession is scheduled for 2012. It is uniquely placed at the crossroads of Asia, Europe and the middle East. One of the sea changes in Turkey has been that of foreign investment. Privatisation has brought in $20bn, with annual FDI projected to $5bn per annum within 5 years.

The 2001 crisis is seen as a distant event unlikely to re-occur given  the range of reforms now adopted within the EU roadmap.Strong grwoth rates 9.9% GNP last year, is set to place Turkey in fourth place behind the likes of emerging giants like China, India and Russia.

Bureaucracy has officially been named enemy number one. Whereas it used to 2.5 months to set up a company, it now takes 1.5 days. Other reforms have included reductions in taxes. Examples being corporation tax on direct investments being 10%.

Factors underlying the growth for demand in foreign overseas property has been underpinned by a number of economic factors. Last year the famous Harvey Nicks opened a store in Istanbul. Another possible site is Ankara.

Why may you ask are stores looking to expand in Turkey - demographics is the simple answer. With 50% of the population under 25, it makes business sense to capture an early market share. The current retail market is fragmented, and large stores are absent from the Turkish landscape.

A recent report canvasing the views of foreign firms doing business in Turkey, showed that 72% believed the economic environment has improved. One of those improving sectors has been real estate. Property investment represents a lucrative investment area. New mortgage laws in the pipeline are due to cause an ineviatble flow of cheap money into the real estate sector. A dramatic growth in mortgages is expected, with will feed through to real estate demand pushing up prices as a result.

Turkey is the world's 17th largest economy. Its geography of being between the East and West has seen a growth in logistical companies, with businesses in both regions seeing it as a strategic base.

Dubai International Properties plans to spend $5bn on development in Turkey.

Those looking to invest in emerging markets are turning towards Turkey as an area where the property market is about to explode. One of the reasons for this is that Turkish people currently spend a disproportionately low percentage of their annual salary on property. This is a strong indicator that things can only move up in the area. Another attractive aspect in investing in turkey is the tourism market which is looking in as good shape as ever, with things only expected to improve in the coming decade.


Capital growth in Turkey is currently at 25% and although this cannot continue year on year, it is certainly expected to remain constant for the foreseeable future. Local people are also getting involved in the Turkish property market following the introduction of local mortgages in February 2007. The purpose of this was to act as a government subsidized investment vehicle that will allow investors to borrow up to 80% of the value of a property.

Despite political unrest in turkey, many are still finding that issues such as EU accession are being overshadowed. This has been the case following the opening up of the real estate market to foreign investors in early 2003. The most encouraging investments include those made by the UAE of around 4.4 billion Euros and also confident UK property investors as well as real estate developers that are looking to acquire a stake in what is currently a vibrant property market. Another encouraging feature is foreign banks are also showing confidence in the area as can be demonstrated by USA and overseas companies setting up regional branches in the area.

Since the deregulation of property investing in 2003, the market has seen promising results. In a lot of areas property prices have climbed by over 100% in a 4 year period, while city centers have seen even more promising results with evaluations increasing by close to 200% on average. Many property investors that are not backed by investment companies are also doing well from Turkey. This includes over 20,000 Europeans that are based in developed economies such as the UK, Holland, France, Germany and Spain. With an exciting tourism industry, many are reporting lucrative returns from taking advantage of their assets in renting out to tourists on vacation.

Between now and 2016 it is expected that 6M new homes will be built in Turkey. The areas that are attracting the most attention are coast line areas as well as major cities. Although the government is in support of such investment in its infrastructure, it was not prepared for the growth that it has experienced. One major issue is that the Turkish financial sector has not managed to garner the financial accessibility of other European countries such as the UK.

One means of tackling this can be found in the new legislation that is expected to be enacted by May 2007. When this takes place inwards investing as well as government subsidized programs could swell the real estate loan market in Turkey to around $60 Billion annually.



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