Turkey has developed a reputation as a value-for-money destination, helping to boost the country’s popularity as a property investment destination. Spurred by relatively cheap property prices, demand for Turkey property is growing.
Weak Turkish currency A recent report The Myst from the Post Office named Turkey as one of the world’s most affordable places for Brits’ to visit, due to sterling’s strength against the Turkish lira. Yet, the Turkish currency is expected to fall in value in 2009, according to Deloitte Turkey, making already low property prices even more affordable.
“It (the Turkish lira) started the year (2009) relatively weak due to a 200 basis point interest rate cut by the Turkish Central Bank,” says Homes Overseas’ Percy Pound.
Robert Nixon, executive director, Nirvana International, comments: “From a British buyers perspective the purchase of property in Turkey is a wise move in the current economic climate as it is outside the eurozone and therefore your pound goes further.”
Turkey, which now attracts around 25 million tourists each year, was last year named number one holiday destination for British tourists. Nonetheless, international visitor numbers to Turkey are expected to rise further this year. Travel association body, ABTA, predicts that Turkey will be one of two “big growth areas” in 2009, along with Egypt.
The economy The Turkish economy, which is partly and unsurprisingly reliant on tourism, appears to be well equipped to withstand the current global financial calamity, after recovering from its own crisis in 2001.
A levelling up situation – wage inflation, growing prosperity and access to less constrained mortgage finance – is driving greater domestic and international demand for properties in Turkey.
Mortgages in Turkey were introduced in 2007, enabling buyers under the age of 75 to borrow up to 80 per cent of the property’s value for a maximum term of 20 years, according to Eric Kaya, director of Cumberland Properties. Mortgage borrowing rates currently start from around 5.8 per cent.
Kaya says that the previous inability to obtain mortgages was “stifling demand, preventing people from buying property and holding our (Turkey’s) economy back. The new mortgages that are now available are good news for both Turkish and overseas buyers.”
He adds: “Prices of property in Turkey are a lot cheaper than much of the rest of Europe” and this presents “a lot of opportunities for investors to make very good returns from property.”
The Turkish Statistical Institute shows that there are now around 73,000 overseas nationals registered with Turkey’s Land Registry, many of who will have benefited from recent capital growth.
Property price growthEstate agent, Aston Lloyd, reports that average Turkish property prices appreciated by 7.3 per cent between 2004 and 2008. Given Turkey’s economic strength, combined with a general housing shortage, hopes of joining the European Union and a maturing mortgage market, Turkish property prices should strengthen further moving forward.
However, there are signs that property price growth may slow across some parts of the country or even depreciate in the short-term, as the worlds’ economy all but grinds to a halt.
Economic caution Despite the country’s seemingly strong economic position, Turkey’s economy will potentially face a tough year in 2009, having made around £51 billion of financial obligations, according to Deloitte Turkey in its Economic Outlook 2008.
This means that the country will need to raise money in financial resources to cover a current account deficit and matured debt, according to the report. Consequently, an agreement with the International Monetary Fund will be vital to help produce these funds.
Nevertheless, the medium to long-term outlook for Turkey’s economy looks positive, which should in turn benefit the country’s maturing housing market.