Turkey lifts temporary restriction

A temporary restriction preventing foreign investors buying in Turkey has been lifted by the passing of a new government bill.

The issuing of title deeds to foreign property buyers was halted earlier this year over concerns about whether non-Turkish investors, especially companies, should be permitted to buy agricultural land and in sensitive areas.

According to the new bill foreigners will be not allowed to purchase property in irrigation, agricultural, religious, cultural, archaeological, strategic and specially protected areas, as well as areas protected for their unique characteristics such as energy resources and mines, and flora and fauna reserves.

Officials in Turkey have also unveiled new plans to minimise the effect of property investment on the environment and limit development in certain areas. The government said, for example, that property buyers who knock down trees in order to build a home should plant twice as many in order to make up for the environmental damage.

Real estate agents said they hope the new bill will allow interest in property to soar again as visitor numbers continue to increase. The latest figures show that between 2003 and 2007, foreign nationals spent more than £5 billion on Turkish real estate. Most interest came from Germany and the UK.

As interest has soared so have prices. But financial analysts are not so sure that the market in Turkey is as promising as some might think and claim it is over valued.

'We don't believe that a property rise is sustainable when stock prices continue to fall and interest rates rise. Since the start of the year, the Turkish stock market has lost 27% of its value, while its currency has waned 5% against the dollar,' said Jeff Chowdhry, head of emerging equities at F&C Investments.

But Savills, the British property services company, is undeterred. Its property fund management unit, Cordea Savills, is raising €400 million, or $622 million, for a fund aimed at Turkish retail and residential real estate, with a targeted return on investment of 25 percent a year.

'Turkey is a country of some 70 million people, with half of the population under 30 and with an average annual population growth of about 1%,' said Ian Jones, director of investments at Cordea Savills. 'The economy is slowing, but coming down from a high base.'

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