Growing economy and mortgage market encouraging overseas buyers in Turkey
Interest in Turkish real estate has surged in 2013 and the outlook is positive for 2014 with all the indicators pointing to increased demand from both foreign and domestic buyers.
The latest global property index from international real estate firm Knight Frank shows that property prices in Turkey increased by 12.5% in 2013 and Turkey has outperformed the rest of Europe.
Russian and Arabian buyers have led to rise in interest from abroad, according to Turkey property specialist Spot Blue International Property. For the three months to the end of November 2013, it saw visits to its website increase by 24% compared to the same period in 2012.
The number of Arabian visitors increased by 164% year on year, while visitors from Russia were up by 113%. Other enquiries have come from the UK, France, the Netherlands and the United States.
‘Istanbul in particular has attracted interest from Gulf and Russian investors this year. There are buy to let opportunities springing up in the booming suburbs in areas such as Halkali, Beylikduzu, Bahcesehir and Erenkoy, and the availability of chic second homes in more central fashionable districts on either side of the Bosphorus,’ said Spot Blue director Julian Walker.
‘Also, if they're buying for lifestyle purposes, then Bodrum on the Mediterranean Coast and other marina resorts on the Bodrum peninsula are also popular spots, thanks to the selection of smart, private villas on offer there,’ he added.
The largest group of Gulf investors in Turkey today comes from Saudi Arabia, from where a group of delegates attended the Turkish-Gulf Real Estate Congress and Exhibition in Istanbul in December. The event highlighted the strengthening alliance between Saudis and other Arab nations, and the Turkish property sector, and included the unveiling of a new package of joint real estate ventures worth a total $5billion.
Also this month, a leading real estate firm in the Gulf announced it has committed to real estate investments in Turkey worth AED200 million, approximately £33milion.
‘Istanbul has led Turkey's property market in 2013 and I believe will continue to do so in 2014. International investors like it not only for its capital gain prospects and buy to let opportunities, but also because it operates in multiple currencies, including US dollars, euros, Sterling and the local Turkish lira. Furthermore, this year the Turkish lira has lost value against most major currencies, making it a cheaper currency in which to buy for foreigners,’ explained Walker.
The country’s booming economy also makes it an attractive prospect for real estate investors. Gross Domestic Product (GDP) increased by 4.4% in the third quarter compared to the same quarter last year, exceeding forecasts of 4.05% and increasing 0.9% compared to the previous quarter.
It is this strong economy, low unemployment and more relaxed property laws that are attracting overseas buyers according to agents Universal21. ‘Turkey's economic growth has actually exceeded expectations this year. With unemployment low and the populations of cities like Istanbul having greater spending power, we are seeing a rise in demand for property from domestic as well as overseas buyers who are encouraged by relaxed property laws,’ said Adil Yaman director of Universal21.
He also pointed out that there is now more competition as foreign investors move in to take advantage of the high capital growth potential of property. ‘Unlike some of the other fast growing property markets like China, there is no sign yet that Turkey is overheating. Economic growth has proved to be sustainable and there are no plans to take the heat out of the property market as has been the case in China,’ he explained.
‘Turkey remains one of the best countries in the world to invest in property and the new more welcoming approach by the government to foreign investors in real estate looks to be paying off,’ he added.
Turkey's Economy Minister, Zafer Çaglayan, said this month that Turkey has grown continually over the last 16 quarters, and added that the Turkish economy was one of the fastest growing economies in Europe, the OECD and the G-20.
The country’s mortgage market is also growing and maturing and this means that local buyers and investors are competing with overseas buyers, according to Monica Anca of Universal 21. The total amount of loans used to buy property increased to 36.4 billion liras in the first nine months of 2013 in Istanbul, an increase of 28% year on year.
‘When people think about the property market in Istanbul, they think it is foreign investors who are driving up prices. The reality is that a combination of factors is at work in the city. Local demand is also driving up property prices in the city. The population has become wealthier as the Turkish economy has grown in the past three years,’ she explained.
‘The more money that is borrowed to buy property, the more money you see chasing a limited supply of property. This is particularly the case in areas of the city that are well connected to the central and business districts,’ she added.
Rapid mortgage growth helped push property sales up 78.7% in Turkey in 2013 compared to the same period in 2012, according to statistics released by Gyoder. In order to cope with increasing demand for real estate, Turkey's construction sector grew 7.6% in the second quarter of 2013.
Analysts are predicting that GDP will continue to grow in 2014 and the outlook for the economy is described as very positive.