11 Reasons You Should Invest in Turkish Real Estate
In the past, the Turkish economy and real estate market has been turbulent to say the least. The Turkish Lira has also been dubbed by Deutsch Bank as “the cheapest currency in the world”. Despite this, Turkey has the 17th largest economy in the world and aims to be within the top 10 by 2023;
Recent regeneration projects, new infrastructure and large foreign investments are paving the way for Turkey’s emerging economy to increase in strength, thus leading to a great opportunity to native and foreign real estate investors.
- The 11 reasons you should invest in the Turkish Real estate market
- Fundamentals in the Turkish real estate market
- Development works
- Foreign investment
- Buying opportunity
- Urban regeneration
- Holiday destination
- Bank incentives
- Turkish citizenship
- Political & national stability
- Financial and business
- Price predictions
- Which areas to invest in
The 11 Reasons You Should Invest in the Turkish Real Estate Market
Below you will find the 11 reasons which we believe make Turkey an attractive investment opportunity.
1. Fundamentals in the Turkish Market
Some fear that the Turkish real estate market is experiencing a price bubble which ison the verge of bursting, however many experts have noted that the fundamentals within the Turkish real estate market still remain strong.
The fundamentals which are showcased in the Turkish market are as follows, but not limited to;
High demand for properties in Turkey – With the median age of the Turkish population being around 30 years old, there is sufficient demand for residents looking to rent/purchase. In addition, tourism remains fairly strong in Turkey – Investing in a residence to then use as a short term rental can be extremely lucrative.
Long term outlook – Short term fluctuations in the market should not worry a property investor. In the long term, prices will most likely rise. However, capital gain should not be a large concern to you – as the saying goes: Cashflow is king.
Exchange rates – The low priced Lira allows foreigners to purchase real estate in Turkey at a much lower cost compared to other countries.
2. Development Works
Various developments within Turkey are set to increase tourism in the country, and in turn the demand for real estate will also increase. The major developments to note are;
The new airport is designed to be one of the largest in the world, covering a staggering 76.5million square meters.
It is predicted that once the airport is in full working order, around 200,000 passengers will pass through the airport on a daily basis.
While this may not provide a direct increase in tourism, the major project of Kanal Istanbul will connect the Black Sea and the Marmara Sea, and hence the Mediterranean Sea.
The completion of the project will provide a new route for shipping tankers, which could encourage new industrial development in Turkey, leading to a stronger economy and real estate market.
3. Foreign Investments in Turkish Real Estate
A source in Ankara has stated that the Qatar government is considering investing $15bn into Turkish banks and financial institutions.
Although this is not a direct foreign investment in Turkish real estate, the investment will surely have a positive effect on the real estate market.
During 2018, there was a surge of residences purchased by foreign nationals. In Ankara, sales were up 160% compared to the previous year. Istanbul and Antalya saw increases in transactions of 74% and 70% respectively.
It should be evident that the increased number of sales during 2018 shows that many people are optimistic about the prospects of Turkish real estate.
4. Foreign Buyers Opportunity
The beginning of 2018 saw the Turkish Lira loose around 40% of its previous peak value. However, since then, the Lira has slightly recovered and is currently around 30% lower than the previous high.
Despite the fact that the Lira is still 30% lower than in the past, this provides an excellent opportunity to investors due to having the ability to purchase Turkish property 30% cheaper;
Due to exchange rates, depending on which country you are currently located, purchasing real estate in Turkey can be geared extremely advantageously to you;The current exchange rate is 8 Lira per £1 or 6.2 Lira per $1.
As an example, a large beachfront villa in a prime location in Turkey can be found for around 17,000,000 Turkish Lira (~£2,100,000 / $2,700,000), whereas a similar sized villa in a beachfront location in Spain or France would cost anywhere between €3,500,000 and €15,000,000 ($4,500,000 – $19,500,000)
5. Urban Regeneration Projects
There are various urban regeneration projects currentlybeing undertaken in various cities within Turkey, such as Istanbul.
During a rapid population growth between the 1970s and 1990s, numerous buildings were constructed which are severely unsafe in today’s standards, and hence have extremely low selling prices.
The aim of these regeneration projects is to modernize below par buildings which will breathe life into new communities within the city, creating a safer environment that will allow communities, business and innovation to thrive.
Successful past regeneration projects in the city of Istanbul have showcased price increases of between 50% to 95%; These magnitudes of price increase are ideal for real estate investors.
6. Popular Turkish Holiday Destinations
Turkey has taken hits to tourism rates in the past due to various unforeseen circumstances, however with blue coastlines, natural mountainous scenery and a rich history, the number of tourists visiting Turkey is again growing.
With tourism providing a steadily growing income, popular destinations such as Istanbul, Antalya and Bodrum will benefit the most. An increase in demand for short term rentals and holiday homes will generate upward pressure on prices..
Although property prices have seen many highs and lows in Turkey, purchasing real estate in a popular holiday destination of Turkey could provide you with a reliable rental income – during the holiday seasons.
7. Turkish Banking Incentives to Drive Mortgaged Property
There is a perception that demand is still relatively low in Turkey, therefore numerous banks are offering tax incentives to those purchasing with a mortgage, in a hope to drive more interest in the Turkish real estate market.
8. Cheaper Turkish Citizenship
In the past, one would have to purchase residence valued at $1,000,000 or above in Turkey to receive Turkish citizenship, however in an attempt to increase the interest of foreign nationals in the Turkish real estate market, the threshold for citizenship through purchasing property has been lowered to only $250,000.
9. Political and National Stability
There has been instability which has affected the Turkish real estate market in recent years.
The failed military coup and terrorist attack in Istanbul caused apprehension among many foreign investors, however stability has been regained, politically and nationally in Turkey, which provides a good grounding for prices to steadily increase.
10. Financial Institutions and Business
Turkish banks are set to aid business loans, which will be reviewed on a case by case basis. This will aid businesses that are struggling to make current repayments but have a positive future.
The aim of restructuring business loan repayments in Turkey is to enable successful businesses to thrive, thus bringing more income to the country.
Along the same lines as above, the financial and business links Turkey has with other countries are strong, and are looking to be further strengthened in the future.
Turkey is a major oil exporter, and the country is also aiming to export more goods than they import.
A young population, with around 700,000 graduates per year is also positive to developing a highly educated workforce.
The above points are all positive news for the developing economy of Turkey, and will all contribute to strengthening the economy, thus in turn the real estate market will steadily increase in value as more funds are available to be spent on further regeneration.
Last but not least, it should go without saying that Turkey has an exquisite Mediterranean climate, who wouldn’t want to wake up in gorgeous sunshine every day from April to mid October?
While the climate does not have a direct affect on property prices, it does however provide an increased interest for tourists and expats alike, which in turn will contribute to steadily increasing prices.
Price Predictions in Turkey
No one can predict anything with 100% certainty; however industry professionals will analyze a multitude of data within the property, financial, economical and political sectors when determining real estate market predictions.
Some experts are predicting that 2019 will showcase a similar price trend to that of 2018, however it is expected that towards the end of 2019 and beginning of 2020, the market will begin to steadily increase.
It has been predicted that there could be up to 1.5 million house sales in Turkey by the end of 2019, with over 50,000 of the sales predicted to be sold to foreign nationals.
In previous years, the luxury real estate market in Turkey has not seen much action, however it is predicted that this will soon change – a young, well educated population will look towards purchasing, or renting, the higher value buildings.
Which Areas of Turkey Should I Invest in?
Due to a growing young workforce, it would be beneficial to invest in high quality rental accommodation which will be suited to those working in areas such as Istanbul and Antalya; preferably a unit which is part of a regeneration project, as you will receive a consistent monthly income whilst also benefiting from large predicted capital gains.
Other areas which should be considered for investing in real estate are; the cities of Bodrum and Izmir, small resorts in the area of Antalya and small towns such as Alcati.
We believe that the Turkish real estate market still displays a promising investment opportunity, especially in the coming years.
Although luxury villas are an attractive purchase due to the Lira being lower in value than in the past, we would recommend purchasing smaller residences, such as flats, apartments, condos and town houses due to a high current demand which will remain for the foreseeable future.
Areas undergoing regeneration projects seem to provide the optimum investment; with low initial purchase prices, consistent demand and the possibility of large capital gains.
The emerging economy of Turkey could provide a good real estate investment opportunity, and should not be one to miss out on.
Infographic: Reasons to Invest in Turkish Real Estate
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