Which Investment Property in Turkey?

Are you, like a number of our readers, currently pondering a question along the lines of - ‘if Spain’s property market is about to go bust does that mean all property abroad is a bad bet?’  If you are then this article has been written especially for you!  In it we will introduce you to 5 core reasons why many people believe an investment property purchase in Turkey right now could actually be considered a sound purchase and a wise investment choice.

Additionally we’ll focus on which investment property in Turkey to buy depending on which of the 5 main investment approaches you personally favour, how to keep an eye on the main factors in Turkey’s real estate market favour as well as what to watch out for as far as weakness indicators are concerned.

5 Reasons Why Property in Turkey is a Wise Investment Choice

1) The wider world is finally realising that Turkey has so much stacked in its favour as a most desirable place to holiday, live or retire.  Particularly along its southern coastline the lifestyle achievable in Turkey is enviable, the climate is glorious, the cost of living is highly affordable and the population is friendly, hospitable and welcoming, meaning Turkey is a great place to invest in for consistently increasing opportunity.

2) Even in the most sophisticated cities and resorts the property market in Turkey is miles behind that in the likes of established Spain or even emerging Bulgaria.  The lack of mortgage availability has significantly restricted the expansion of the market in terms of meeting demand and stretching affordability and so property prices remain affordable.  Mortgage law is already changing for the better, additionally larger developers are offering gearing opportunities to investors with staggered stage payments beyond the construction period available - and so suddenly there is financial buoyancy in a market ripe for expansion suggesting prices could now rise in a sustainable way.

3) The Turkish economy is doing quite nicely thank you!  And local Turks are becoming wealthier in relative terms meaning that along with the availability of mortgage products for local citizens, local affordability is going up meaning house prices can and will follow.

4) Turkey’s relations with the EU are generally improving.  A few giant leaps forward in recent years have been followed by a period of stagnation - however, there is no stopping the internal economic, legal, social and political reforms that are happening to ensure Turkey is best aligned for EU entry when a complete invitation is received.  This positive development has led to an increase in foreign direct investment commitment in Turkey which bodes exceptionally well for the future economic advancement of the entire nation.

5) There is massive local demand for housing stock.  Unlike in the UK, US, Germany and in Turkey’s neighbour Greece, Turkey’s population majority is actually getting younger rather than aging as birth rates soar; in addition to this fact over half the population is housed in sub-standard accommodation at a time when almost universally affordability is improving meaning that this fact, coupled with the aforementioned mortgage related data creates enormous domestic demand for real estate presenting an investor with uniquely profitable potential.

Which Investment Property in Turkey?  5 Potential Approaches

Determining which investment property to buy in Turkey can be very tricky because there is just so much on offer to choose from.  In the resort towns from Kusadasi to Side there are simple holiday apartment and luxurious villas, in Ankara and Istanbul there are smart city studios or ancient buildings in need of complete renovation and ripe for remodelling – there is a tourism demand to service, a student base to house, local demand to satisfy or a commercial opportunity to explore…one has to pick an approach to profiting from an investment into Turkish real estate in order to determine which investment property to buy.  Here are the main 5 approaches to choose from: -

1) As mentioned earlier there is unprecedented domestic demand in Turkey and a buyer has the entire country to consider.  One can buy older, character stock and renovate with the intention of resale.  Once can choose well located ramshackle property to simply remodel and let out, or an investor with a developer’s background can of course create brand new real estate for sale or to let to meet this burgeoning local demand.

2) City based opportunities present themselves in the form of purely commercial ventures or in the form of developing, buying to let or renovating to service demand from corporate tenants in either Ankara or Istanbul for example.

3) Also largely centred in Ankara and Istanbul, there is great student and faculty demand for rental residential real estate – seek out the most popular residential locations for this type of demand and remodel larger properties into affordable single occupancy units for example and always look closely at what your chosen demographic demands and can afford allowing these findings to guide your purchase decisions.

4) The largest known demand base is tourism related and this covers those buying now to retire later or buying now for holidays as well as those seeking villas or apartments for short term holiday lets.  An investor seeking the broadest choice of tenant or buyer as well as the broadest choice of location and property type should consider servicing the tourism related demographic in Turkey.

5) And finally, there is a bleeding edge market within this stunningly rich emerging market and that is the ski and winter sports resort property market in Turkey.  While it’s a well known fact that Bulgaria has a ski season and a number of popular winter sports resorts, many are oblivious to the fact that Turkey has massive mountain ranges, incredible ski and snowboarding destinations and that this particular market is so ripe for exploration it’s incredibly exciting!  Look at Uludag, Kartalkaya, Palandoken, Erciyes, Saklikent, Sarikamis, Elmadag, Dagi and Gumushane to begin with and see what inspires!

Pros and Cons: Strengths and Weaknesses

And finally, while on the whole Turkey represents a fantastic investment opportunity there are also certain warnings one should heed and potential issues an investor should be aware of before they commit to buying property in Turkey…

Property in Turkey – Positive Factors and the Potential

Politically and economically speaking Turkey is changing for the better; additionally a potential EU entry schedule could mean already strong foreign direct investment commitment soars.  The tourism market in Turkey is established and has remained robust even in the face of relatively recent shakes and shocks…it is supported by good and improving infrastructure, decent levels of affordable accessibility and stunning natural assets including scenery and climate.

There are no excessive restrictions on foreign ownership of property, transaction costs and taxes associated with buying owning and profiting from property are relatively modest.  Demand for property in Turkey is growing among local and international buyers, mortgages are becoming increasingly available and the red tape and legislation involved in property transactions is easing.

Currently property stock remains affordable but there is a wealth of positive factors leaning in favour of property prices rising alongside demand creating long term profit potential for investors who buy in now.

Turkish Real Estate – Negative Issues and the Risks

There are currently some political issues in Turkey in which the army have sought involvement and this has resulted in local nervousness in light of the fact that the last time such a situation occurred there was a coup.  Additionally unemployment in Turkey remains high and Turkey is considered a poor nation with lower levels of education and literacy than in all EU countries for example. 

There are other negative pressures that could create an issue affecting the property market such as the fact that Turkey is known for corruption ranking 65th in Transparency International’s league table and certain areas along the coastline have been overdeveloped too quickly with lesser quality stock which is being promoted for prices above what the real estate is worth in the current market climate.

In conclusion, to say that all property markets abroad will crash if and when Spain’s market comes tumbling down is incorrect.  Many markets run independently of the Spanish model, many are at a very different point in the global market cycle and other locations like Turkey just have so much obvious appeal and on the whole low, low prices that they really do represent a great opportunity right now.