If you’re looking for the next place to make money from property, Turkey could be just the market. It offers investors excellent capital returns on off plan property.
As always, location is key. Many overseas buyers are investing on the Turkish coast where summers are hot and dry – usually above 30C – and almost rain-free. Charter flights regularly service the main coastal resorts and easyJet already flies to Dalaman and Instanbul. Other low-cost flights and routes are likely to emerge, too, including from Turkish Airlines. As the number of tourists continues to increase, mirrored by the number of flights, demand for rental accommodation will rise alongside.
Unique opportunities for investors
Turkey currently holds an enviable position in world property markets. It has begun the application process to join the European Union (EU) and, property in turkey although it may still take many years for full membership to be signed, property prices are already rising sharply, making Turkey one of the world’s hottest property markets.
Booming tourist demand
Turkey has long been a popular destination for tourism and the current surge in tourist numbers (over 25 million each year), is fuelling the property boom further. Property prices are still low in relative terms and investors can enjoy both short- and long-term capital growth. Golf tourism is also emerging in Turkey, particularly in Antalya on the southwest coast.
High build quality
Building standards in Turkey have increased dramatically in recent years and the investor can feel confident in that respect when buying off plan in Turkey. New-builds usually have reinforced concrete frames and carry a minimum five-year structural guarantee. With the high levels of craftsmanship, many feel that building standards in Turkey now exceed those in the UK. However, if you’re investing in an older property, it’s wise to do a thorough check on the build quality, as the same standards may not apply.
High capital growth
Although a relatively young property market, Turkey’s low cost of living, together with the current low price base for property (with properties from around £25,000) and the boom in tourism means prices are now rising by 25-40% per annum. Land prices in Turkey have doubled in places in the last two years. In certain beach locations price projections for the next two to three years show potential gains of as much as 100%, especially where investment in tourism infrastructure is strong.
The best rental yields come from short-term lets during the high season and long-term lets over the winter. If you’re planning to re-sell though, be aware that with so many new developments under construction, somewhere small and more exclusive is likely to be easier to sell.
Economy now more stable
The Turkish economy has been characterized by high inflation but, although still relatively high (2002-2006 average 19.6%), this is now under greater control. In 2005 inflation fell to a 30-year low of 7.7%. Economic growth is currently very strong – 2002 to 2006 saw an average GDP growth of 7.2%. In addition, although there is still much State influence and control in many industries, the country has a strong and rapidly growing private sector.
Although investing in property in Turkey is relatively straightforward, always take independent financial and legal advice from someone acting solely for you. Assume nothing – and always check carefully your obligations as a property owner.
The mortgage market in Turkey for overseas investors is still in its infancy but the framework is currently being put in place for foreign nationals to be able to take out a mortgage in Turkey itself. As an overseas investor, you can already buy urban land and property in Turkey in your own name, and if the property is for private use (i.e. not business use), you can easily transfer sale and rental proceeds out of Turkey.
New-build property is exempt from property tax for five years, and if you hold on to your property for at least four years, capital gains tax does not apply. If you’re planning to live in Turkey, you’ll need a residency permit, which takes about six weeks to issue.