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Buying property in Turkey

18th November 2009 Print

Turkey straddles South East Europe and South West Asia and is bordered by the Black Sea and the Mediterranean Sea, Greece, Bulgaria, Georgia, Armenia and countries in the Middle East (Iraq, Iran, Syria, Azerbaijan). Turkey and Turkey property is steeped in a wealth of history and culture which should be understood when making investments into Turkey property.

Modern-day Turkey was formed in 1923 by Mustafa Kemal who became known as “Father of the Turks”. This followed periods of control by the Ottoman Empire, and Kemal established a constitution and Constantinople became known as Istanbul. Turkey has suffered from many periods of civil unrest with a poor human rights record, but the troubles have lessoned in recent years. Rapid modernisation an expansion is taking place.

Turkey has a diversity of culture, beliefs and ideas and has nine locations listed as World Heritage sites, including Istanbul and Troy. Anatolia is one of the oldest areas in the world (the link between Europe and Asia) and there are believed to have been Neolithic settlements. Turkey still shows influences from many civilisations or empires - Hittites, Greeks, Persians, Romans, Byzantine, Oghuz Turks and the Ottoman Empire.

Turkey has 81 provinces and although the capital is Ankara, Istanbul is the financial hub of the country. Turkey is a democratic republic.

Turkey has a lot to offer any visitor - the warm Mediterranean climate means that the Aegean coasts with bays, sandy beaches and coves, as well as ancient theatres and temples. Resorts such as Bodrum are popular. Istanbul is well worth a visit for its museums, churches, palaces, mosques, bazaar places and natural beauties.

Property in Turkey

Historically the Turkish property market grew from the need for cheap affordable housing for the growing inner city populations, who moved inland to find employment. This resulted in some low quality property offerings in Turkey, although this was all that was required at that stage. There are many factors affecting large scale change in Turkey and property in Turkey. Shrewd property in investors are seeing this as an opportunity to make an investment in property in Turkey at the ground floor.

The country has under gone a series of fairly radical economic changes, due in the main to the application to join the European Union (EU) and the many conditions attached to this. The Free Market culture was embraced and the restriction on overseas ownership of property was lifted. After spotting a very underdeveloped property market in Turkey, the impending economic growth and infrastructure investment associated with the EU membership application, overseas investors have taken a great interest. Initially the interest has centred on the Aegean and Mediterranean coastline, with its extensive transport network and demand for holiday housing which have resulted in a property boom.

All be it from a very low basis, the last 12 months have seen the price of Turkish property leap by over 50%. While there is no way that this increase in prices can be repeated indefinitely, there are many market observers who believe that this is only the beginning of a long, sustained re-rating of the sector. Many are predicting a boom period which could easily last between 5 and 10 years.

While the large global holiday companies have a significant exposure in the coastal cities and towns, many people are now looking inland at the more untouched areas of Turkey. While the terrain can be difficult to navigate, there are some breath-taking sites to behold as people begin to investigate the less fashionable areas. As many of these areas have not yet been affected by the rise in property values, there are some real bargains to be found.

Buying Property in Turkey

Turkey is one of the many countries which have applied for membership to the European Union (with this expected to be rubber stamped in 2007) and seems poised to benefit more than any recent entrants. The World Trade Organisation believes that Turkey has one of the most prosperous economies in the world and is set for further growth in the foreseeable future. The potential for economic growth is based on a mixture of the climate, great history, golden beaches, and some very quiet rural villages which are attracting the attention of foreigners looking for exciting and different holiday venues. These are all fantastic signals for those investors who are thinking about buying property in Turkey.

As well as attracting new holiday makers, the country is attracting a lot of overseas investment with a number of blue chip companies opening up manufacturing and service operations in the country. This in turn is adding to the vibrant economy which is also encouraging further infrastructure investment. While initially the government may have been a little slow to encourage overseas investment, they now seem to making up for lost time, and the forthcoming membership of the European Union can only open up new avenues.

Recent increases in the value of properties have been in the region of 50% and while this cannot continue indefinitely there is still substantial demand in the pipeline to ensure above average returns in the short to medium term. The country has a prime site, with local access to central Asia, the Middle East, Africa and the mainland European markets and a double taxation agreement with many of its trading partners also adds a further attraction for investors.

In brief, Turkey has embraced the free market economy and has a young and willing work force who are helping to power the country’s economy. Vibrant, open to new ideas and with recent government reforms starting to take effect there are many positives to look forward to.

Future for Property in Turkey

As the Turkish economy continues to expand and the standard of living improves further, the forthcoming membership of the European Union will further lift what is already a buoyant economy. As ongoing government reforms continue to be introduced, the period of co-operation with business and overseas investors continues to develop to facilitate an ever increasing inventory of property in Turkey being bought and sold.

After a very difficult economic period, which resulted in near collapse in 2001, the country has recovered and inflation is now under control. In hindsight the fall to the brink of disaster caused the government into radical reforms which are still coming into effect now. The economy is being supported by the ever growing population of the country which reflects the general air of confidence in the future. A recovery in the value of the currency and the fact that inflation is now under control adds to the positive outlook for the country.

Do not be put off by recent property price rises, as these were from a very low base and look set to continue for the foreseeable future.

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