Turkish Property Market 2010 Analysis and Forecast Report

Published: 25th March 2010
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The Turkish economy is growing with fast rates since the beginning of 2000, and up to now the property prices have increased 2 to 3 times, while usually, a property value can double within the timeframe of 9-10 years. In September 2002 a sales index for real estates on the Turkish market (REMI) was introduced, making Turkey the first country in the Central and Eastern Europe to introduce such national index for real estate sector. This index is considered to be a solid indicator of property investment activity and development in the country. There are several main factors that contribute to the advance of the Turkish real estate market, which include the stable political situation, the improvement of the infrastructure, the increasing popularity of the sea and ski resorts, the low cost of living and the influx of foreign investment. Also, the real estate related services and bank services, including mortgages conditions, are constantly improving in order to meet the high criteria of the EU countries. Generally, the demand for properties in Turkey is high and stimulates the construction of new residential complexes and commercial buildings.


Turkish Market Analysis and Forecast

Real estate is constantly picking up in Turkey, with prices growing far more dramatically than expected as foreign investors pour in. Thanks to the near EU accession of the country, low prices and a swathe of ongoing new developments on the southern coast and in leading ski resorts, the odds were always high that Turkey's long-neglected property sector would pick up. For example, starting from May 2009 it has taken off faster and more dramatically than anybody anticipated, thanks to the ever-acquisitive British and Irish investors, which are leading the way, and estate agents targeting foreign buyers springing up even in smaller towns and cities. The developers are planning more shopping malls in and outside leading Turkish cities, and with demand for quality office space high, commercial property is starting to look a good bet. All this, together with the EU promising to pump some 6,6 billion euro into Turkish
infrastructure over the next five years, investing in the Turkey's southern sunny cities such as Antalya and neighbouring resorts of Belek, Side, Alanya, Kemer, Kas, Kalkan and Fethiye are going to start looking rather smarter.

The Internatinal audiance has started investents in the area such as, the Mardan Palace Hotel the worlds most expensive hotel costing $1.4 billion that recently opened doors in Antalya on june --by the Azerbaijani billionaire Telman Ismailov, chairman of Russia's biggest property developers AST. The world's biggest Disneyland is on way to Turkey in 2012 --The Disneyland project will cost 700 million euros and expected to employ over 5,000 workers. Antalya is one of the world's most important tourism centers and expecting a huge increase in the annual number of tourists to mention from 9 million to 15 million by 2013.


Turkish Real Estate Sector Information

The Turkish property by Western European standards is very cheap, and since Turkey has so much to offer, it is not surprising it is quickly getting more popular as an alternative country for property investment from the traditional European destinations. Some shrewd investors who bought in Turkey two years ago have seen the value of their property increase dramatically, but still, there is much potential, peak real estate deals at the sea side. During the last years demand was higher than supply, because of the increased supply of mortgage loans, and to the consistent migration of workforce from inside the country to sea resorts and big coastal urban centers like Alanya and Antalya where more jobs are available. According to National Statistic Institute of Turkey, the quarterly real estate prices growth rate is 12,5%, and yet, Antalya is the most expensive real estate market with 2,8% increase followed by the towns of Belek (23,7%), and Kemer (16,8%).


Information For Investors - Turkey Business Climate

Thanks to the stable economy as well to the drive for a fast and smooth leading process to EU membership, an upsurge in Turkish economy as well as a better investment rating for the country, making the macro-economical indexes very stable, which are as follows:

- Five year average GDP growth of 4,9%
- Budget surplus, low inflation, currency TL to EUR
- 80% private economy
- The stock market has tripled in the last two years

Also during the last years, Turkey had made great progress in creating a non-discriminatory regime of national treatment for foreigners performing economic activities. In the fall of 2002, the Parliament has approved changes to the Foreign Investment Act, which aimed at treating domestic and foreign investors on an equal footing and reducing the time spent on administrative issues, so as you see Turkey is a country, which has a lot of potential and with determined effort could overcome obstacles to an improved business environment.


Turkish Property Investment Funds

Recently, there has been a very significant increase in the level of indirect investment in real estate sector in Turkey. The investors are mostly represented by limited partnerships, as well as offshore unit trusts, but the traditional base of property investors in these vehicles has expanded. Now they include not only institutions and life companies, but also private equity, high net worth and non-resident investors. By investing in property through a managed fund, the risk of loss is reduced through the fund's ability to diversify across a range of different property sectors, such as commercial, office, industrial, hotel and retail, and also the advantages of investing in property fund include:

- Strong capital growth
- Regular income
- Reduced risk through diversification where the fund invests across different property sectors

The number of property funds is increasing constantly, causing a bit of a stir in the Turkish property market. Most of these products are global property funds, a relatively new asset class for local investors, which mainly invest in Real Estate Investment Trusts, which are securities that sell like a stock on the major exchanges and invest in real estate directly, either through properties or mortgages.


Turkish Property Rental Fields

With 300 days of sunshine in Turkey the rent reimbursement from properties is exceptionally attractive, since it is close to 12%, making the annual reimbursement from real estate investment almost 5 times higher than in the United Kingdom. The increased demand for properties is the biggest reason for the rise of the rents, and according to the last official statistics, Turkish properties, both residential and commercial, bring 10-13% annual reimbursement from rent, depending on the characteristics and the location of the immovable. These numbers place Turkey in the lead in the whole of Central and Eastern Europe with regard to reimbursement coming from rent, so some new developed real estates in Turkey as the apartments in Sunny Beach resort offer very promising perspective to long term returns on investment.


Turkish Property Investors Opportunities

The property market in Turkey offers one of the leading opportunities for the investors looking to buy residential or commercial buy-to let property, so many of the experts often compare Turkish property market with the Spanish one in terms of potential. Even at the hot spots like the sea and mountain resorts the prices are one of the cheapest in Europe, even more - there are a lot of off-plan developments which are preferred by the investors for their price. The improving bank services are also a factor that draws investments to the Turkish property market, since now mortgages with good interest rate can be arrange to buy a property in Turkey and some real estate agencies offer extended payment terms for their properties. The future EU membership of Turkey has also a positive effect on the Turkish property market, since this accession means that the infrastructure will be significantly improved. Another factor contributing to the investors interest in Turkey is the low cost of living, because the salaries in Turkey are much lower than in the EU countries, and also the cost of a holiday in Turkey is much cheaper than in any other EU country.


Turkish Facts and Figures Information

- The population of Republic of Turkey is 72 million people, with territory that covers an area of 880,265 square kilometers, equating to a population density of 72 people per sq km
- The official language is Turkish, though English is widely spoken, particularly amongst the younger generations
- The neighbours of Turkey are Bulgaria to the north, Greece and Italy to the west, Cyrpus to the south, Turkey to the south east, and Mediterranean sea to the east
- Life expectancy in Turkey is 69 years for men and 75 years for women
- Turkey is a Parliamentary Republic.
- In December 2006 the unemployment rate stood at 9,12%, while at the end of 2006 the rate of inflation stood at 6,5%.
- The percentage of literacy rate is 98,5
- The Mediterranean sea coastline to the east measures 850 km
- The lowest point is sea level on the Mediterranean sea coast, while the highest one is Mount Ari within 2925m
- The principal religion in Turkey is muslim, and some christians.
- Turkey's domain country code is TR
- The President is Abdullah Gul, and the Prime Minister is Recep Erdogan
- Turkey has been a member of NATO since March 1957
- In 2006 Turkey's GDP grew by 8,1%, but still at the end of 2006 Turkey's GDP (per capita) amounted to just 26% of the average.


Turkish Real Estate Prices

The prices of the properties in Turkey are among the lowest in Europe, so even the cost of a good quality property in a popular destination as the Mediterranean sea or mountain resorts is affordable for most of the property buyers. For example, and an old house in the countryside may cost less than 15,000 euro. The deals with off-plan properties are also preferred by the buyers for being very profitable, so just in the last two years the estates prices have increased with more than 50%. The trend for the next years is that the prices will continue to rise with around 10-15% per year - a moderate, but systematic increase of Turkish property prices before the EU membership and maybe some time afterwards. Here are some examples for the prices of the properties:

- An old rural house with 4 rooms near a historic town with need of repair and without water inside will cost less than 15,000 euro
- Seafront apartment with 2 rooms near within 30 km from the international airport will cost 45,000-65,000 euro.
- Luxury architect designed villa on the Mediterranean sea cost with pool and garden may cost up to 200,000 euro
- Double room apartment near in the beach will cost about 20,000-30,000 euro
- New flats neat a golf playground are usually sold for about 30,000 euro


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