Turkey has seen more house price inflation than anywhere else in the world apart from Hong Kong according to Knight Frank’s Global House Price Data from 2015, but does this mean it’s a good location to buy a second home abroad?
Considering the often violent anti-government demonstrations and political unrest that took place in the summer months Turkey’s position near the top of the World’s fastest rising property markets is surprising. Normally this kind of instability tends to dissuade investors from taking a leap into buying property leading to a drop in sales and subsequently prices.
Turkey also suffered from a drop in the value of its currency leading some analysts to predict that the country was heading for choppy waters and a real estate slump. Yet none of these seems to have happened. New home prices in Istanbul, one of the key destinations for international property investors in recent years, have increased by an average 7.72% between October 2014 and October 2015.
Turkey’s resorts have also benefited from increased foreign investor interest since much of the red tape which held investors back was removed.
One of the big surprises to come out of Turkey was the recent election result which saw the re-election of the AKP party. Few people expected this result given the unrest in the summer but it at least brings continuity.
Many foreign investors who have arrived on Turkey’s shores since the great property boom began will have breathed a heavy sigh of relief. It is largely through the encouragement of the present government, that investing in real estate in Turkey has become easier. This has helped transform Turkey’s most famous city, Istanbul, into a magnet for investors.
While the political unrest which took place in 2015 will have led to doubts about stability, these proved to be shortlived. Efforts to encourage investment haven’t always been popular with locals and this has led to mass protests from those who oppose the ongoing development of Istanbul.Yet this doesn’t appear to have put off investors.
Another attraction for investors has been the generally lower prices of property compared to other European cities with a comparable historical heritage. While Istanbul does have its fair share of exclusive areas where properties are priced at £3million, it is still possible to buy properties in the less fashionable areas of Istanbul such as Esenyurt for less than £50,000.
Istanbul has seen its fair share of glossy new high rise property developments in recent years as well as a few that have faced long delays to completion. The latter has meant disappointment and money lost for some investors.
“Istanbul is a great city to invest in property but it is not a city where inexperienced property investors should go without first seeking an independent company to manage the day to day running of their properties for them.” Says Ilker Kara, CEO of TAM, a property management company based in Istanbul.
When investors purchase a property from one of the many property investment agents operating in Istanbul, they assume that paperwork and legal issues will be taken care of for them. But it is important to hire an independent lawyer and also have someone available to act on your behalf in the day-to-day running of a property.
Having the support of independent local property managers is important to investors, who may be new to Turkey, however the biggest factor that will encourage foreign investors to continue to put their money into Istanbul property is ongoing stability.
Both political and economic stability have always been an important factor in real estate markets and none more so than in the era we now live in. After a period where the world has seen a global financial crisis and the rise of a new age of global terrorism, stability is something everyone craves and hopes for. While Turkey remains perilously close to the forefront of the war against forces bent on causing death and destruction across the civilised world, stability stands for a lot and not just for investors.
For now it looks like Turkey can look forward to a resumption of growth and continuing interest from investors but there remain better alternatives for more risk averse overseas property investors.