Many people are starting to look at the Turkish property market as the potential next “hotspot” as and when the world economy starts to pick up. While it may be a little too early to invest into the market there are some interesting factors coming into play which could make the Turkish property sector one to monitor for the future.
So what exactly does Turkey have to offer?
Situated in south eastern Europe Turkey is fairly unique in that it is actually bordered by eight different countries which include Bulgaria, Greece, Georgia, Armenia, Azerbaijan, Iran, Iraq and Syria. The Mediterranean Sea is to the south, the Aegean Sea is to the west and the Black Sea is to the north offering access to literally millions of people within a fairly short distance. When you also include the 70 million plus population which Turkey itself boasts this offers significant tourist and property investment opportunities.
The Turkish economy
There has been a significant shift in the Turkish economy which had been traditionally dominated by agricultural operations. While agriculture still plays a major part in the Turkish economy it is dominated by the industrial sector (30.8%) and the services sector which accounts for a massive 59.3% of the economic output of the country. It is interesting to see the massive growth in the tourist sector, the majority of which has happened over the last 20 years and is playing an ever greater role in the thoughts and actions of the Turkish authorities.
In 2008 alone there were over 30 million visitors to Turkey generating in ex cess of $20 billion in revenue for the economy. While figures for 2009 are difficult to predict bearing in mind the ongoing economic turmoil around the world there is no doubt that Turkey is now one of the main tourist attractions of the world.
Interestingly there has been a significant shift in the growth pattern of the Turkish economy as the agricultural sector has reduced and other sectors have stepped into the mix. Between 2002 and 2007 gross domestic product in Turkey grew by an average of 7.4% and is expected to have grown by around 5.4% in 2008. This puts Turkey near the top of the league of fastest growing economies in the world and bodes very well for the future.
The climate of Turkey
There are few countries in the world which can offer the variation in climate and landscape available in Turkey. The country boasts an array of mountainous regions where temperatures can be freezing many months of the year against the backdrop of the Mediterranean Sea resorts which are attracting the vast number of tourists to the region.
However, Istanbul is one of the major attractions for overseas visitors and overseas investors with a population of over 12 million with the second largest city in Turkey, which is Ankara, hosting a population of just over 4 million. The mixture of sun, sea, sand, mountains and culture has always been available although the actions of the current Turkish government have seen many areas of the country opened up over the last few years.
The Turkish property market
As the increase in tourist numbers has filtered through to the economy this has created significant demand for both holiday homes and tourist attractions. Prior to the onslaught of the global economic downturn and the withdrawal of many overseas property investors from countries such as Turkey there had been significant growth in property prices in the region. However, as with all other tourist dominated property markets around the world we have seen prices fall over the last few months although there is some debate as to how far they will go.
As well as domestic and international property investors staying on the sidelines at the moment, there is also speculation that international property investors in areas such as Marmaris, Bodrum and Didim in the west of Turkey are looking to dispose of their investments. This has caused something of a standstill in this particular region with literally thousands of new homes available and further homes being placed on the market on a regular basis.
This particular trend has been repeated across the tourist dominated regions of Turkey and many people are now of the opinion that the fall may well be overdone when you consider that Turkey still has a very strong economy and a very strong tourist industry. Even though the country has a history which goes back centuries it is still a fairly new entrant to the international property market but there is significant potential for future growth in Turkish property prices.
Transport links to Turkey
While Turkey already has significant transport links due to its attractive position in the world (with eight countries surrounding the country) it is also interesting to see that EasyJet has plans to open direct flights between London and Bodrum from the end of April 2009. This is a significant development when you bear in mind that budget airlines such as EasyJet have been cutting back on their transport routes and reverting to their central spine of lucrative transport links.
For EasyJet to go ahead with a new transport link in the current economic environment is a testament to the future potential of Turkey. This is sure to be something which will register on the radar of many international and domestic property investors looking for areas to target as and when the world economy starts to pick up. How much will this impact Turkish property prices?
Conclusion
Turkey has been an up-and-coming country for some time now with the ongoing expansion of the tourist industry and the new mix of industry leaders in the economy it all bodes very well for the future. Interestingly many experts still expect tourist numbers will increase in what is sure to be a “difficult” 2009 even though many tourist markets around the world are in disarray.
The purely technical situation which has seen mortgage payments increase for those in countries such as the UK, where the local currency has collapsed, has seen a significant number of properties placed on the market. While it would be foolish to suggest that Turkey can escape the ongoing worldwide economic downturn there are elements of the economy and the property market which offer great comfort to those already invested in the market and those looking to the future.
Whether now is the time to invest in the Turkish property market remains to be seen but interestingly there are a number of buy to let opportunities available at the moment. Some of the offers available include guaranteed rental incomes of 9.5% for the first five years, many of which are apparently backed by bank guarantees.