Emerging market interest
Turkey has proved itself to be a popular choice for emerging market property investment; a result of its combination of low property prices, attractive natural scenery, warm climate and its ongoing accession talks with the EU. The country is also benefiting from a significant injection of foreign direct investment (FDI), demonstrating a confidence in the country's success as well as being a direct boost to its development today. The main choice for property investors is between tourist areas and cities; namely the scenic coastal regions and Istanbul.
Economic background
Turkey's economy still has a large agricultural component - it provides around 35% of the country’s jobs - despite now being more of a mix of commerce and modern industry. Its economy is largely state-run (most of the basic industry, banking, transport and communication sectors are state-controlled) although private business is fast growing in strength. A large proportion of its varied economy is made up of textiles and clothing, which supplies a third of all jobs in industry, although since the end of the global quota system, the sector has suffered against international competitors. Other sectors are growing; Turkey's electronic and automotive industries are on their way to comprising a major part of the country's exports.
Recent developments
Turkey has gained a place among the 20 largest economies in the world with a gross national product (GNP) of almost USD300 billion. Turkey's economic growth rate has been one of the highest in the Organisation for Economic Cooperation and Development (OECD). For more information on recent developments please follow the link:
http://www.turkisheconomy.org.uk/economy/outcomes.htm
Encouraging investment
The importance of FDI is not lost on the Turkish government. It is fundamental to both the country's long-term economic success and its EU membership that it can maintain high levels of inward investment, and Turkey is aiming for $1.2 trillion from the Gulf States initially; the sum committed by the Crown Prince of Dubai was a welcome show of confidence which will hopefully rub off on other page 2 potential investors. The Chairman of the Association of Real Estate Investment Companies (GYODER), Bekir Cumurcu, forecast that FDI will reach $30 billion in 2007, up from $20 billion in 2006. Turkey has the potential, given sufficient levels of FDI and membership of the EU, to become a pivotal player in global relations, bridging the Middle East and Europe in both geographic and political terms. For more information on FDI please follow the link:
http://www.turkisheconomy.org.uk/investment/statistics.htm
Tourism contribution
The emergence of a strong tourist market has had a significant effect on the country’s economy, particularly in the coastal regions of the south where the land once dominated by agriculture now accommodates millions of summer visitors from overseas. In 2005, the revenue Turkey received from tourism came to over $18 billion, and visitor numbers had increased by 20.4% from the previous year to 21 million, making the country one of the world’s top ten destinations for overseas visitors. The figures for 2006 show a slight drop in tourist numbers to just below 20 million, which the country’s authorities have blamed on a number of factors, including bird flu scares and a series of terrorist attacks on the country. For the most recent figures please follow the link:
http://www.turkisheconomy.org.uk/economy/UK_tourism.htm
Encouraging development
As part of its tourism drive, the Turkish government has chosen certain areas to be ‘Tourism Development Areas’; these are the regions thought to have the greatest potential as tourist destinations and so have been chosen by the Ministry of Culture and Tourism. Government-owned land in these regions is promoted for sale to developers, with the knowledge that the government will invest considerable amounts in the future to boost the areas’ infrastructure. For information on development zones in Turkey please follow the link:
http://www.kulturturizm.gov.tr/genel/text/eng/TST2023.pdf
Growing demand
Turkey has a population of over 70 million people; 70% are under the age of 30 and population growth is around 2% a year. Reuters has reported that this young and growing population has created a huge housing deficit. The demand for property will further increase as a result of the new mortgage system that Turkey is adopting and as the mortgage market continues to expand there will be a greater demand for property from both the overseas and domestic markets.
Areas: Istanbul
Turkey’s capital city is gaining a name for itself as a trendy international nightspot and is attracting an increasingly cosmopolitan crowd. The government is keen to promote the city for investment and a major urban regeneration project is high on its agenda. The demand for accommodation in Istanbul is considerable; the population is growing at 4% a year (compared to the national average of around 2%) as many residents from rural areas migrate to the cities for work and by 2020 the city’s population is predicted to reach 23 million. A housing crisis has been predicted as construction in the city will not be able to keep up with the rising demand, with Turkish residents moving into the city and, increasingly, overseas professionals relocating to Istanbul for work. Demand for new accommodation in the city is driven not just by the property deficit, but also the condition of a large proportion of the existing housing in the city, much of which would not meet modern standards for living or for safety. Professional workers will be looking for a high standard of modern, conveniently located accommodation, either to rent or to buy, and property investors can take advantage of this.
Areas: Bodrum Peninsula
Investors preferring to take advantage of the tourism market in Turkey should consider Bodrum. Formerly a small fishing port, the town has evolved into one of Turkey’s best-known and popular tourist destinations. Its lively nightlife, paired with the attractive coastline of the Bodrum peninsula, guarantees a steady stream of both Turkish and foreign visitors every year and this, coupled with tight building restrictions, ensures that demand for property will always outstrip supply and, whilst property prices in Bodrum may be higher than in other areas of Turkey, they still represent excellent value for money by international standards. |
“Turkey agreed to enter into talks with the EU in October 2005, and from that point FDI into the country immediately increased”
“Its combination of low property prices, attractive natural scenery and its talks with the EU regarding its intended EU membership make Turkey a popular option for emerging property market investors”
“Turkey has the potential, given sufficient levels of FDI and membership of the EU, to become a pivotal player in global relations, bridging the Middle East and Europe in both geographic and political terms”
“In 2005, the revenue Turkey received from tourism came to over $18 billion, and visitor numbers had increased by 20.4% from the previous year to 21 million, making the country one of the world’s top ten destinations for overseas visitors”
“Government-owned land in these regions is promoted for sale to developers, with the knowledge that the government will invest considerable amounts in the future to boost the areas’ infrastructure”
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