With official figures from the Turkish Statistical Institute showing that property sales to foreigners surged 65.3 per cent year-on-year in July 2017, why are buyers heading back to Turkey in 2017?
1. House price growth
At a time of global political and economic uncertainty, the stability of bricks and mortar makes real estate a reliable asset for investors, and capital growth is a key factor to that long-term appeal. Turkey’s capital growth has been one of the country’s primary selling points in the years since the financial crisis, with prices continuing to grow once more in 2017. In Q1, property values rose 3.4 per cent, according to Knight Frank, taking prices to 13.3 per cent above Q1 2016. As a result, the country is now ranked the fifth fastest-growing property market in the world.
2. Tourism
Tourism is a significant driver of market recoveries and investment appeal. After a period of dwindling visitors, Turkey’s tourism sector is now flying high once again, with the number of foreigners visiting the country up 46.4 per cent in July 2017, according to the Ministry of Culture and Tourism, the biggest annual increase since May 2004. British travel agency Thomas Cook says it has seen a “significant pick-up in demand” among UK tourists, which it attributes to both the quality and value of the destination. Russian tourists have also fuelled the sector’s growth, as relationships improve between the two nations. Official figures show that the popular resort of Antalya is the second most sought-after destination among foreign buyers, followed by the Black Sea province of Trabzon.
3. Infrastructure
Istanbul’s population growth means that the city’s development arm is highly active, as urban renewal and infrastructure plans seek to support its rising number of residents and improve both travel and quality of life. Megaprojects such as the Marmaray rail project, the 3rd Bosphorus Bridge, Eurosia Tunnel are some of the mega-projects to name that are completed in the recent years.
“Istanbul Financial Center (IFC), the Istanbul Canal and a third International Airport are all underway, while Istanbul’s third international airport is expected to be one of the largest in the world,” comments Mr. Erem. “Having had the uncertain (financial) environment in Europe (particularly after Brexit), IFC would be a good opportunity to fill London’s position for Istanbul in the near future.”
4. Local demand
The government has introduced a range of measures to boost lending, including state-guaranteed finance, tax cuts and looser banker regulations. As a result, lending rose 21.2 per cent year-on-year in March 2017, the fastest level recorded in over a year, according to BDDK. VAT has also been reduced to 1 per cent for certain residential properties. Combined, these have helped to encourage domestic property sales as well as overseas sales, both of which are building momentum in the housing market’s performance.
“There is no doubt that 2015 and the beginning of 2016, the property market in Turkey and particularly in Istanbul was doing explicitly well,” says Mr. Erem. “On the other hand, after the first quarter of 2016 and particularly after the coup attempt in July 2016, the market has slowed down for the international buyers. The numbers of the foreign buyers have decreased, but the number of the sales in Turkey has increased compared to 2015. Interestingly, the local market has not slowed down.”
5. Citizenship
Building upon Turkey’s appeal as an investment destination is the country’s recently introduced citizenship scheme. Turkey now grants citizenship to non-residents who make a $1 million investment in the country’s real estate. With other countries, such as Portugal, Greece and Cyprus, seeing success with similar “Golden Visa” programs, Turkey’s citizenship scheme is likely to boost demand from wealthy buyers from countries such as China.
