"We weren’t surprised when GCC news recently reported that real estate in Turkey is where Middle Eastern investment fundsare landing. We have completed many transactions this year where Arab investors are buying property in Istanbul and other Turkish cities" said Cameron Deggin of Place Overseas, Turkey property specialists.
Changes in Turkish Law
All of the investor enthusiasm, the article found, was initiated by a key change in Turkish real estate law. Historically, if you were a foreign investor, you could not directly buy Turkey property of any significance. But, since the final law barring foreign real estate ownership was removed in May, 2012, savvy investors have been reviewing Turkish real estate in droves.
Adding to the real estate in Turkey windfall is the relaxation of tourist visa requirements, especially as it relates to length of stay, says GCC. These visas traditionally lasted for three months, but have now been extended to one full year. So, not only can you find affordable real estate in Turkey, but you can spend much longer enjoying your investment as well.
Further, several sources are noting a stable and progressive Turkish government who is actively promoting 'master plan' community projects and unlocking tracts of land in major cities to continue providing fuel for the growth.
The new Turkish government, while eyeing possible membership in the European Union (EU) has worked hard to create transparency in government affairs while increasing its own auditing mechanisms and access to government collected data.
Leading the Investor Charge into Turkey
As the initial gold rush of Arab investors buying property in Istanbul, Bodrum and other metropolitan areas is being led by large investment fund managers looking for short-term to long-term returns, according to the article. The fact that these fund managers tend to be well-informed and generally adverse to significant risk is a strong sign to the smaller property investment firm or individual.
Well educated foreign investment fund managers have also increased their confidence in Turkey because the country has a large group of well-established and globally recognized construction companies who have already 'tooled up' to meet higher demand.
The Numbers Don't Lie
To put a number to the investment activity, GCC is reporting that over one billion dollars was invested in Turkey property in the first month after the legislative changes alone. This number appears to be expanding as word of mouth in the investment community is trickling to individual investors, many of whom come to us for help.
Another number that insightful investors are noting is the age of the Turkish population. Since Turkey's population average is below forty (40), there is still a large percentage of the population who is earning more, does not yet own real property and can be counted on to provide an ongoing source of real estate activity for several decades. In fact, current housing demand is larger than the available pool of Turkey property, showing that Turks would be experiencing a smaller real estate rate value even without large foreign investment.
Why Turkey Real Estate Now?
Compounding all of this good news for Arab investors buying property in Istanbul and elsewhere in Turkey is the general unrest, globally and regionally. Turkey, according to the GCC writer, may be the lone bright spot with positive Gross Domestic Product (GDP) growth. This is a particularly strong statement by the Turkish economy as it has negative pressure from falling European Union (EU) manufacturing orders and is still bounding forward.
Inflation is being held down by high national consumer confidence and domestic spending. With Turkish nationals seeing a significant increase in new investment in their country, they are spending more on luxury and staple goods and new shopping mall and retail construction is at all time highs.
Low inflation is combining with low interest rates from banks eager to support domestic growth and to share in the new investment profits.
The Arab Spring has also fanned growth with multiple nations experiencing political and social unrest that intelligent real estate investors would choose to avoid. Arab investors buying property in Istanbul can relax with the knowledge that their investment monies are safe and at work.
Finally, GCC experts state that the current problems in Syria have investors who traditionally weren’t allowed into the Turkish market and often choosing Syrian neighbor Lebanon as an investment location are slowing or stopping investments in those countries pending the outcomes of the current Syrian crisis and its possible effects on its neighbor state.
Turkey as a global real estate hot spot
European ratings agencies, including IP Global, are giving real estate in Turkey high marks normally reserved for European cities including Munich and London and GCC further noted that some European cities do not share Turkish good fortune, including Stockholm and Paris.
This shift is largely due to the problems attributed to European currency issues and unstable national economies. European investors need somewhere to safely earn returns and the lack of domestic prospects makes Turkey a top choice.
But, successful investors are not just coming to Turkey from the Middle East. They are coming from every corner of the globe, including China, the United States and Japan as their native real estate markets continue to struggle.
Additional research has shown us that Turkish investment properties collect higher than average rental rates as compared to its neighbors. These higher rent rolls are particularly noticeable in all urban sectors as well as office, retail and manufacturing properties.
Finally, Turkey sits in a golden geographic spot where Europe, the Middle East and Asia connect to each other and the Turkish entrepreneurial environment is creating enterprises to enable and/or improve these pathways.
We are being contacted every day from individual and institutional investors looking to step into the Turkish real estate market and we are happy to help them. As the GCC article states, the combination of political, economic and social forces have all aligned to make real estate in Turkey a positive investment for decades to come.