Southern Turkey may offer an excellent alternative to Mediterranean properties in crowded countries such as Spain and Italy. And the country is beginning to gain popularity among foreign holidaymakers as a result. 73,103 foreigners have spent approximately $10.4 billion on property in Turkey in the last five years, according to Today’s Zaman, the largest English-speaking newspaper in Turkey.
“In Didim on the Aegean, so many expatriates have purchased homes that electricity bills now come with an English translation. On the southern coast in Alanya, Germans are opening their own bars and shops. In the nearby city of Antalya, as of June 2007, 23 percent of real estate was owned by foreigners,” according to The World Politics Review.
Turkey with Ankara at center and Istanbul in the Northwest
Orhun Özdener Vahaboglu, a real estate attorney and consultant in Istanbul, agreed that the number of foreigners entering the country has been increasing. “Basically the British, German and Russian tourists are flooding into Turkey in ever-increasing numbers each year,” he said.
Coastal property in Turkey is rising in value as a result of increased foreign interest. “Turkey is a growing country with a lot of potential, as the European membership is a pending issue. As soon as this is realized, we may expect that the prices [will] double, as has been in Romania, Bulgaria [and] Croatia some time ago,” Vahaboglu said. Property values in Kalkan, on Turkey’s Mediterranean coast, average approximately $525,000 USD, and values in nearby Fethiya are even higher, according to information from The World Politics Review.
The Republic of Turkey is home to 71,892,807 residents, according to July 2008 estimates from the CIA World Factbook. At that time, the population was estimated to be growing at a rate of 1.013 percent per year. The majority of the country’s residents are Turkish (80 percent) while the remainder are predominantly Kurdish. The vast majority of the population is Muslim (99.8 percent), and the country’s official language is Turkish.
The government of Turkey is a republican parliamentary democracy. The president of the republic serves as the chief of state, which is a mostly ceremonial role, and is elected by the National Assembly for a seven-year term. The prime minister is the acting head of government, and is appointed by the president from among the members of parliament, according to the CIA World Factbook. Abdullah Gul is Turkey’s president and Recep Tayyip Erdogan is the current prime minister. The country is divided into 81 administrative provinces, and the national capital is Ankara.
Turkey is a candidate for membership in the European Union, and first applied April 14, 1987, when it was still known as
Alanya has become a popular destination among central Europeans
the European Economic Community. Since that time, Turkey has adopted 30 new amendments to its constitution and passed sweeping reforms to meet the EU’s criteria, according to EurActiv.com.
Turkey’s GDP is $888 billion and growing at a rate of 5 percent, according to 2007 estimates. Services account for the largest percentage of GDP (41.2 percent), with agriculture accounting for 35.9 percent and industry making up 22.2 percent. The national unemployment rate stands at 9.9 percent, with an additional 4 percent considered underemployed. The inflation rate is 8.8 percent. The official currency is the Turkish lira, one of which is worth approximately $0.86 USD.
“Despite the strong economic gains from 2002-07, which were largely due to renewed investor interest in emerging markets, IMF backing, and tighter fiscal policy, the economy is still burdened by a high current account deficit and high external debt,” according to the CIA World Factbook. The anticipated acceptance of Turkey into the E.U. is expected to boost the country’s economy and increase foreign investment in the region.
Coastal real estate such as in Istanbul and Alanya has attracted greater foreign interest, and property values are rising with demand
Buying real estate in Turkey
When considering where to purchase real estate in Turkey, investors may want to primarily consider regions on the southern coast. “Istanbul is the best place for investors,” Vahaboglu said. “Other than Istanbul, if the investor is willing to make some development projects, there are many places that may be attractive: [the] southern coast and other developing cities like Bursa [and] Izmir.”
Because of the influx of foreign holidaymakers coming to the country, holiday rental properties along the coast may prove to be a good bet for investors. But investing in open plots of land in promising areas may prove to be a good investment as well, according to Vahaboglu.
“[Investors] can sell the land in two or three years with huge range of profit,” he said.
Although Turkey opened its real estate market to foreigners in 2003, this has been met with resistance by some Turkish nationals. The Foreign Direct Investment Law, originally designed to encourage foreign investment by easing regulations for real estate sales to foreign companies and individuals, was recently revisited by the Turkish government.
“The regulation enables foreign companies, which had previously been granted rights equal to Turkish ones to purchase real estate on the basis of the Foreign Direct Investment Law-No. 4875, to own real estate by permission of the governor's office. The regulations, which will come into effect in [October 2008], will determine the basic aspects of how to receive this permission. As a result, no land will be sold to the companies concerned until then,” according to The Turkish Daily News. Until the new regulations come into effect later this year, foreign persons and companies operating out of foreign companies are restricted to two-and-a-half hectares of property and up to 10 percent of the land within a building scheme, according to the paper.
Political instability and unfamiliarity with the culture and society may deter many investors from exploring opportunities in Turkey
Political instability may mar Turkey’s attractiveness as an investment locale. Earlier this year Turkey’s Constitutional Court considered banning Turkey’s ruling AK party and barring Prime Minister Erdogan from office because of alleged Islamist subversion, according to Reuters. The Court “narrowly” rejected the lawsuit July 30, opting instead to merely censure the party, according to a report by Moody’s Investor Service. There was a possibility that these developments could harm Turkey’s bid for E.U. membership, which would have adversely affected the country’s economic prospects.
Vahaboglu said that, with the closure of the lawsuit, Turkey’s political climate is significantly more stable. “Finally the lawsuit is passed and now the waters seem to be calmer,” he said. “A somewhat political stability [has been] achieved and this helps to stabilize the property market.”
When purchasing property, investors must ensure that it is not within a military region, as military approval must be received before permission to purchase the property is granted. “When a foreigner applies to purchase real estate the land registry office will ask [for a] military clearance sheet from the military,” Vahaboglu said.
Turkey is also prone to earthquakes, and is among those countries that have suffered the greatest losses of life and property because of earthquakes, according to the University of Southern California. The primary sources of earthquake activity in Turkey are the North Anatolian Fault, the East Anatolian Fault and the Western Turkey Graben Complex. When selecting property for purchase, investors should research the region’s earthquake history and try to avoid areas with a large amount of seismic activity.