With GDP growth of 6.6% Turkey was officially the fastest growing economy in Europe last year, and this followed an even stronger 8.2% GDP growth in 2010. However, now the government is preparing for and preparing us for a slowdown against the continued misery in the European economy and sluggish growth almost everywhere else. The government says it is aiming for a soft-landing on growth of 4%, that will allow it to focus on shoring up the economy after its incredible couple of years, but some are predicting no such pillows will be laid for it.
Some sectors may well be worried about the slowdown, but property definitely needn’t be one of them. This could be said anyway for a number of reasons, but the home-run confidence builder has to be the fact that the Turkish parliament has recently adopted the long-awaited (well, long in dog years) bill that will allow millions more foreigners to buy in Turkey and to buy more land in Turkey without special permission being sought.
Under the old law nationals of the 89 countries that didn’t allow Turks to buy property, couldn’t buy in Turkey because of the reciprocity clause, but the new bill drops that clause. This doesn’t mean it is open season, as the government will now decide which of the 89 countries will be allowed to buy, but it is expected that buyers from most of the currently banned Arab states will now be welcomed with open arms.
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This of course, at a time when Turkey is incredibly popular in the Arab World, not least because the Arab Spring has effectively cut-away much of Turkey’s competition for tourism and Investment. This is because Arabs like to stick to Arab countries for their holidays and investments, but will also feel safe doing so in Muslim countries like Turkey. Because of the Arab Spring many of the Arab world’s top tourist locations are now unsafe for family holidays, and require a lot of faith from investors as well, faith that is not very common in today’s marketplace.
On top of that Turkey had signed many visa-free deals in the 18 months running up to the Arab Spring, including many with Arab countries, this helped to make it a top choice with the many Arabs now looking for an alternative choice, as well as increasing its popularity in the Arab world in general, as did standing up to Israel. The combined effect of all this has been a surge in Arab tourism to and investment in Turkey, and it is expected that when they are allowed to buy property it will add billions in revenue to the market.
A market that is already growing strongly of course. According to the latest index from the Association of Real Estate Investing Companies (GYODER), Turkish property prices grew 1.28% on the month in March, and 11.62% on the year. This represents an acceleration on February’s data when growth was 0.60% on the month and 10.42% on the year, which was in turn was an increase on January’s annual growth figure of 9.97%.
The body also reported strong growth in foreign buyers between 2009 and 2010 when it said the number increased by 40%. Unfortunately we do not have comparative data for last year as yet, but it is believed that growth was even stronger, and with more nationalities added to the mix one can only predict further acceleration.
Under the new law foreigners need special permission only if they want to buy more than 30 hectares, the previous limit for special permission was 2.5 hectares. This is also expected to increase sales and revenue flowing into the Turkish property market.
