On the crest of a wave

Turkey is ticking all the boxes for overseas property investment, says Clare Nessling

Spanning Europe and Asia, Turkey is where East meets West in a blaze of glory. Influences of both cultures chart its epic journey across thousands of years to the developments shaping this sizeable country today. Ottoman mosques vie for attention next to Roman temples and eastern spice markets mix with trendy boutiques. Ancient cities resplendent with archaeological treasures are just a short expedition from lively beach resorts. Turkey is crammed full of delights, and as more people discover the tempting array it has to offer, so its holiday home market is flourishing.

According to the Turkish Statistical Institute (TurkStat), the number of foreign property sales in Turkey has risen by 28 per cent over the last 12 months. And there appear to be plenty of British buyers taking the plunge – the country is currently the fourth most popular location with regard to mortgage enquiries we receive, after the more traditional hot spots of France, Spain and Portugal.

Property market

Figures from Knight Frank’s global price index show that prices in Turkey increased by 16.2 per cent year-on-year by the end of 2014, putting it in an impressive second place in the world. It remains affordable, however.  According to aplaceinthesun.com, despite fierce competition in the last few years from the depressed property prices of Spain, Turkey still remains a great alternative to the Costas for coastal properties well under the £100k threshold; whilst at the other end of the spectrum it attracts high-end buyers for its affordability when weighed against the Cote D’Azur or Sardinia.


Turkey is concentrating resources on expanding its tourism market, so there should be appreciation in value as this infrastructure builds over time. So, if you’re interested in buy-to-let opportunities, you might be tempted by some healthy rental yield potential as well as strong capital appreciation over the longer term.

The number of people visiting Turkey as tourists actually reached an all-time high of around 37 million in 2014, an increase of 5.5 per cent on the previous year, as reported by the Ministry of Culture and Tourism, making it the sixth most visited country in the world.

Hot spots

Bodrum is a particular hotspot, with many buyers snapping up small coastal apartments which they can use as holiday homes, but also rent out easily to others. But there’s also been an increase in the number of people buying more expensive villas, especially in areas such as Fethiye, and those investing in multiple properties in the prime coastal areas.

In Turkey’s three biggest cities – Istanbul, Izmir and Antalya – populations are growing and there are significant levels of migration from rural areas and neighbouring countries for employment. And buy-to-let investors are being attracted to this emerging demand for housing.

It’s important to remember that Turkey is also growing in popularity as a retirement destination, with many being lured by the warmer climate, lower costs of living, and excellent property value.

For many buyers, it’s simply a more cost effective location at the moment, and it certainly seems to be on an upward trajectory, especially now that the Turkish government has been easing property ownership rules over recent years.  As part of this, foreign buyers can now get their title deeds in as little as one day, pending certain conditions, whereas previously it could take up to 10 weeks.

Obtaining finance

It’s possible to obtain loans of up to 80 per cent loan to value, and considering that Turkey didn’t even offer mortgages to foreign nationals until 2007, availability is generally pretty good. Lenders tend to prefer shorter terms, with 10-15 years being quite typical, and rates start from around 6.6 per cent at the moment. Mortgages tend to available in euros or sterling rather than Turkish lira, and we generally advise that an overseas mortgage and the income used to service the repayments should be in the same currency, to avoid any exchange rate issues.

It is of course imperative to take professional advice before committing to anything. You should always go through the same process that you would follow if you were buying a property in the UK, and this includes consulting a good independent lawyer, and ensuring that an independent valuation of the property takes place, even if it’s a cash purchase. There’s nothing to be gained, and everything to lose, by cutting corners and taking unnecessary risks.

Clare Nessling is Director of Conti, the overseas mortgage specialist.

Tel: 0800 970 0985 www.mortgagesoverseas.com


Case study

We love it so much, we’re going to retire there

Geoff Thorpe and his girlfriend Alison Cannel, who live in Kent, have just completed the purchase of their third property in Turkey. They fell in love with the country while on a cruise visit several years ago and decided that it would provide the perfect opportunity for long-term property investment as well as a place to spend their retirement. It’s also a location that their children and grandchildren can enjoy holidays.

All three properties are based in the Mugla province, at the country’s south-western corner where the Aegean Sea meets the Mediterranean. The first, purchased in 2009, is a one-bedroom luxury apartment in Gulluk, the second is a two-bedroom apartment in Yalikavak which was bought in 2012, and the most recent acquisition is a two-bedroom apartment in Tuzla. Mugla enjoys a thriving tourism industry, which was key to the couple’s decision to buy there as it’s the rental income from holidaymakers which pays the mortgages on each property.

“We have totally fallen in love with the people and culture in Turkey,” says Geoff. “There’s a lovely relaxed pace of life, a lower cost of living, and the climate is obviously great too.  I took a long time researching the local market and we spent time here before making any decisions to make sure that it was the right place to invest.

“When it came to our most recent purchase, the valuation of the property enabled me to negotiate an acceptable price for both parties, bringing the price down from £42,000 to £31,000. We put down a 20 per cent deposit and financed the remainder with an overseas mortgage, which was arranged once again through Conti.”

The couple opted for a sterling-denominated mortgage as they use sterling rental income to make their repayments, thus avoiding any issues with exchange rate fluctuations, and the mortgage is fixed at 6.8 per cent for two years.

Geoff says that there were many benefits of using a specialist broker. “They were able to source the best possible deal for us, and worked tirelessly to give us great service. They dealt with all of our questions and any issues which arose to make the process as easy as possible, which saved us a lot of time, cost and hassle.”

When it comes to advice for others, he recommends spending time researching the market and immersing yourself in the area that you’re considering for a purchase. “If you do that, it eliminates any disappointment,“ he says. “It also pays to be a little bold and I’d definitely advise people to be brave when it comes to negotiating price.

“This is all about the future. We’ve invested in these properties to help fund our pension, and we love Turkey so much that we’re going to retire there.”

Best buy mortgage rates for property in Turkey

Interest rate Product type Max LTV Repayment Method Minimum Loan
6.6% Fixed 80% Repayment €25,000
6.8% Fixed 80% Repayment €25,000

Source: Conti. Rates correct as at 13/5/15. All product specifications will depend on individual circumstances. The table shows a small selection of the deals currently available and should be used as a guide.