Turkey – on the crest of a wave

Growing tourism, a stable economy, and a healthy appetite for lending – Turkey’s ticking all the boxes for overseas property investment, says Clare Nessling

There’s a lot going for Turkey right now. Often referred to as the ‘new Spain’, it boasts a healthy tourism industry, cheaper house prices and rising demand for rental properties, all of which have contributed to its popularity of late. It offers all the benefits of its Mediterranean location, minus the effects of the eurozone crisis, which has pushed some prospective investors to locations which are further afield.

The passing last year of a long-awaited bill by the Turkish parliament has eased restrictions on property buyers from the Middle East, Russia and Central Asia, and with an estimated annual boost of $5 billion to the country as a result, this will stimulate the market further.

It’s currently the fourth most popular location with regard to mortgage enquiries we receive, after the more traditional hot spots of France, Spain and Portugal. According to REIDIN.com, the real estate information company, more buyers from the UK than any other foreign nation own homes in Turkey. Of the 125,449 foreign nationals who own property there, 35,825 are from the UK, many more than the 29,219 owners from Germany, and the 10,830 from Greece.

The annual survey of Association of Foreign Investors in Real Estate (AFIRE) members actually puts the country in third place in a list of emerging markets being considered by potential investors in 2013, up from seventh place last year. And it now ranks fourth in the list of countries providing the best opportunity for capital appreciation, up from ninth place last year.

It could be a very attractive option for any clients who are thinking of buying a holiday home overseas or investing in a foreign buy-to-let property.

Property market

The rising demand for property in Turkey has led to property prices increasing. According to Knight Frank’s global price index, prices in Turkey increased by 11.5 per cent year-on-year by the end of the third quarter last year, putting it in an impressive third place after Brazil and Hong Kong.  And research from GYODER (The association of real estate investment companies), shows that overall, new home prices in Turkey grew by just over 12% in 2012.


The number of foreign tourists who visited Turkey between January and November 2012 rose by 0.59 per cent to 30.4 million, compared with the same period in 2011, according to data from the Ministry of Culture and Tourism. The country is concentrating resources on expanding its tourism market, and there will be appreciation in value as this infrastructure builds over time. So, any of your clients who are interested in buy-to-let opportunities may be tempted by some healthy rental yield potential, as well as strong capital appreciation over the longer term.

With accessibility being a key factor too, Turkey has a wide choice of airports and is very well served by flights from the UK.

Bodrum is a particular hotspot at the moment, with many of our clients snapping up small coastal apartments which they can use for their own holidays, 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.

Buy-to-let investors are also drawn to cities, where there is an emerging demand for housing. 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.

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, it’s simply a more cost effective location at the moment.

Turkey truly has mass appeal. Perhaps that’s why local agents believe that the demand for property in Turkey will continue to boom in 2013. GYODER estimates that overseas investment in the Turkish property market will rise from the current $2.5 billion a year to around $10 billion per annum over the next few years.

The mortgage process

In Turkey, it’s possible to obtain loans of up to 80 per cent loan to value for your clients, and considering that the country didn’t even offer mortgages until 2007, availability is generally very good. Lenders tend to prefer shorter terms through, with 10-15 years being quite typical, and rates start from around 6 per cent at the moment.

It’s imperative that they seek advice from an independent English-speaking lawyer who is not connected to their seller, estate agent or property developer. There are some areas where buyers have encountered problems because they didn’t arrange for the necessary checks to take place. A lawyer will act on your client’s behalf throughout the entire buying process to ensure that the title is secured, military checks are undertaken and the TAPU (title deed document) is transferred.