Turkish real estate has long been a favourite for savvy investors even before the global meltdown that began in 2008. However, because of the prudent fiscal policies adopted in the early 2000’s, Turkey emerged from this meltdown largely unscathed, resulting in a real estate investment climate that presents even greater opportunities than before.
The second home market in Turkey, whilst maturing, is still some way behind established markets such as Spain, Cyprus and Portugal. The previous lack of credit availability significantly restricted the expansion of the market, so quality primary and secondary residences remain affordable. However, the credit laws have been re-enacted in recent years and loans are now available to both Turkish and foreign buyers. These moves have created a major shift in the dynamic of the market, with demand outstripping supply in some areas – this will almost certainly result in a sustainable rise in prices.
The current, favourable pricing conditions means that more and more foreigners are turning away from the more established markets and choosing, instead, to purchase property in Turkey. As well as the obvious lifestyle benefits, Turkey has much to offer, both socially and culturally – beautiful natural landscape, stunning golden beaches, ancient sites of historical importance, a modern, developed infrastructure, excellent healthcare, superb climate, easy accessibility and so much more – what’s not to like!
As at the end of 2019, foreign nationals own some 320.000 properties in Turkey, with around 45% of these having been purchased in just the last 5 years. Historically, the majority of owners were from northern and western European countries – in recent years however, as a result of the abolition of the ‘Law of Reciprocity’ in 2012, foreign nationals worldwide are buying property in Turkey in ever increasing numbers.
2019 was a record year for house sales to foreigners, with just over 43.000 units purchased – this was around 10% higher than the previous best year of 2018 (39.663 units).
The majority of foreigners buy in just 2 provinces, Istanbul and Antalya, located in the southern Mediterranean region and rightfully labelled the ‘tourism capital’ of Turkey. These two combined have accounted for nearly 80% of all properties purchased by foreigners in the last 5 years.
The purchase of property by foreigners is not only a ‘lifestyle’ choice – the opportunity to generate rental income and to realise good capital appreciation are now the main priorities for around 30% of all new clients.
Rental income yields average between 5% – 7% annually and according to the Knight Frank Global House Price Index, property prices increased by 9.8% in 2018 and by a staggering 65% in the 5 year period 2013 – 2017.