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, Portugal and Dubai. 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 mentioned above and instead, choosing to purchase in Turkey. As well as a greatly enhanced lifestyle, Turkey has so 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 2018, foreign nationals own around 260.000 properties in Turkey, with nearly half 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.
Last year was a record year for house sales to foreigners, with a total of 39.663 units purchased – this was around 74% higher than the previous best year of 2015 (22.830 units) and 78% higher than in 2017.
The majority of foreigners buy in just 2 provinces, Istanbul and Antalya, the ‘tourism capital’ of Turkey – these provinces have accounted for 58% 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.