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Turkey: Hot property in Turkey - Aydin Cakir, New Home in Turkey

Why is Turkish Property So Hot Right Now?

Turkish property almost missed out on the last overseas property boom, but is currently enjoying a boom of its own. The question is: why would a country struggling to reach its full potential during the biggest ever overseas property boom, be flourishing so brightly as it seems to be now? Aydin Cakir tells the story of Turkey then and now to answer this burning question.

Starting at the Beginning...
The story of Turkey starts in the early noughties, when the massively diverse country connecting Asia and the Middle East to Europe was opened up to the masses of British tourists by the massive growth in budget air travel. But it was only in 2006 that Turkish property could really call itself popular with foreign buyers.

The law was fully opened to foreign buyers in 2005, but it wasn't until 2006 that Turkey really started to become a big hit.

In 2006 confidence among overseas investors was reaching fever-pitch; the risks of emerging markets were being all-but-set-aside by the waves of speculators, who could see only the potentially massive returns on offer in these markets where prices were a fraction of established markets.

By now tourism to Turkey was growing massively, and the first waves of holiday home buyers were reporting success stories.

But Turkish property had one stumbling block to overcome before it could reach its full potential: EU Accession.

The Importance of EU Accession
Turkey's EU accession has always had a big problem, well, 2 big problems actually, namely objections from France and Germany; both capable of vetoing the secular majority-Muslim state's accession, and both seemingly willing if not eager to do so.

Of course this wasn't a problem for holiday home buyers and holiday home investors, who started buying tentatively from 2003, and bought in huge numbers between 2006 and 2008. In fact by the back of 2008, 63,085 individual properties had been sold to over 73,103 different foreigners according to official figures.

But for the new breed of pure investor -- those buying for rapid capital growth -- the uncertainty over EU accession put Turkey behind the likes of Albania, Croatia and Montenegro -- countries that looked more certain to see the price boost that EU membership affords. Now it is a different story altogether.

EU Membership No Longer Such a Plus
The EU is fighting a massive sovereign debt crisis, the likes of which no one would ever have dared suggest we'd see. Earlier this year there were genuine fears over whether Greece could pay its debts, which of course led to the markets cutting Greek off with high rates, further exacerbating the problem.

A bailout was finally agreed for Greece, but not before the world and its markets realised that there were several other countries in Europe who had borrowed almost as heavily as Greece, and who may also have difficulties making repayments, namely Spain, Portugal, Ireland, Italy and even the UK.

In Q1 EU GDP grew 1%, Turkish GDP grew 11.7%, and across the board the Turkish economy is recovering far more strongly than the Bloc. Turkey is currently regarded as one of the fastest growing economies in Europe, and for the first time, EU membership seems less necessary for Turkey than it does for the EU.

But Turkey Had Already Started to Overcome the EU Issue
But that isn't a new thing, or entirely caused by the sovereign debt crisis. In fact EU membership became less and less necessary for Turkey throughout 2009, as Turkey shored up its relations with its allies and formed new alliances throughout the developed and emerging world.

During the last 18 months Turkey has signed agreements to increase trade and/or ties many countries including: China, India, America, Britain, Russia, Brazil, Albania, Syria, Lebanon and Jordan. These included a "strategic alliance" with Brazil, a deal to increase trade with the US by a factor of 3, and free-trade with Syria, Lebanon and Jordan, and visa-free travel deals with Russia, Syria, Lebanon, Jordan, Albania, Libya, Kosovo and Sudan.

Sustainable Economic Growth + Tourism Growth = Successful Property Investment
All this is a massive part of why the Turkish economy is growing so rapidly, and why Turkey doesn't need EU membership as much as it did in 2006, in the world's eyes or in investor's eyes.

On top of that, and in no small part because of the visa-free deals, Turkish tourism has barely been affected by the economic crisis. When Turkey received over 28 million tourists in 2008, the government set the target of 30 million by 2010. Then the crisis struck. None the less, Turkey received over 28 million tourists in 2009. In 2010 tourism is growing strongly. According to the tourism ministry, visitor numbers are up 9.26% in the first half of this year compared to last year.

This massive tourism, along with the fact that many of Turkey's managed resorts are sold as properties when being built, and the growing trend of people creating their own holidays online, form another massive reason why Turkish property is so hot right now.

Aydin Cakir

Aydin Cakir is the director of New Home in Turkey, a real estate agent offering property in Turkey for sale from 25,000 Euros.

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