Market focus on Turkey
Friday February 23, 2007Saundra Satterlee
That Turkey bridges two continents, borders seven states and has over 8,000km of Aegean, Mediterranean and Black Sea coastline provides an element of geo-political kudos well known to advocates of Turkey?s bid for European Union (EU) membership. What isn?t so well known is that Turkey has more ancient Greek ruins than Greece and more Roman ruins than Italy.
Turkey is special in a number of ways and ? from Ephesus to the birthplace of St. Nicolas ? tourists love it. Not only tourists, the country is in the throws of becoming a popular emerging property market. ?Turkey is an almost undiscovered haven at the edge of Europe with a wonderful coastline, only three to four hours away from major European capitals and still offering an exotic element as well as all the mod cons that Europeans seek,? says Yaman Iyikan former finance manager at the European Bank for Reconstruction and Development and now MD at Property Republic.
Country and economyFrom the 1750 BC Hittite introduction of centralised government in Anatolya ? and down the ages through the Hellenistic and Byzantine periods ? to the Ottoman Empire, Turkey has loomed large at the crossroads of civilisation. Over 600 years of Ottoman rule ended in the 1920s with the creation of modern Turkey by its founding father Kemal Atatürk, whose achievements were many, not least his input into conservation of Turkey?s rich cultural, intellectual and archaeological heritage. Atatürk also embarked on a policy of westernisation that covered political, legal, social and economic reform.
A new 21st century stage of economic reform is underway, following Turkey?s soaring inflation and the financial crises of 2001. Since then the Turkish government has taken steps to create a more stable economic environment. ?Recent data shows that much of its historic volatility and rampant inflation has been successfully removed,? says James Kingdom, research analyst at Colliers CRE.
The signs of economic revival and modernisation are everywhere, according to the International Monetary Fund?s John Lipsky, who observed on a recent visit: ?The Turkish economy?s transformation has taken root and is here to stay.?
Now at its lowest levels for 30 years, Turkey?s recent days of record high inflation seem to be at an end. Total GDP growth over the last three years has been 24%. Kingdom predicts 5% per annum growth for the next five to 10 years.
The marketProperty was part of the economic reform package implemented by the government in 2003 when reciprocal purchase agreements were introduced for the citizens of 87 states worldwide, including all of the EU. Nowadays prices are on a dramatic upward swing. ?Since 2003 there have been consistent property price increases of 18% to 30% per year,? says Iyikan.
According to Colliers CRE research, buyers are predominantly British, Irish, Greek, Dutch and German and a noticeable number are from the United States and Syria. ?The numbers of foreign owners rose by 35% between 2003 and 2005,? notes Kingdom, ?while over the same period the number of British buyers more than doubled and now account for almost a fifth of the foreign market.?
Foreign buyers favour coastal areas. The most popular destination and one with massive infrastructure improvements is the Riviera, which spans the Aegean and Mediterranean coastline from the Izmir area to the environs of Antalya. ?If you compare the French Riviera to the Turkish Riviera with like on like size and sea views,? says Iyikan, ?Turkey is 60% to 70% cheaper.?
Near Bodrum with its picturesque harbour and the 15th century Knights Hospitallers Castle of St. Peter, a beachfront development of 64 tiered two bedroom apartments, all with terraces and sea views, is for sale off plan from Property Republic starting at ?88,100.
At Fethiye Bay in Gocek, two bedroom apartments from ?97,000 or four bedroom villas with individual swimming pools from ?297,000, both overlooking the sea, are available through Property Republic.
Along the Riviera coast at Dalaman, Waterside is a nearly completed development of 27 two bedroom, two bathroom apartments from Colliers CRE. A short drive away is the beach, the airport and a new golf development scheduled to be finished later this year. Properties start at ?69,500 and offer the option of joining the management rental pool.
Closer to Antalya at the resort of Alanya is another Colliers CRE project. Late spring will see the launch of The Hill, a gated community with gardens and swimming pools on a hillside with expansive views over the Mediterranean. Prices for one to three bedroom units range upwards of ?115,000.
If you are inclined more toward the metropolis, within easy distance of central Istanbul, Hamptons International will be launching Tuscan Valley in May, a resort with views over the Marmara Sea and the Buyukckmece Lake. Or, near the Formula One circuit, Property Republic are selling two bedroom apartments with a porter, gym facilities and 24-hour security from ?97,000, and three to four bedroom penthouses from ?254,000. According to Iyikan, three bedroom detached villas around the Bospherous ?typically vary from ?149,5000 to ?4.5?.
Pitfalls and practicalitiesTurkey is in the throws of seeking EU membership. Supporters argue that the country?s strategic significance, once it meets accession criteria ? related to human rights, the press, economic issues and Cyprus ? makes EU membership inevitable, which is good news for the property market. ?Accession will mean that property prices increase further, as seen in many recent accession countries,? says Kingdom.
To purchase property in the first place, foreigners must have a ?character clearance? from the Turkish Ministry of Defence (in case of a criminal connection, for example). This takes six to eight weeks.
When it come to the buying procedure, Kingdom emphasises the importance of employing an English speaking lawyer accustomed to the local market to make sure all the deeds and documents are correct. He notes: ?Ownership for new buildings is obtained once construction is completed and when the full amount has been paid.?
Properties are generally sold on a freehold basis. For purchase costs you can expect to pay between 4% to 5% for fees, insurance and registration. A real estate purchase and acquisition levy is 1.5% and stamp duty is 0.75%.
A spokesman for the Ministry of Foreign Affairs explained to Guardian Abroad that once you purchase property, you apply to your local Turkish consulate or embassy for a one-year renewable residential visa, at a nominal fee ? ?all very straightforward?. In Turkey, this document is presented to the local police for your residency permit. After five years you can apply for permanent residency.
Rental income will not be taxed, but you will be liable for capital gains tax of 20% on the increase in price if you sell your property within four years of ownership.
Should potential investors be concerned about terrorism activities? Kingdom thinks not: ?So far these have been confined to Kurdish dissidents rather than Islamic extremists. Turkey is no worse than Spain, Sharm el Sheikh, Eilat, Bali, Thailand, Kenya, the USA and London.?
Turkish Culture and Tourism Office
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