Lured by luxury homes, booming property prices, and amazing waterfront views, wealthy international buyers are increasingly heading towards Turkey with Istanbul fast becoming one of the top destinations for foreign investment, and an increasing influx of buyers from the Middle East.
Background to foreigners owning property in Turkey
Statistics released by the Global Housing Price Index show that real estate prices in Turkey increased by a phenomenal 18.5% in the second quarter of this year compared to the same quarter of the year before. This is second only to Hong Kong, and luxury real estate prices in Turkey have seen an even greater increase.
Since the early 2000s, Turkey has been roaring with impressive annual GDP growth, a strong economy, and property sales that have more than doubled in six years from 420,000 units sold in 2008 to more than 1.165 million units sold in 2014 representing an annual increase of 18% per year in that period.
A big part of the reason for this success is the 2012 lifting of the reciprocity law which lifted restrictions on the sale of Turkish real estate to foreigners from certain countries, and since then, international buyers have been flocking to Turkey. In the first eight months of 2015, sales move up by 27% on the same period of the year before, while in August alone, 2,044 properties were purchased by foreigners alone.
Statistics show that there are currently more than 137,000 properties in Turkey that are owned by foreign buyers, most of whom are British, German, and Russian.
Is Turkey a safe haven?
It has been speculated that Turkey is now a safe haven for buyers from the Middle East, with more and more people from Iraq and the Gulf States looking to buy a property in Turkey. In an area with so much social and political unrest, elites have begun looking towards Turkey as a safe investment for their money.
Arab visitors to Turkey used to be those who came to Istanbul to shop for clothes or visit the city as tourists; they are now coming to shop for properties. Cameron Deggin of Property Turkey says: “Three or four years ago, there were few Middle Eastern buyers to speak of. Now they are 70 to 80% of the foreign buyers in Istanbul.”
With budgets ranging anywhere from $150,000 to $500,000, Deggin says that most buyers from the Middle East are looking to buy properties on the fringes of Istanbul where you can purchase high-end properties at cheaper prices.
Property risks and rewards
In 2008 when the demand for real estate dropped during a global recession, Turkey’s real estate market was able to recover swiftly, and largely unaffected, unlike its European neighbours.
Today, the Turkish property market is seen as relatively immune to the prospect of currency depreciation and interest-rate increases. It seems as though most people who are interested in these types of homes are largely unaffected by these types of risk.
This bullishness in the market, coupled with speculation has lead to asking prices for the cream of the cream top Istanbul properties heading through the roof. To purchase a Bosporus seafront Yali mansion you may have to pay out well into the tens of millions, with one currently on the market for a mouthwatering $80 million. Earlier this year, Sheikh Tamim bin Hamad al-Thani, emir of Qatar, paid between 100-110 million Euros for a waterside Yali property.
Where do foreigners buy properties?
Looking to avoid long commutes to the city, foreign property buyers in Turkey are known to not bat an eyelid at paying prices that would be comparable to neighbourhoods in London or Paris, and are increasingly looking at properties close to the city centre.
Cameron Deggin says: “Now that Turkey has been tried and tested, the bigger money has started to come.” Statistics show that the most expensive areas for luxury residences in Istanbul include Besiktas where you can pay $876 per square foot, Uskudar where you can pay $666 per square foot, and Sisli where you can pay $647 per square foot.
Istanbul is home to the seventh highest number of billionaires in the world, after only New York, Moscow, London, Hong Kong, Beijing, and Mumbai, and it seems as though the demand for homes to suit those needs are keeping pace with supply. In a new project in Nisantasi where property prices range from $1 million up to $22 million, all but eight properties have been sold.
European buyers are still primarily interested in holiday homes along the Aegean coast and Mediterranean shores of Turkey, but they are starting to venture into Istanbul. The future for Istanbul’s luxury real estate market looks to be in safe hands.
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