Three ways to take advantage of Turkey's low lira
The Turkish lira has reached historical lows, sending shockwaves around the world. While the currency will need to bounce back soon to avoid long-lasting impacts, the unique situation means once-in-a-lifetime chances for some - including a way to invest in Turkey's real estate for less.
1. Plummeting property prices mean time to invest is NOW
Property investors are rushing to take advantage of the rock-bottom lira. When news of the currency devaluation made headlines around the world, investors booked flights to Turkey - or in many cases, picked up the phone - to buy property in Istanbul and other real estate investment hotspots around the country.
With the exchange rate meaning that anyone holding pounds or dollars can get huge discounts, it’s not surprising that real estate investors are acting fast. Property Turkey director likened the situation to a “gold rush”, with direct flights from the Middle East to Istanbul fully booked as investors poured into the city to pick up bargains.
“It’s a buyer’s market right now, and buyers are rushing in as if properties are going out of fashion,” Cameron Deggin, quoted in the Guardian, said. Deggin added that site views and enquiries had doubled in the past few days. “Buyers are clearly looking for opportunities before the drop in lira is compensated – at least partially – by increases in asking prices.”
As well as Istanbul properties receiving a great deal of interest, Deggin said there had been a surge of enquiries all over the country. “In Bodrum, high end apartments that were priced at £600,000 this time last year are now more like £400,000. And on the lower end of the scale, small apartments that were once £60,000 are selling for less than £40,000.”
Deggin believed that “the only way is up”, both for the beleaguered lira and the value of the properties on his books. “It’s a once-in-a-lifetime situation, we’ve never seen anything like this before,” he said.
2. A last-minute holiday is cheaper than ever
The low lira means holidays to Turkey are cheaper than ever - even if you’re travelling on the pound, which has also famously taken a battering in the last couple of years. Holidaymakers looking for a cheap summer break will now get 697 lira for £100 - a huge saving compared to the 460 the same amount bought last year.
“The lira is at an all-time low against the pound and thanks to the heatwave [making holidaymakers put off booking trips abroad] there are a lot of good-value deals on offer, so there’s never been a better time to holiday in Turkey,” said Anth Mooney of Thomas Cook Money.
Thomas Cook has reported a two-thirds increase in holiday bookings to Turkey, home to some of the world's best beaches, this year, with Antalya overtaking Spain’s Palma de Mallorca as the airline’s most served airport for UK customers, with 57 flights a week.
Graham Sheldon from Basingstoke is on holiday in Fethiye. “Last night we paid £49 for dinner for seven of us, with top-quality food, mixed grill, all drinks and desserts.”
He compared it to a Greek holiday the previous year. “In Greece I spent almost £900 in a week. Here it’s less than a quarter of that, it’s just phenomenal.”
3. Shop till you drop for much, much less
The low lira is prompting tourists travelling on the dollar and the pound to spend up big, particularly in the luxury sector. Luxury brands are anticipating record turnover this year, with some flagship stores in large cities like Istanbul, Antalya and Ankara reporting queues forming out of doors.
The last couple of weeks have seen shopping malls crowded with tourists looking for expensive bags, shoes and coats. The clientele are mainly Middle Eastern and Asian tourists, snapping up goods before stores have time to adjust their prices to the currency.
Istinye Park’s general manager said the number of tourists visiting the giant Istanbul mall, with its 291 shops, has risen by a third compared to the same period last year. And it’s not just luxury items being targeted: anything on the shelves is fair game. ”Tourists are making mass purchases. This applies not only to the luxury brands, but also to the other brands.”
What’s behind the currency crisis?
The lira has lost 40 percent of its value against the dollar this year.
Erdogan’s reluctance to raise interest rates has contributed to crippling inflation and an ever-lower lira. But it wasn’t until a diplomatic row with the US over the detention of an American pastor - who Turkey insists was involved in the 2016 coup attempt - that things really got interesting, with Trump slapping tariffs on Turkish exports of aluminium and steel.
Erdogan remain defiant, insisting that he will not raise interest rates to help bolster the lira, and continuing to back the pastor’s detention.
"Today some people are trying to threaten us through the economy, through interest rates, foreign exchange, investment and inflation. We are telling them: we've seen your games, and we are challenging you."
What's next for Turkey?
At the end of last week, Turkey’s finance minister Berat Albayrak told investors that Turkey would emerge stronger than ever from the current situation, and insisted that banks were healthy and can ride out the diplomatic dispute.
Albayrak played down Trump’s tariffs, saying that other countries had been the target of similar measures, and Turkey would navigate the situation with help from Germany, Russia and China. Erdogan has also been speaking with French president Emmanuel Macron, to discuss ways the two countries could boost economic and trade ties.
He added that Turkey had no plans to seek help from the International Monetary Fund or impose restrictions on the flow of funds leaving the country.
The lira rallied at the end of last week, and following Albayrak’s announcement, a Qatari group pledged to invest $15 billion into Turkey.
However, as the diplomatic dispute continues, with a recent White House statement confirming that the steel tariffs will remain in place, it’s uncertain how the situation will develop.