Turkey’s Historical Context (2002-2020)
Since 2002, Turkey’s economic Gross Domestic Product has grown from a total of $241 Billion to $941 Billion in 2022. This is one of the starkest upwardly mobile trajectories in the world this century. One of the results this scale of economic growth has afforded Turkey, is status within the larger globalised economy. Becoming a ‘developed’ nation within the last two decades, by today’s modern standards, has opened global trade and recognition with all of the world’s major developed superpowers.
Foreign Direct Investment
Between 2002-2022, according to the Turkish Ministry of Commerce over 78,000 came onshore for Turkish production opportunities. That total was up from 5,600 companies, in total, in 2002. Many of these companies selected Turkey over this period of time in victorious direct competition with many of Turkey’s European neighbours.
Over the same period of time, Turkey’s foreign trade volume rose from $80 Billion, in 2002, to $614 Billion, in 2022. The combination of increased foreign trade and increased foreign investment capital, led to a boom period of economic growth in Turkey. According to the United Nations, Turkish assets have increased more than 400% over the past two decades.
Per Capita Purchasing Power
Many technological products and modernisation infrastructure projects resulted from this boom, and has setup Turkey as one of the world’s most promising emerging economies. In terms of per capita purchasing power, Turkey rose from the world’s #20 largest economy to the #11 largest, according to the IMF and World Bank.
The increase in status around the world has not been overlooked by the world’s traveling population. Tourism, historical, leisure, medical, and otherwise has been one of the most positively impacted sectors in Turkey this century. According to the World Tourism Organization, Turkey attracts the fourth most visited destination in the world, at more than 30 Million visitors in 2021. The number had surpassed European competitors such as Spain, England, and Italy for that year. And when compared to a total of 5.4 Million visitors in 1990, we can really see the new levels in which Turkey has achieved in the eyes of the world’s elite.
All of this relatively new exposure to Turkey has compelled many foreigners to make substantial investments in Turkey’s foreigner favourable Turkish real estate market. In 2013, there were a total of around 12,000 residential sales to foreigners in Turkey. In 2021, that number has shot up to over 58,000. Over half of these 58,000 sales are actually the seller’s second or more real estate purchase. This indicates a growing pool of investors that has experience and success in this untapped market.
Turkey’s Current Environment (2020-2025)
Pandemic and Inflation
No different than the rest of the world today, Turkey is experiencing economic inflation and depressing indicators. Thankfully, Turkey’s real economy and infrastructure had advanced so dramatically over the course of this century that its growth prospects have not been dampened heading into 2023. Even with their neighbours Ukraine and Russia engaging in war, Turkey remains steadfast and is in a position to survive, thrive and seize any opportunities that present themselves in the 2020’s. As Turkey’s young population continue to produce momentum for their economic development, the world should expect Turkey’s inflation to retreat. TCMB and IMF expect Turkey’s absurd inflation rate to plummet to 22% by 2024, and down to 5% by the end of 2025.
Turkey’s Future Outlook (2025-2030)
Given the current economic environment in Turkey, and taking the main indicators in a vacuum, one might feel confident in brushing away Turkey’s medium-long term growth prospects. However, this would be a mistake and a misunderstanding of the economic growth potential that Turkey is currently sitting on. According to IMF and PwC, Turkey’s GDP will reach $1.1 Trillion in 2025, and $1.7 Trillion in 2030.
Foreign Direct Investment
A big driver of that growth, in the past, has been FDI capital flowing into Turkey from abroad. In 2023, Turkey is forecasting an additional $15 Billion FDI. This will increase the total FDI reserves to $266 Billion since the year 2000.
Per Capita Purchasing Power
Turkey’s economy in terms of real, on-the-ground purchasing power has seen steady increase, even through our present recessed and inflated environment across the globe. This is largely because of the volume of economic activity, production and vitality of Turkey’s youthful, educated demography. In 2002 the per capita PPP was $11. In 2023, it will be $41. In 2030, IMF and PwC, project it to be around $55. In other words, despite the performance of Turkey’s Lira, inflation and other negative indicators, Turkey’s citizens are going to live through another steady increase in quality of life over this decade.
Where there is success and prosperity, you can expect a healthy dose of tourists to be attracted. Especially when that prosperity is occurring on the banks of the Mediterranean Sea. If Turkey can capitalise on the gains in tourism it has made through the pandemic, it will be able to survive bounce back seasons by its neighbours and potentially stand tall for years to come. With the most Mediterranean coastal miles of any country, Turkey is well positioned to host waves of Europeans and global citizens alike.
There has been a notably large wave of Ukrainian and Russian visitors not only visiting Turkey’s Mediterranean coast but making permanent moves to these hot spots. Istanbul has also seen a steady increase of immigrants flooding into its metropolitan streets. From a real estate perspective, as long as the central Turkish powers are focused on growth through FDI, there will be ample buying opportunities allotted to foreign investors. Whether it’s a favourable exchange rate, housing prices, Turkish citizenship regulations, or all of the above, there is no other place in the world so heavily undervalued than Turkey.
Turkey has been a powder keg of explosive growth both in economic and development terms over the course of this century. Like all of the world’s domestic economies, Turkey has been stunned by the effects of the COVID pandemic, rocketing inflation, and regional war. However, coming out of this economic environment, with an eye toward the future, Turkey is as well setup as any emerging market to continue its explosive growth trajectory and even exceed it. While there are many risks in foreign investment, no matter the situation, Turkey’s demographic and economic profile provide real estate investors with a rare mix of quality location, quality development, quality growth, and quality exit. And, as if that wasn’t enough, Turkey adds in extra citizenship and favourable exchange incentives to further drive its FDI campaign. These opportunities will not last forever, and they may not even last until the end of 2030 before Turkey pivots into a new era as a global central superpower.
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