Turkish economy, property thrive with fiscal measures

Turkey’s economy is back on track - and fiscal measures by the Turkish president will have a positive effect on Turkish property values.

Erdogan's track record

Since securing a victory in April’s referendum to create a new executive presidency, President Recep Tayyip Erdogan has turned his attention to Turkey’s economy, encouraging borrowing and spending, and declaring a war on interest rates.

Erdogan has led Turkey for almost 15 years, transforming the country’s economic landscape and changing its infrastructure almost beyond recognition to bring it into the 21st century. Roads, hospitals, housing, subways and high-speed rail - no project has been too big. He’s also lifted millions out of poverty, quadrupling the average annual income and tripling the per capita GDP, which in 2002 was $3660, compared to last year’s $11,000. Now, he'll need to continue his work if he wishes for re-election in the future.

Turkish property

Healthy fiscal future

Now, Turkey’s one of the world’s top 20 economies, and can look forward to a five percent annual growth this year, after a drop to 3.2 percent last year.

Turkey’s Economy Minister Nihat Zeybekci recently said Turkey’s growth places it in the top three world economies this year. "Despite the coup attempt last year, the ring of fire in Syria and Iraq, and economic difficulties with Russia, we had an economy that expanded 3.2 percent in 2016," he said. According to Zeybekci, over the next 10 years Turkey will invest $100 billion in healthcare, $150bn on transport infrastructure and communication, and $150bn in the energy sector.

Property Turkey director Cameron Deggin says Erdogan has at last made the economy a priority. “After the distraction of campaigning it’s great to see Erdogan’s focus turn to the economy. He wins his elections on his past successes so it’s crucial he continues the work he’s already done to move Turkey forward.”

Deggin says Turkey’s economic future is looking better every day. “Living standards in Turkey have never been higher, the stock market is breaking records, exports are rising and expected to go much higher, GDP growth rates are up. Sovereign ratings group Fitch has revised growth rates for Turkey from 2.7 to 4.7 percent, JP Morgan, S&P have all increased their growth rates to reflect the current climate, even the World Bank has upped its forecast figures for Turkey.”

Promising property sector

Deggin said an improving economy had a number of knock-on factors for the property sector.

First, it improved investor confidence. “A growing, safe economy ensures investors continue to see Turkey as a viable investment option,” he said, pointing out that the country’s unique position between Europe and Asia means it has a perennial appeal to investors. Despite regional security concerns, the country’s viability as an investment destination has not changed.

Secondly, the continued efforts by the government to improve conditions for property investors means it’s easier than ever to make a stake in the fast-growing market. “Government measures to pave the way for foreign property investment include tax breaks, citizenship on offer, an easy exit strategy, cutting out red tape - and much more.”

Thirdly, perhaps most importantly, Turkey’s economic growth, coupled with its future infrastructure investments, mean excellent returns for investors. “Growth in the economy delivers inevitable growth in real estate values, which is most encouraging for investors. Bottom line is, you can have all the great conditions for investment in the world but it’s the investment returns that prick the ears of most buyers.”

Focus on Istanbul

Deggin says Istanbul investment property will continue to be a chief focus for investors. Figures show that although the overall property price rises around Turkey slowed over the last couple of years, Istanbul values continued to climb. Between January and December 2016, property prices in Istanbul surged by almost 18 percent. The city also saw the highest annual increases in newbuild property prices at 15 percent, as construction struggled to keep up with rising demand for housing.

“Rising prices are underpinned by a constant high demand and a low supply,” says Deggin. “Although construction is underway in just about every Istanbul neighbourhood, there is still a significant shortfall which will continue to drive prices skywards.”

Deggin says investors should continue to concentrate on areas where urban regeneration is taking place. “These areas are ideal due to their relatively lower prices, and the room properties have for growth.”

He suggests concentrating on the Media Highway or Basin Ekspres area, where high levels of government and private investment are transforming the area and gaining the attention of investors.

“Prices are currently just below $3400 per square metre, but we expect this to reach $4000 within another 18 months.”

Rental returns are also higher than the Istanbul average in the area.

Another excellent option is property in Kadikoy, where the construction of a new financial centre which will create thousands of jobs and will headquarter some of the biggest regional companies and banks is pushing up property prices.

“Kadikoy is going to change beyond recognition - it’s about to become one of the most significant financial districts in the Northern Hemisphere. That makes it an exciting place to invest right now, at the early stages before prices really take off.”

Read more: Why urban regeneration property is ideal for first-time investors.


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