Arab influx bolsters Turkish housing boom
Despite hurdles such as protests and the effects of the economic crisis, the effects of which are still resonating worldwide, last year the Turkish economy grew by 4%, even higher than anticipated, while the Consumer Confidence Index increased 5% to a respectable 72.5 points. As the economy grows, so does the country’s tourist industry, which is bigger than ever, with visitors this February up by 6.6% from the same time last year. This upward trend of course has led to a knock-on effect on hotel business, and the result is that scores of new hotels are in the works all over Turkey, particularly in Istanbul. So who are all these tourists?
The short answer is Arabs, whose visitor numbers are increasing every year. Last year, the number of tourists from 15 Arab countries was almost 3.3 million, a whopping 9% increase on 2012. Tourists from the Middle East are increasingly heading to Turkey for holiday sun and fun. But their interest is not limited to beaches and sunshine - they’re also snapping up properties at the rate of thousands every year in the country. In December 2013 Time Magazine voted Turkey as number six in the top ten hottest real estate markets.
Why Turkey? Soap operas are a contributing factor. Turkish actors are finding fame in Middle Eastern countries, with some countries offering Turkish television tours. Affordable prices are another big factor, with the average cost of a property rivalling that of Dubai. Middle Eastern visitors also feel at home in Turkey, which has a liberal Muslim majority. Finally, the uncertainty of the Arab Spring drove investors toward Turkey, seeking a safe haven for their money.
However, these visitors are not just here on holiday. A large number of them stay, buying property to either settle in or as an investment in a country that has gone from strength to economic strength while its neighbours flounder. Middle Eastern citizens are set to make up the bulk of overseas property buyers as the market grows. Last year they snapped up 2,700 properties in the first ten months of the year, out of the 21,700 total purchased by foreign buyers from countries including Germany, the United Kingdom, Russia and the Netherlands. This year, the revenue from property sales in Turkey is expected to increase, with the environment and urban planning minister last year predicting $5 billion in sales for the year ahead.
The government has responded to growing Arab interest by easing laws that once hindered property purchases. In 2012 the reciprocity condition was removed, allowing Middle Eastern buyers to purchase without restriction. Buyers are also granted an automatic year-long residence permit, helping new residents settle with a minimum of hassle, and tourist visas are tipped to be extended. These measures have resulted in increased sales, and a surge of interest in Turkish property.
Last year 10,000 Arab visitors attended the Emlak 2013 convention in Istanbul, seeking out opportunities for investment, business and pleasure, and buying properties by the dozen, resulting in $500 million of sales in three days, $380 million more than the previous convention the year before. Construction companies are now getting smart, tailoring their projects to meet the demands and desires of Middle Eastern customers for specific layouts and fixtures.
Arab buyers’ interest is centred along Turkey’s coastline, with wealthy buyers spending as much as $100 million on seafront residences. Istanbul is also very popular, with its cosmopolitan east-meets-west, old-world-meets-new vibe that modern Arabs favour. In fact, 80% of property sales are concentrated in Istanbul, especially in popular areas like Yenikoy, Kandilli and Vanikoy. As well as Istanbul’s anew luxury developments Middle Eastern citizens are seeking out the older, beautifully restored Ottoman buildings that are undergoing a renaissance in the city.
Arab buyers are at the forefront of a luxury property in Turkey boom that has seen the luxury sector increase by 15% each year for the past five years. This is due to affluent buyers from the Middle East, as well as a growing Turkish upper class. Middle Eastern buyers are demanding high quality builds, often designing their own luxury villas to be built in some of Turkey’s most prestigious coastal and urban areas.
Most buyers from the region are from Iraq, Kuwait, the UAE and Jordan. There are also some eminent names expressing interest in Turkey’s properties, including royals and prominent oil tycoons.
It hasn’t been a great year for Turkey’s public image, with protests dogging the country. But Prime Minister Erdogan’s AKP party’s recent election victory shows that the overwhelming majority Turks still support the government that has turned Turkey into a major economic power. And as we’ve seen it’s not only Turks that are riding the wave of Turkey’s success. Overseas buyers, especially those from the Middle East, are discovering just how much this country has to offer.