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Greek anti austerity vote play into Turkish hands

With 90% of the votes counted as of Monday morning 26 January 2015, it is almost certain that Greece's anti-austerity Syriza party has won the general elections signalling a major fall out with the European Union with regards Greece's cumbersome austerity measures. 

Greeks bearing gifts for Turkish real estateBBC reports the result as a "possible collusion course with the EU over Greece's massive bailout".  It is expected that Syriza party may very well attain 151 seats in the Parliament, which is the required number of seats to form an absolute majority government. Alexis Tsipras, the left-wing party's leader, immediately announced that Greece would look to renegotiate its debt with the EU. He went further to say that "Greeks wrote history" with the election results. The outgoing Prime Minister acknowledged defeat and congratulated Mr. Tsipras on his victory. 

Greek election results has already sent shock-waves through Europe. Euro slid from 1.29 to almost 1.34 against GBP from Friday 23 January to Monday morning 26 January. Similarly USD has risen against Euro over the week-end from a low of 1.16 last week to 1.12 Monday 26th. British Prime Minister, David Cameron said "the result of the Greek elections would increase uncertainty across Europe".  Mr. Tsiplas has already vowed to reverse the austerity measures adopted by Greece since 2010 bailout programme. The worst case scenario projected by political analysts is a collapse of Greek banks and going bust unless Mr. Tsiplas is willing to make a U-turn on his promises or unless Brussels and Berlin find it in their hearts to be more than flexible to accommodate new Greek demands to come. 

Concerns re rising left-wing in Spain, Portugal, Italy, France
Could the Greek election results be an early warning sign for things to come in the rest of austerity ridden Europe such as Spain, Portugal and Italy? Left-wing Podemos Party led the opinion polls in Spain in November 2014. Spain's established political parties were panicked by the opinion polls, when their popularity crumbled beyond recognition. Needless to say, Spanish Podemos has similar vows as Greece's Syriza to Spanish voters with respect to austerity and the Euro zone. And the feelings are not positive to say the least.

In Italy, the left-wing sentiments are also on the rise with harsh criticism by the general public of the government's austerity compliance. In November 2014, we saw major clashes in main cities of Italy between anti-austerity demonstrators and the police. Demonstrators and riot police clashed in the streets from Milan in the north to Palermo in deep south of Italy. In Rome protestors showed their discontent by throwing eggs and paint balls at the German Embassy.
 
Similarly Portugal has seen a wave of anti-austerity protests since the EU bailed out its failing economy. 
Anti-austerity protests in Europe
 

Is Syriza's victory a milestone for Europe?

Continuing economic weaknesses and sluggish to no growth have sent a wave of populist, anti-austerity backlash in Europe from France to Spain, Portugal and Italy. Voters have become immune to promises made by ruling parties in favour of Brussels and Berlin imposed policies, which sought harsh measures to manage debt, however, failed to bring prosperity and higher employment.  On the contrary, Greece and Spain saw some of their highest unemployment levels in many decades. 

The rise of UKIP (UK Independence Party) in non-Euro UK is also highly notable. UKIP with their main, arguably sole, policy of 'Britain out of EU' is gaining strength in the UK. Latest opinion polls show UKIP at 15% ahead of Liberal Democrats, which are currently in coalition government with the Conservatives. UKIP is currently the third major party in the UK according to opinion polls, well ahead of established parties such as Liberal Democrats and the Greens.    

 

Why are the anti-Euro sentiments creeping up in Europe playing into the hands of Turks, and Turkish real estate in particular? 

Play into Turkish handsThe answer is simple, smart money flows toward stable economies and stable political environments, no matter what their policies and views may be. The key-words are 'stability and growth'.  Turkey has been delivering just that for over 10 years now.

There is political stability, despite Erdogan government (now the President) having their share of issues with dissident voices in the media and harsh political criticism from the opposition, they have been in power single-handedly and unchallenged. Latest opinion polls put ruling AK Party at around 50%, much the same as the last general elections, no loss of voters. 
  
Turkish economy has repeatedly outperformed most of BRICS economies (emerging markets Brazil, Russia, India, China and South Africa) in the last 5-6 years and Turkish economic outlook for 2015 is still much stronger than all European economies and most of BRICS.
 
Turkish real estate market has been booming since 2003, there is still no sign of slow-down with high demand and strong foreign direct investment. Real estate sector is in fact regarded as one of Turkey's locomotive sectors with very steep domestic demand. Istanbul real estate is pulling ahead of most world capitals (although Ankara is Turkey's official capital) in terms of foreign direct investment. Investors looking for a safe haven for their money are choosing Istanbul over and above conventional real estate destinations, including some European capitals.   


People who invested in Turkish real estate"We invested heavily in New York, London and Paris in late 90's and early 00's, however, since 2010 we are channelling a significant portion of our real estate investments into Istanbul, Turkey. Strength of the Turkish economy, thus very convincing returns we have managed to achieve on our portfolio, have reassured us that we have played it right" says Mr. M. Olayan, a Saudi corporate investor.  

"We cashed out of Spain at the right time" says Mr. Walton-Carmichael, whose family home in Spain collapsed in value during 2008 - 2010 Euro crises. "We were lucky for we had sold just prior to the squeeze. With the proceeds of our Spanish property, we purchased 2 properties in Turkey in 2011, a detached villa in Fethiye area and an investment property in Istanbul. Our Istanbul investment has almost doubled in value now and it is rented out full time, whereas we see new houses being sold not far from our home in Fethiye at prices 35-40% higher than what we paid for ours".   

 


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