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Foreign property demand expected to rise by 6% in Turkey

Friday 1st April 2016

Written by Roy Weatherby, The Overseas Investor

This year, sale of real estate property in Turkey is expected to rise by 6% according to one of the leading property bodies.
Foreign buyers purchased 22,830 homes during the first 11 months of 2015 according to TurkStat. To add to this, the Istanbul Constructors Association has estimated that the total investment made by foreign buyers in Turkey could reach as much as $5.5 billion for 2015.
Therefore, the association of Real Estate Investment Companies in Turkey expects growth within the foreign housing market to hit 5-6% during 2016.
Many of the buyers come from Saudi Arabia, the UK, Germany and Kuwait highlighting how important the Turkish property market has become to international investors.
Investors from Saudi Arabia have been the largest buyers when it comes to space as they have doubled the amount of space in square metres to 1.24 million between 2014 and 2015.  During the first 9 months of 2015, buyers from the UK were ahead in terms of purchases and activity from Russian investors has dropped in term so of the number of buyers and the space they own.
Experts believe the increase in interest from foreign investors has come from the weak Turkish Lira against the American Dollar and the British Pound. This change has taken place over the last two years.
The increase in property prices could also be down to foreign capital. During the 3rd quarter of 2015, house prices were up by 18.9% year-on-year when compared to the global average growth of 2.7%. The Central Bank of Turkey have also clarified this through figures they have released. The average price of property in Turkish Lira has almost doubled between January 2011 and November 2015. This figures has risen from TRY900 per square metre to TRY1,800.
The areas of Turkey that are popular with tourists are the areas that experience the strongest increase in Turkey’s House Price Index which stands at 20% and more. These area are the Southwest Mediterranean region that runs along the Aegean region coastline from Alanya to Izmir and this also includes Istanbul. Those regions that saw the 2nd highest increase of 15-20% were found to be in the West and close to the border of Greece and Bulgaria.
There is an expectation from real estate developers that investments will continue to grow. This is because the sector is now becoming accustomed to the expectations of foreigners when it comes to construction quality and design. In contrast to this, the total capital inflow that came from abroad dropped considerably from 2014. There was only $10.8 billion invested in the first 11 months of 2015 which is significantly lower than the $42.72 billion invested in 2014.
At the end of 2015, interest from US and EU investors decreased but there is an expectation that interest will increase once again- especially from investors in the Middle East.
Experts now believe that Turkey should pay more attention to commercial projects in order to attract more capital from the Middle East.
Enthusiasm surrounds the potential growth during 2016 and as interest rates have fallen because of the stable economic environment there is a belief that records will be broken.
For more information or to browse a range of investment properties in Turkey, please contact Hopwood House.

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