Five years ago, Turkey allowed foreigners to buy property. As business booms, Graham Norwood looks at the options for city slickers and sun-worshippers
Perfect skies, blue seas, golden beaches – Turkey has got them all, but, for now at least, instead of being overrun with tourists, much of it remains relatively unspoilt, so ideal for holiday-home seekers.
Of the 51,044 homes owned by foreigners in Turkey in 2005, some 9,298 (or 18 per cent) are in UK hands, according to Turkish government data, up from just 2,420 in 2003.
Istanbul, straddling Europe and Asia, is increasingly popular and is serviced by budget airlines. “Istanbul is fuelled by domestic demand for rental property because locals prefer to rent than to buy. In addition, the city is beginning to draw foreign investors,” says Ali Ozturk of Regnum, a Turkish development company. He says that rental yields of 7 per cent to 9 per cent are possible, depending on the quality and location of the development.
Prime Istanbul locations for long-term investors include Levant, Akatlar and Etiler, all central areas mainly consisting of flats near shopping malls and the business centre. Areas such as Maslak, Besiktas and Ulus offer good views of the Bosphorus, while in hilly, older areas such as Bebek, Rumelihisari and Kemer there are more spacious family houses.
Within the city, about £30,000 will buy you a small new-build flat in a secondary location, probably without parking; for £60,000, you will get an apartment in an area more appealing to renters. But you need to spend £100,000-plus to get a property that is likely to appreciate and attract corporate tenants, while £200,000-plus buys a big house in a desirable suburb 30 minutes from the centre.
There is a similar variety of property and prices on the Turquoise Coast, the most sought-after area of Turkey where the Mediterranean and Aegean meet. The Newcastle-based Turkish Property Centre says that the most popular locations for British buyers are Bodrum and Fethiye, although less well-known areas, such as Antinkum and Kushadasi, are also popular. “In some places, you can buy flats close to the water for Â£20,000, although higher-quality developers are now moving in,” says a TPC spokesman.
Michael Doig of Colliers CRE, a British property consultancy that monitors Turkey’s housing market, says: “Like many countries that are becoming the focus of British residential investors, growth is estimated at anywhere from 10 to 40 per cent a year.”
Turkey’s Muslim conventions don’t prevail in resorts, but there are some idiosyncrasies that can catch out foreign buyers. In some areas, for example, it’s hard for Britons to buy a car without being full-time residents, and shipping large items to Turkey. is tricky and costly.
But the most significant problem until recently has been the country’s volatile economy. This has been a deterrent to property investors, especially as slow progress on reforms have led to faltering talks on Turkey’s EU membership.
As recently as 2001, the Turkish economy was associated with soaring inflation, black-market activity and high levels of national debt. Even in 2004, 40 per cent of government spending was on interest payments on debts. But in the last two years, to win support for EU membership, Turkey has changed.
The country has brought inflation down to its lowest level since the mid-1970s, annual growth is now a staggering 9 per cent, and it is setting up systems of land registry to prevent disputes over ownership.
“The transformation has been dramatic. The introduction of a mortgage system this year will stimulate demand for domestic housing and drive prices up. There’s been a liberalisation of foreign property-ownership laws, with new legislation in 2005, and the possibility of EU accession has increased foreign investment,” says Alise Crossick of Ready2Invest, a UK property consultancy.
Given the many agents now marketing to Britons, it is amazing that Turkey only allowed foreigners to buy property in 2001. In five years it has become popular, helped by the fact that all property is freehold and eligible for inheritance by spouses or offspring.
Turkey is already a firm favourite. And, for the moment at least, a competitively priced one.
How to buy
- Britons can buy in Turkey providing the property lies within the boundaries of a city, town or village with over 2,000 residents, and not in a designated military zone.
- A buyer chooses a property on sale and signs a contract with the seller and an official of the Property Registry Department.
- A contract is drawn up setting out the agreed price and completion date with a deposit, usually 10 per cent or more, paid at this stage.
- Applications to buy a property need to be agreed by the local council and Turkey’s Army Office – an unusual but obligatory part of the purchasing process, which can take up to eight weeks.
- The balance is paid at a date negotiated between buyer and seller when the legal deeds are transferred on completion day.
- Fees include estate-agency fees (3 per cent of purchase price); legal fees (about £100); purchase tax (£300); land registration fees (about £450); and compulsory earthquake insurance (£120).
Source: The Independent
- Istanbul the Hottest Destination for Property Investors in Turkey (Article)
- Foreign purchases of real estate in Turkey (Wikipedia)
- Turkey expat community discussion forum
- Colliers 2006 Turkey Real Estate Market Review Issues 1 (PDF)
- Ready2Invest Turkey