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News: Istanbul property market soaring

Wed, 23 May 07

Canny investors have been talking Turkey in 2007...

The planned introduction of local mortgages in January 2008 coupled with property prices that remain low compared to other emerging European countries has made the land where east meets west very appealing.

Over 13,000 Britons (Turkish Embassy 2006) have already purchased property in Turkey with the majority of development located along coastal areas such as Bodrum, Altinkum, Fethiye and Alanya where property prices are said to have doubled in recent years. It is however in Istanbul, the country’s largest city, where the provision of housing has not kept up with demand.

Domestic population growth, increased rural to urban migration and immigration now means that over 10 million people call Istanbul home. John Limbrick of Obelisk International comments, “Istanbul’s population has tripled since 1980, over 700,000 new residents arrive each year and 5 million tourists visited in 2006.

Every year Turkey requires some 400,000 housing units; there is a chronic shortage of housing in major urban centres such as Istanbul and this represents an excellent opportunity for investors to enter this bull market on the rise.”

Prices will continue to rise

In Istanbul, although property prices are relatively low (2 bedroom apartments average at £51,000) they are rising and will continue to do so as local mortgages become available in 2008. It is key therefore for investors, be they looking for a short term ‘flip’ or buying to let, to enter the market in this early stage to maximise returns.

John comments, “Istanbul is the ideal investment for all types of investors. For those looking to dip into and out of the market then purchasing an off-plan apartment and selling just before or on completion to the domestic market can be lucrative.

Equally for those looking for a longer term investment then purchasing a property off-plan at discounted prices, enjoying potentially high capital appreciation and then using rental income to help finance the purchase is a shrewd strategy. ”

The demand for residential property comes not only from Turkish nationals but also from tourists and foreign business workers. The city is preparing to be the Cultural Capital of Europe in 2010 and expects 10 million tourists to visit during the next 10 years.

Big business ‘moving in’

International hotel chains, such as the Inter Continental Group which owns the Holiday Inn and Crowne Plaza brands, have already identified the potential and moved into the market along the Marriott, Four Seasons and Sheraton and interest in commercial real estate has been seen from financial institutions such as Morgan Stanley, UBS, Deutsche Bank and Credit Suisse.

A real estate summit has also recently been held in Istanbul by the Association of Real Estate Investment Companies.

The summit focused on the capital city’s potential for foreign property investment with discussions centered around the opportunities brought about by recent impressive global capital into Turkey, as well as the specific plan to rebuild the Istanbul’s historical peninsula, an area of around 1 million square metres.

It’s not hard to see what attracts millions to Istanbul each year. Situated on the shores of the Bosphorus where the waters of the Black Sea, the Sea of Marmara and Golden Horn meet it is the place where east meets west.

Istanbul has a ‘very bright future’

A skyline of Ottoman minarets combined with Byzantine architecture, traditional food, rich culture and a vibrant nightlife all just 3 hours via budget airline Easyjet from the UK.

John comments, “Istanbul has a very bright future ahead; we are seeing the combination of population increase, an influx of foreign direct investment, a faster growing economy than China or India (according to a PwC report), high demand for residential property yet low supply. Investors can enjoy returns of up to 20% in some suburbs such as Cekmekov and Umraniye but the key is to invest now before the secret gets out.”

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