Investment Strategies for Turkey

Short Term Investment Strategy
Key Opportunity
Easily accessible from most of Europe, Turkey benefits not only from numerous cultural and natural reasons to visit the country but also some of the most desirable climates for holidaymakers, therefore it is no surprise that Turkey is amongst the top ten tourist destinations worldwide. Additionally, the price of property and the cost of living is significantly lower than most other European countries therefore the demand for primary and secondary residences is steadily increasing, with predictions of an even stronger growth as Turkey enters the European Union. The time to invest is now.

Infrastructure
With the growth of the tourism sector, the improving economy and decreasing inflation, stable political situation and commercial investments, the country offers all of the factors which promote a secure environment for real estate investments. Prices are still low however are likely to increase soon, potentially increasing to reach European price levels once the country enters the European Union therefore prices are not expected to remain low for very long.

Timescale
Due to the beneficial tax regulations for real estate investors, a minimum of 5 years should be accounted for when considering real estate investment in Turkey. As well as the benefits from the “no capital gains tax” implemented, this will allow the economy to develop further, the tourist sector to continue to grow and the commercial investments in the area to develop further. This will also allow for further infrastructure improvements to be made in the area, providing a further boost in the demand for residential and temporary housing.

Typical investment product in Turkey require a reservation deposit to remove the property from the market and reserve it in your name. Once your legal representative has informed you that the development and the purchase contract meet the legal requirements and you are able to proceed, investors are required to make a deposit between 20% and 35% in most cases, with stage payments during construction and the remainder to be paid upon completion and delivery.

While it can be possible to prepare a strategy in which the property is sold before completion and delivery, due to the tax benefits and financial projections for the country, a medium to long term strategy is recommended.

Key Risks
Planning and implementing a sound exit strategy is fundamental when investing in real estate anywhere in the world and Turkey is no exception. Determining how attractive your property will be to end users and how easily your property can be sold (and the right time to sell) is key to gain the most returns on your investment. Purchasing property in an area which is considered to be highly desirable and which will remain highly desirable or become even more desirable is an absolute necessity.

The area should have an attractive climate and natural features but must also be a location in which infrastructure is being improved and new features are being added to improve the quality of life of the residents, both temporary, permanent and transitory.

The increase of employment opportunities which are inherent with the implementation of infrastructural improvements and opening of new companies will have a direct impact on the demand for permanent residential property. The accessibility and maintenance of local attractions (for example the beach or areas of historical significance) will also influence the influx of permanent and temporary visitors.

General infrastructure improvements, such as hotels, hospitals, restaurants, roads, marinas, golf courses etc will affect both demand for temporary and permanent residences. Additionally, all of the above will affect the demand for transitory residents, which in turn dictate the demand for rental property, which may play an interim part in your investment strategy.

It is important that you attempt to find out what the situation is regarding all of the above when discussing a real estate investment overseas. Turkey, as one of the top holiday destinations worldwide benefits in no small way from good conditions regarding all of the above.

Holding on until the correct time to sell and following your investment strategy is vital, as with any global real estate investment.

Medium to Long Term Investment Strategy
Key Opportunity
With the possibility of Turkey joining the European Union in the next decade, the best time to invest in real estate in Turkey is now. Returns for those who purchase property now are likely to be much more significant than someone who purchases just after the entry into the European Union, when property values should be more comparable to property prices in European destinations.

Everything from financial projections, political assessments and forecasts for the tourism sector indicate that the property prices in Turkey will not remain at their current values for very long. While the prices in Turkey are still very competitive when compared to nearby destinations, steep rises in value are estimated for the coming years. Small towns like Didim and neighbouring resorts, like Altinkum are under close scrutiny and by the sales global investors are showing that they agree on one point. It is an area worthy of investment and which is certain to provide substantial returns.

If Turkey manages to achieve its goal of becoming one of the top 5 tourist destinations worldwide over the coming years, effectively moving up three or four spots on the global tourism ladder, investors with property in resort towns of Turkey will see very significant returns.

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