Why More Arabs Are Investing In Turkish Property
An old property investor friend of mine said to me the other day, “Turkey is pretty interesting at the moment isnt it.” I told him that is a bit of an understatement.
It may surprise you to hear that the Middle East accounts for just 10 per cent of foreign direct investment in Turkey each year. This may already be about to change as Turkey seeks closer ties with its Middle Eastern neighbours.
There are some obvious economic benefits for Turkey in being nestled between Europe and Asia. If one side slows down it can always rely on the other to boost trade. Turkey’s economy continues to grow even though most European countries have gone into reverse and Turkey’s remarkable economic performance in recent years is no accident.
As a result, investors from the Gulf states are increasingly eyeing Turkish real estate as a good long term bet. It has been well documented that Istanbul has seen increasing interest from investors from the UAE, Saudi Arabia, Kuwait and Yemen – all of whom can invest in Turkish property following the reciprocity law change this year.
The country is actively encouraging more investment from its near neighbours and their arrival has been part of the reason why the Turkish property boom has managed to sustain itself to the point where average prices have already risen over 10% since January 2012.
The new Turkish property law only came into effect in May and already the FT reported this month that Agaoglu, a construction group developing the site in Istanbul has received $400m from Gulf investors before it was even launched.
The development in the centre of Istanbul’s business district will include 5,000 apartments in what is claimed to be the biggest real estate project in the Turkey’s history at nearly £1.5bn.
For both investors from Arab states and Turkey itself, the benefits of closer ties means that, on the one hand, Gulf investors can feel confident to invest in property in cities such as Istanbul at prices that are still well below those to be found in Western Europe. While on the other Turkey’s property developers get to tap into the obvious wealth that is accumulating from the trade in energy.
People have been calling Istanbul the “new London” for most of the past 12 months and it is likely that many Middle Eastern investors will find Istanbul a more attractive proposition. Turkey is much closer to home and so is the culture.
So when it comes to catching the next wave of growth in Turkey, investors will need to act fast to beat the influx of investors who will inevitably find Istanbul property – as my friend would say – ‘pretty interesting.’
Do you find Istanbul property interesting? Please leave your comments below:
Angelina GoreProperty Expert