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WHY INVEST IN TURKEY
STRONG ECONOMIC GROWTH
Turkey is the 16th largest economy in the world with a GDP of $382 billion, which put the Turkish economy ahead of Belgium, Switzerland and Sweden in 2006. Bear in mind that 45 % of Turkish economy is unrecorded too, meaning it is actually much larger than publicly stated. Turkey is also among the top 7 emerging markets, with one of the most opened, dynamic and internationally integrated economies in the region. Indeed, some large clients of Price Waterhouse Coopers regard Turkey as a faster-growing market than China, India and the rest of the so-called E7 countries. As economic growth translates into increased spending power there will be a strong upward pressure on property prices.
ECONOMIC AND POLITICAL STABILITY
The economic transformation in Turkey has been dramatic, especially the lowering of inflation, and the country is now more stable economically and politically than ever before. Turkey has been a member of United Nations since 1945 and a member of NATO since 1952. It has also been a secular state since 1923 where religion and state is seperate.
STRONG AND GROWING LOCAL MARKET
High population growth and fast urbanization are the most important factors triggering housing demand in Turkey. With a local population of more than 70 million, Turkey is among the world’s most populated top 20 countries. The country’s population growth rate is 2% per year, well above the world avarage. Surprisingly 70 % of the population is younger than 35 , which indicates a strong and growing local market.
SERIOUS HOUSING SHORTAGE
A rapidly growing young population coupled with swift urbanisation has led to a severe housing shortage in Turkey. According to a recent study, the country needs more than 5 million new houses by 2010. Turkey’s housing shortage is estimated to be 500.000 units per annum ( Mc Kinsey Global Institute ) so demand for new homes is expected to remain very strong for some years. Further more inefficient financial institutions have historically hindered developer’s ability to secure financing, compounding the housing deficit.
SET TO JOIN THE EU OR CLOSELY CONVERSE BY 2015
Turkey has allways had very close ties with the EU. In 1996, a Customs Union came into effect between Turkey and the EU, creating the closest economic and political relationship between the EU and any non-member country. In 2005, Turkey met all the Copenhagen Criteria, the political criteria which are the pre-requisites for starting the full EU membership negotiations, and this has already begun to impact property prices.
MASSIVE FOREIGN INVESTMENT
When Turkey began the process towards EU accession in 2005, it immediately led to a surge in international and foreign direct investment. Foreign investment pouring into the country is currently estimated at $10 billion per year.
LARGE EXPATRIATE COMMUNITY
There are about 5,4 million expatriate Turkish citizens, 90.5 % of whom live in western European countries. It is estimated that more than 3 million Turks live in Germany alone, of whom more than 57.000 have established small and medium sized enterprises with a total annual turnover of about $ 35 billion. Much of this money finds it’s way back to Turkey, generally invested as being used to buy property.
INTRODUCTION OF A MORTGAGE SYSTEM
Newly ratified mortgage law in February 2007, stimulating demand for domestic housing and driving house prices upwards. Right now, property has to be bought with cash or bank loans at really high interest rates. When the Mortgage Law come in to effect on January 1st.2008 , the local market is set to soar. The same law will allow foreigners to secure mortgages, which will further boost property prices in Turkey.
LIBERALISATION OF FOREIGN PROPERTY OWNERSHIP LAWS
New legislation was retified in December 2005 permitting foreigners to own Turkish property. Now 100% foreign ownership is permitted, as well as 100% repatriation of profits and dividends, creating a favourable climate for investing in Turkish residential property.
BOOMING PROPERTY MARKET
Due to the arrival of mortgages and the growing interest in foreign property investors the dynamics of Turkey’s property market could be compared to those of Spain 20 or more years ago ( only better ), and the country could well emulate this growth and development pattern.In a study carried out by Master Card in December 2000, Turkish Nationals were asked what they would do if they had an additional $ 20.000. 35 % said they would buy a house. ( For respondents in the lower to middle income brackets, this figure was 50 %.)
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