JEDDAH/ISTANBUL – Foreign buyers are increasingly attracted to Turkish property with a marked rise from overseas planning to buy, industry experts said.
Foreign investors are becoming aware of possibilities in Turkey, particularly in Istanbul, with a booming economy and relatively cheap prices, meaning there is the potential to pick up a bargain.
Traditionally, foreign buyers have focused on holiday homes along the country’s Mediterranean and Aegean coasts.
GCC countries have invested $10 billion in Turkey, two-thirds of it since 2004. “Trade between the Arab world and Turkey reached $32 billion in 2011, of which 11 percent or around $3.6 billion was conducted with the UAE,” said Mohammed Al Shihhi, Undersecretary of the UAE Ministry of Economy.
Prospects for the continued fast growth of Arab-Turkish trade are certainly positive, with the Turkish Minister of Science, Industry and Technology Nihat Ergun, announcing in Benghazi, Libya, in June 2012 that the (Turkish) government (aims) to reach $100 billion of trade… between Turkey and the Arab League within the next five years.”
In tourism, Turkey is thought to be sixth-largest tourism destination in the world, with 31.5 million visitors in 2011. Some 1.4 million were thought to be Arab. Tourist flows from Egypt alone to Turkey rose 400 percent in 2011. In March, the UAE’s Jumeirah Group assumed management of Istanbul’s Pera Palace Hotel, and is scouting new opportunities.
“The Rotana Hotels and Viceroy, as well as Saudi Arabia’s My Tuana have already announced investments in Turkey’s tourism sector,” said Tim Reid, HSBC’s regional head of commercial banking MENA, speaking at a Turkey-MENA seminar in Dubai.
Against this backdrop, Turkey targets $100 billion Arab world trade in five years.
Turkey’s economy grew the second-fastest in the world in 2011 at 8.5 percent, and is expected to grow almost six percent to $817 billion this year.
OECD data shown that the Turkish economy will be the bloc’s fastest growing member in 2011-17, with average annual growth of 5.7 percent. GDP per capita is set to rise from under $11,000 today to over $14,500 by 2016.
While these numbers do not come close to matching GCC metrics, they are quiet cause for satisfaction in Ankara. Inflation is the only blemish on this record, and is high today at 8.6 percent.
With a growing population now at 75 million, and a labor force of 27 million, Turkey needs to increase headline GDP and diversify its economy further. The Turkish government has set a series of targets to be met by 2023.
Loxley McKenzie, managing director of Colordarcy, said Turkish developers are focusing on attracting investment from the Gulf states - such as the United Arab Emirates, Kuwait, Saudi Arabia and Yemen - rather than from Europe.
Istanbul in particular is proving to be a popular location among buyers from this demographic.
McKenzie said: “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.”
He added that one of its main selling points to this group of investors is its proximity to the Gulf region.
Another reason why Turkey is a popular real estate investment destination is the performance of its property market, with the latest figures from REIDIN revealing house prices in the country increased by 2.38 percent in September, compared to the previous month, and by 16.4 percent annually.
Erdinc Varlibas, chief executive of Varyap, said earlier that there are a number of reasons why this trend is changing and pointed to relaxed property laws in the country as one factor in the recent boom.
“Istanbul is becoming a second London for the Arab world,” he claimed.
A revision to Turkish property laws has changed a rule that only allowed foreign investors from countries where Turkish nationals could buy real estate to purchase property in the country, making it easier for buyers to get on the ladder.
Property prices in the country are also on the up, with the TCMB recording year-on-year growth of 10.76 percent in the House Price Index over the course of June.
“Turkey aims to be one of the top 10 economies in the world (currently, it ranks at 16), to achieve a gross domestic product of $2 trillion, increase annual Turkish exports to $500 billion and achieve a foreign trade volume of $1 trillion,” Reid said. “Turkey is aiming high, but its goals are attainable.”
Vindication of the policy of shifting outlook to a more accommodating set of international partners was not long in coming. MENA has played a crucial role in serving as an outlet for thwarted Turkish ambitions, and the commonality of ambition is striking. “Turkey is recognized as a stability generator and a security producer in its region and beyond,” said Turkey’s ambassador to the UAE, Vural Altay. “Although we do not share a common border (with the GCC), we have a common culture.”
Some 850 Turkish companies and trade agencies operate in the UAE today, and participate in around 120 exhibitions taking place in the UAE.
“Trade between the Arab world and Turkey reached $32 billion in 2011, of which 11 per cent, or around $3.6 billion, was conducted with the UAE,” said Al Shihhi. Both countries believe $10 billion of bilateral trade is possible by 2015.
Turkey’s contracting industry is thought by some global measures to be second in size only to China’s. In June, Turkey’s TAV Construction won the $3 billion contract, via its joint venture with Consolidated Contractors’ Company of Greece and the UAE’s Arabtec, to build the new 27 million passenger Midfield Terminal at Abu Dhabi International Airport, and in late 2011, signed a contract with Saudi Arabia’s General Authority for Civil Aviation to expand the kingdom’s Medina Airport. Turkish contractors are also actively seeking GCC work in Qatar, Oman and Kuwait. – SG