5 Reasons Why Turkey Property Won’t Go The Way Of Spain

Turkey PropertyThis week an investor client asked me this question, “Will Turkey go the way of Spain?” This was my answer…

I don’t believe that Turkey is comparable to Spain. In fact it is not in any way comparable – at least not from an investment point of view.

Now you can say both countries share a warm climate and great beaches. However if you were to base your investment decisions on geography and climate I am sure there are plenty of other countries offering the same thing.

1. From a pure investment point of view, the first reason why I think the Turkey property market is unlikely to follow the Spanish path is that prices have not reached a point where they are grossly inflated.

Much has been made of the rise in Turkey property prices over the past three years and this is true – property prices are rising by around 10% per year, which could mean that in five years we could see them rise by as much as 50%.

The important thing to remember though is the price of Turkey property is low compared to countries like Spain. You can still quite easily invest in a spacious 2 bedroom apartment in Turkey’s resort towns for £35,000.

2. The second reason I see Turkey following a different path to Spain is because local authorities are careful to place strict planning restrictions on new developments. This means there are minimum distances between buildings and you won’t find high-rise blocks dominating the skylines of coastal resorts.

3. Before we get too excited, property development in Turkey has accelerated to meet demand and there is evidence of this in the main Turkish holiday resorts. Unlike Spain however, this is matched by demand on the local market as one local agent in Kusadasi properties told me recently:

‘Foreigners are not the main buyers of properties here, it is the Turkish domestic buyers who are looking to buy second homes. They are happy to buy at market value in good areas and homes are not on the market for very long”

4. Healthy rental yields are the most important thing to consider when investing in property and here too we see a big difference. How many property investments do you know that can offer a 10 year rental guarantee?

Rental yields in Spain are about 3% in most resorts due to oversupply issues, yet in Turkey yields are 7% or higher, partly due to the relatively low price of property.

5. Finally, unlike Spain, Turkey is predicted to continue being one of the fastest growing economies amongst OECD members until 2017 with anticipated average annual growth of 6.7% while Spain can look forward to 0.3% growth in 2013 in comparison.

Will it be Turkey or Spain for you this year? Please leave your comments below.

Kind regards

Brett Tudor
Property Expert

Join The Conversation - Be The First To Comment

Categories: Property Invest / Turkey Property

Tags:

Like What You Read? Stay In Touch

Follow Colordarcy on Twitter or Facebook