Storm Clouds Gather As Swedes Turn Their Backs On Turkish Property

Turkey property peak A report out this month has revealed that Swedish property investors are beginning to turn their backs on Turkish property.

This summer has turned out to be a cruel one for Turkey.

The country which at the beginning of the year was being held up as a model for how to manage an economy is now being seriously tested for the first time since the economic boom began.

The trouble started with the Gezi protests, which seem to have either directly or indirectly applied the brakes on important areas of the national economy.

First there is the 35% fall in FDI reported by the central bank.

Unemployment too has risen slightly from 9% to 9.3%. It has to be said however that employment is actually up.

The central bank has also been forced to raise its interest rate after the Turkish Lira fell to an all-time low against the dollar.

Then there are the Swedish holiday home investors who appear to have taken issue with Turkey’s human rights record.

According to a survey by Swedish Estate agents, 10% of people in the cities of Malmo, Gothenberg and Stockholm own a holiday home abroad. The trouble is they are now less likely to be looking for one in Turkey. This is down to two reasons.

The country’s human rights record and the recent unrest.

4 in 10 Swedes involved in the survey now rule out Turkey as a second home destination.

The good news for investors is that the Swedes may be missing out on accelerating growth in new home prices in Istanbul.

They might also be missing out on assets that will increase further in value as the Turkish government seeks to reverse the fall in value of the Lira.

The pace of housing market growth has seen the price of new homes increase to 1.84% in June compared to 0.31% in April and the 0.54% seen in May.

This has coincided with a 6.81% and 5.77% increase housing stock in April and June.

A market peak in Turkey may well be on the horizon, therefore it is advisable that anyone considering investing in Turkish property opts for good quality key ready properties in Istanbul which offers the best long term capital growth prospects, strong rental yields and less risk.

Now is not the time to speculate on property in Turkey’s holiday resorts or wait around for an off-plan apartment in Istanbul.

What are your thoughts on Turkey at the moment? I would love to hear your comments.

Kind regards

Loxley McKenzie
Managing Director

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Categories: Property Invest / Turkey Property

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