Middle East investors gobble up Turkey property
The Middle East accounts for just 10 per cent of foreign direct investment in Turkey each year, according to Turkstat. This may already be about to change as Turkey seeks closer ties with its Middle Eastern neighbours.
Despite the popularity of Turkey holidays with Western investors, Loxley McKenzie, Managing Director of Colordarcy.com comments, “In my experience European investors are not the main target for Turkish developers at the moment, it is the growing influx of investors they are welcoming from the Gulf.”
And a new development in the centre of Istanbul’s business district may help do just that. The project will include 5,000 apartments in what is claimed to be the biggest real estate project in Turkey’s history at nearly £1.5bn.
Analysts at Colordarcy are keen to point out that 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 its remarkable economic performance in recent years is no accident.
The government has worked hard to boost investment and keep the economy on track even to the point of taking some of the heat out of the economy this year.
As a result, investors from the Gulf states are increasingly eyeing Istanbul property as a good long term bet according to Colordarcy. 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 (Source: Gulf Times).
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 (Source: Knight Frank).
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. Meanwhile Turkey’s property developers get to tap into the obvious wealth that is accumulating from the trade in energy.
McKenzie added, “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.”
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 are likely to find that Istanbul offers the best property investment opportunity in Europe.”