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MARCH 2012 |www.opp.org.uk WORDS | Clare Nessling


BUSINESS


Developer profi leMORTGAGE OUTLOOK | 31 Turkish delight


Turkey continues to tick all the right boxes for overseas investors. It has a stable economy, a rapidly growing tourism sector, steadily increasing property sale volumes, and a healthy appetite for lending. OPP international mortgage columnist Clare Nessling, from Conti, cannot see any reason why Turkey’s upward trajectory shouldn’t go on.


residential property in Turkey. The country will be one of the top investment destinations of 2012. It’s now the third most popular location with regard to the mortgage enquiries we receive at Conti, after the more traditional hot spots of France and Spain.


T And, according to recent fi gures


from Turkey’s Land Registry Offi ce, international buyers are moving into the city on a big scale.


Of the 123,000 foreign nationals who own property in Turkey, 35,656 are from the UK, 28,306 from Germany, and 10,859 from Greece. The annual survey of Association of Foreign Investors in Real Estate (AFIRE) members puts the country in third place in a list of emerging markets being considered by potential investors in 2012, up from seventh place last year. Often referred to as the ‘new Spain’,


Turkey boasts a healthy tourism industry, cheap house prices and rising demand for rental properties, all of which have contributed to its popularity of late.


These factors, combined with low interest rates and the fact that it’s out of the eurozone could make it a very attractive, as well as affordable, option for any of your clients who are thinking of buying a holiday home overseas, investing in a foreign buy-to-let property, or retiring abroad. As well as international demand, domestic ownership is also experiencing considerable growth according to the Turkish Real Estate Investing Partners Association (GYODER) report. The country’s sound economy, steadily increasing employment numbers and rising levels of affl uence are boosting the purchasing power of Turkish nationals. And, due to a shortage of properties, there are


he world’s ongoing global fi nancial crisis is clearly not dampening the appeal of


predictions that 2.9 million houses will be required by 2015 to accommodate the growing population.


The rising demand for property


in Turkey has led to property prices increasing by six per cent year-on-year. Figures from REIDIN.com, Turkey’s Residential Property Price Index, puts the fi gure slightly higher, with an annual jump of 7.33% across the country. This is all very reassuring for prospective buyers. Also, fi gures from the Turkish Ministry of culture and Tourism show that between 2006 and 2010, tourism grew by just over two million visitors per year on average.


“The country is concentrating resources on expanding its tourism market”


The country is certainly concentrating resources on expanding its tourism market, and there will be appreciation in value as this infrastructure builds over time.


So, any of your clients who are interested in buy-to-let opportunities may be tempted by some very healthy rental yield potential, as well as strong capital appreciation over the longer term. With accessibility being a key factor too, Turkey has a wide choice of airports and is very well served by fl ights from most of mainland Europe. According to our recent mortgages applications, Bodrum is a particular hotspot, with investors snapping up small coastal apartments which they can not only use for their own holidays, but also rent out easily to others. A number of developers are offering guaranteed rentals, which could work as a real incentive to any clients considering a purchase. But there has also been an increase in the number of people buying more expensive villas, especially in areas such as Fethiye, and


those investing in multiple properties in the prime coastal areas. Buy-to- let investors are also drawn to cities, where there is an emerging demand for housing. In Turkey’s three biggest cities – Istanbul, Izmir and Antalya - populations are growing and there are signifi cant levels of migration from rural areas and neighbouring countries for employment.


According to recent reports, developers simply can’t build quickly enough to keep up with demand. And Istanbul was highlighted as the number-one city to invest in property by PricewaterhouseCoopers’ 2011 ‘Emerging Trends in European Real Estate’ report. It’s important to remember that


Turkey is also growing in popularity as a retirement destination, with many being lured by the warmer climate, lower costs of living, and excellent property value. For many, it’s simply a more cost-


effective location at the moment. Living costs are, in fact, around 50 to 60% below the norm in northern Europe. In short, Turkey truly has mass appeal for overseas property investors in northern Europe seeking a relative safe-haven that is outside the Eurozone, with a good climate and the prospect of


Clare Nessling is Director of Conti, the overseas mortgage specialist. You can contact her by phone at 0800 970 0985 or visit http://www. mortgagesoverseas.com


a good return on capital. In Turkey, it’s possible to obtain loans of up to 80% LTV for your clients, and considering that the country didn’t even offer mortgages until 2007, availability is generally very good. Most Turkish lenders prefer shorter terms through, with 10-15 years being quite typical, and rates start from around 4 to 5% at the moment. The buying process can generally take up to eight weeks, but as always, it’s important for your clients to obtain an approval in principle before signing any contracts or putting down a deposit. This will tell them what price range they can realistically consider, and will put them in a much better position with agents and developers, proving that they’re a serious buyer. It’s imperative that they seek advice from an independent lawyer who is not connected to their seller, estate agent or property developer. Lawyer’s fees, local and national taxes and insurance can often add at least a further 10% to total costs.


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