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08 February, 2016
Having experienced political instability both domestically and internationally of late, Turkey does not exactly look like the typical picture of star destination for property investment right now. However, one of the most prominent indicators of property market performance – Knight Frank's annual Global House Price Index – has delivered a compelling endorsement for the country as a place to invest in a property, whether for use as a second home or for letting out as either holiday accommodation or for residential use.
The Index identified Turkey as holding second place for the title of the property market with the fastest-growing house prices in the world. First place went to Hong Kong – a very expensive market to enter, and one where many believe a correction is coming in the near future. As such, for many investors this makes Turkey a practical first place in terms of price growth.
While Turkey has experienced its share of political turmoil lately, some other previously-expected problems have been neatly avoided. For example, devaluation of the country's currency led to predictions from some quarters that wider economic turbulence was approaching, and in particular a slump for the property market. The passage of time, however, has not only failed to bring the expected slump but, with such a strong showing in Knight Frank's Global House Price Index, in many ways the opposite. In the key market of Istanbul, for example, prices in October were up by an average of 7.72% compared to the same time the year before.
Foreign property investment in Turkey, particularly in key resorts and cities, has thrived since the removal of formalities and restrictions that were previously in place. Istanbul, in particular, has emerged as a popular destination for investment from around the world. In spite of this and of the recent rapid price growth, so far Istanbul remains one of the more affordable major European cities for property investment.. Compared to cities of a similar calibre and significance, at least, it is a relatively low-cost market to enter yet one which is expected to see continued rapid growth. There are exceptions to this rule – exclusive areas favoured by the wealthy where property values can reach into the millions – but these districts are outliers and represent a fairly small portion of the city's area.
The essence of Turkey's attraction and the key reasons for its rapid price growth and optimistic forecasts, however, come down to the simplest of economic factors. Much of Turkey, and Istanbul in particular, is experiencing a trend of rapid population growth, expected to continue in coming years, and a shortage of places for those people to live. Simple supply and demand means that prices are rising, properties are filling up with relative ease, and new developments – whether freshly-built or off-plan – are springing up in an effort to fill the gap, and as a result creating new opportunities for investors to get a foothold in the market.
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