The Bosphorus, also known as the 'Istanbul Strait', runs through the city and is recognised as forming the boundary between Europe and Asia. On the west of the Bosphorus, Istanbul's European side, there are the tree-lined boulevards and modern-day shopping centres which you would expect to find in a major Western European city, while on the other side of the Strait the skyline is dominated by minarets and domes. Add to this clear remnants of Turkey's past, in the shape of Greek ruins, Roman theatres, Mosques and orthodox churches, and one can start to see how Istanbul mixes Middle Eastern, ancient European and modern Western European characteristics into one diverse melting pot.

With such a vibrant mix of cultures all colliding in one sprawling city, it is no real surprise that Istanbul has long been an extremely popular tourist destination – a reputation that will be enhanced further over the coming years, with the city expected to be named the European Capital of Culture for 2010. In recent years Istanbul has become an increasingly wealthy city. According to Forbes, it is home to the fourth highest number of billionaires in the world, while the city's economy is also booming. What's more, the city's population (which is already approximately 12 million) is growing at around 1.5 per cent a year, meaning there has possibly never been a more exciting time to consider buying a home there.

A recent PriceWaterhouseCoopers and Urban Land Institute survey officially named Istanbul as the second-best place in the world to invest in property, behind Moscow in Russia, with affordable property prices, cheap living costs and decent rental yields all contributing towards the city's investment potential. Indeed, despite being the economic and cultural hub of Turkey, Istanbul was voted only the 37th most expensive city in the world in a recent survey, and there is certainly property available in the city to suit all budgets. "There is a wide range of property available in Istanbul, it's much like London in its range of property," explains Julian Walker of Spot Blue. "The property we currently have listed starts from about £35,000 in Beylikduzu, but we also have one property on the market for $12.5 million (approximately £6.3 million). It all depends on the type of property and area." Property prices in the city are buoyant at the moment, however, so Istanbul may not maintain its reputation as an affordable destination for long. "Increased pressure on the housing market has led to property demand outweighing supply, creating a strong buy-to-let market," explains Victoria Jones of Select Property. "A recent report has suggested that there is a need for 750,000 new residences in Istanbul, which is having a positive effect on housing prices that have already increased consistently at 18 to 30 per cent between 2003 and 2006." Walker echoes Jones's sentiments. "While there might be a global credit crunch, buy-to-let properties in Istanbul are proving popular, especial fly for a younger demographic which are looking to use the profit to get on the UK housing ladder," he says.

Not that Istanbul's healthy capital appreciation levels are the only mouthwatering prospect for investors. As an established tourism market, and with an increasing number of international companies setting up home in the city, those who invest in Istanbul, and choose their property wisely, stand to make a healthy profit on rental yields. The latest Istanbul Housing Sector Report predicted that the average annual rental yields in the city are between 6–8 per cent. And it is not only on the European side of Istanbul which holds promise for investors at present. "Traditionally the west side has been the centre of commercial activity in Istanbul. However, due to a shortage of available land and land prices, there has been a residential and commercial property boom on the east side," says Jones. "Property prices in the east is around 50 per cent cheaper than in the west, and commercial organisations, homeowners and tenants alike are beginning to realise the benefits of superior urban planning, better infrastructure, additional space and green areas as well as superior quality developments," she adds. With all this in mind, it is no real surprise that, according to the International Investor's Association, foreign investment in Istanbul property is estimated to reach an alltime high this year, with more than $15 billion set to be spent.

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Article published July 2008