Last year, however, this figure reached a peak in what has been a dramatic upswing for the Turkish market, with 10,000 foreigners buying property in what has become one of the most popular destinations for overseas purchasers.

The times are a changing
"Turkey has really emerged as a prime property market over the past decade," says Paul Benedek from Solaris Villas. "In the late 1990s there was recognition by the Turkish Government that tourism could bring a large boost to the economy and as a result they created Tourist Development Regions (TDRs) with funding from various sources, including the World Bank, and started developing the infrastructure to support tourism in these newly created areas. "This infrastructure has made Turkey more accessible with new roads and enlarged airports being built and existing road and air routes being expanded," he adds.
With increased demand from holidaymakers and property buyers to experience what this 'new and improved' Turkish life has to offer, low-cost airlines have upped the number of regular flights to the country dramatically, allowing more foreigners the chance to enjoy over 300 days of sunshine per annum, fine sand beaches, dramatic mountains and fertile plains. The country not only offers the holidaymakers' requirements of great scenery and climate, but is also undergoing an intense period of change which has seen Istanbul named European Capital of Culture for 2010, and many of the restrictions that once limited overseas investment in property dropped.

The International Monetary Fund has also been working with Turkish officials over the past decade to ensure that the country benefits from a stable economy while preparation for EU membership has improved organisational and audit systems. One of the most influencing factors in the rise of the Turkish property market has been the introduction of mortgages available to overseas property purchasers. "The Turkish financial instruments have changed over the past decade and with the recent introduction of Turkish mortgages, property purchases are now even easier as more lenders are available to finance acquisitions within the Turkish property market," says Benedek. "In turn, this has made Turkish property purchases easier for foreign investors as the mortgage is secured in Turkey rather than on a property in the country of the investor's residence."

The culmination of all of these factors has led to growth in the Turkish property market of around 40 per cent year on year in some of the country's prime locations. This growth in demand for Turkish property, and subsequent growth in property prices, looks likely to continue over the next decade and many property experts state that this could be the best time to invest due to a lack of risk associated with emerging markets, continuing affordability and the realistic potential for substantial capital appreciation.

"Turkey has gone past the point of being an 'emerging market' with all the uncertainties that this brings," says Peter Esders from the International Law Partnership. "It is still relatively cheap, but getting less so as prices increase. Many have compared the Turkish position now with the way that Spain once was." Benedek agrees that Turkey can be compared to a young Spanish property market and one that overseas buyers are turning to now the Spanish market is mature, but states that unlike many emerging European markets, Turkey is a safer bet for overseas property investors. "There is at least another ten years of good returns to be obtained from the Turkish market and as yet it is not over-developed and is not fully mature," he says. "The Turkish laws also protect the property investors so compared to some of the other emerging markets, as long as you take the relevant legal advice, your investment potential is protected."

The Turkish political stage
Despite the apparent security the Turkish property market offers overseas buyers, the political situation in the country has hit headlines across the world of late, making many potential property investors cautious about the market. Turkish Secular parties have voiced their fears over the possible election of Foreign Minister Abdullah Gul, of the AK party, as president. They worry that the Islamic-rooted party could challenge the country's secular system and the separation of state and religion, a claim the AK party firmly rejects. The international media spotlight and focus on Turkish developments has created a variation in interest rates as money has moved in and out of the country. However, the Turkish property market has been stable throughout these developments and many property agents are quick to emphasise that investing in Turkish property carries low risks. Many agents are also optimistic about the Turkish accession to the European Union, the work towards which has been one of the AK party's main focuses along with the country's economic progress. "With the general election due for July, we hope the outcome will bring further political stability and democratic development," says Susan Pelakanou from Islands Blue Ltd. "It should be noted that the ruling AK Party have been changing their position of late, enacting liberal reforms and bringing the Turkish people closer to EU membership than ever before. The last government reformed and modernised the country faster and more effectively than most of its predecessors."

Turkish property investment hotspots
Some of the best Turkish property investment opportunities are to be found in the country's Tourist Development Regions and Turkey's two major cities: Istanbul and Ankara. The country's TDRs are in Cesme, Dalaman, Didim, North Antalya and Managvat and Oymapinar. The TDR in Cesme is located 80 kilometres from Izmir city centre, covers a planned area of 10,400 hectares and will incorporate a 72,000 tourism bed capacity. The Dalaman TDR benefits from the area's International airport and with a planned area of 22,859 hectares, will be home to 70,000 tourist beds. Didim TDR also has the advantage of being located near international airports, being 150 kilometres from Adnan Menderes Airport and 90 kilometres from Bodrum Airport. The region will also be served by a ferry which will make daily trips between Bodrum and Altinkum and the region's Apolion temple is likely to attract a steady stream of tourists. The 12,000 hectare planned area is set to include 50,000 tourist beds. Twenty-five kilometres from the city centre, the North Antalya TDR will cover 30,000 hectares and will also incorporate 50,000 tourism beds and the Managvat and Oymapinar region, 85 kilometres from Antalya city centre, is set to become home to 30,000 residents. Benedek states that the development of Akbuk, a small town in the Didim TDR, is typical of those within the districts. "Akbük is currently a small town with a number of property developments underway," he says. "The prices here are very reasonable with apartments averaging £50,000. The plans for the town are that the size of the harbour will increase and a marina will be built.

A number of good-sized hotels will also be developed, along with a golf course. "The road infrastructure is planned to be expanded with direct links to the airport, changing the travel time from Bodrum International Airport from a current one-hour-and-ten-minutes to around 35 minutes. From most UK airports you could be on the beach within four hours travelling time, thus making Akbük a future holiday and property investment hotspot," Benedek adds.

Charles Bentley, from Oruc International, believes that the net of Turkish property investment potential spreads further than over just the TDRs. "Any coastal areas that are near to a modern airport offer great investment potential," he says. "Some of the larger resorts are now becoming sprawling and developing well away from airports leaving a long transfer, which isn't desirable. Also any area with restricted building, like Dalyan which is a conservation area, has investment potential as this will maintain price growth and ensure there is no 'over-development'. The Turkish city and district of Fethiye in the Aegean region is also a good bet. It has year round tourism and a new ski centre less than an hour away." In terms of city investment, Istanbul, the Turkish capital, is undoubtedly the number one choice. Property prices in the city have been rising following last year's announcement that it had won the European Capital of Culture 2010 title and, according to Nirvana International, prices in the city are set to rise by as much as 50 per cent as a result of the EU's decision. EU policy-makers hope the title will highlight Istanbul as a gateway between Europe and Asia and with both these markets on its doorstep, demand for property looks likely to soar. "Istanbul is definitely a good choice for high net worth investors," says Bentley.

Edison Ford Investment Property recently reported that Ankara is catching up with Istanbul in its popularity for Turkish property investors, partly for commercial investors looking to build shopping complexes. These investors are drawn to the city by its relatively cheap property prices, high tourism and steady consumer spending. There are 24 shopping centres currently under construction in Ankara, meaning that there will be more square metres of shopping malls per thousand people than there is in Istanbul, a certain draw for tourists – who will need somewhere to stay when they're shopped out.

Bargain Turkish property buys 
"Like many countries the cheap property is in areas which are not near to the coast or close to major cities," says Esders. "However, these areas tend to be cheap because there is less demand for them. Cheap property doesn't necessarily mean a good buy." Benedek is just as quick to note that cheap Turkish property does not necessarily mean a good investment opportunity. "Most people only look at the cost and not the total price," he says. "For example, there are many properties available in the tourist development areas at costs of around £30,000 upwards. The majority of these are old and in need of refurbishment and the costs for this can grow to £15,000. "Therefore, the purchase price of £30,000 could develop into an overall cost of £45,000. As these properties are also older, their maintenance fees are generally higher than modern buildings and so in the long run can cost a lot more. If you look at new Turkish property developments then, depending on the area, you can pay from £25,000 for a studio apartment and up to £50,000 for a reasonable two-bedroom or a smaller three-bedroom apartment. The newer properties tend to have better rental potential and lower maintenance costs so can be better investments in the longer term."

Apartments
For those looking to buy holiday apartments with investment potential, either for their own use or for letting purposes, the best opportunities are to be found, again, in the Tourist Development Regions and in Istanbul and Ankara. Obviously, the best areas for holiday-apartment investment are the ones most popular with tourists as they have the most developed infrastructures. "Altinkum is easily the best for apartments as it is popular with Brits and has seen a rise in buying interest for this type of property," says Bentley. "Also, Fethiye has a stunning new development which has a cable car lift for access to very high quality apartments from as little as £42,000. The apartments are also within a mile of the centre and the beach." When considering the rental potential of a holiday apartment it's imperative to consider location and size and calculate which variables will bring in the most capital. "A three-bedroom apartment tends to have a wider rental potential than a two-bedroom apartment as a larger family or two couples would be able to rent it," says Benedek. "Similarly, an apartment needs to be close to amenities and connected to the road network."

Many newer Turkish apartment developments, especially those in TDRs, have on-site facilities such as bars, restaurants, gyms and convenience stores, so it's often worth spending a little more investing in property which is well-served by its surroundings. "You can find something reasonable with all of these described features starting from £40,000 upwards," adds Benedek. Solaris Apartments, developed by Solaris Villas, is a new development in the town of Akbük within a close distance to the beach and a two-minute walk to the market square, from which regional buses also run. On site facilities include a bar, gymnasium and restaurant in the setting of landscaped gardens. Two-bedroom apartments start at £50,000 rising to £85,000 for a three-bedroom penthouse. Off plan Turkish property is also worth considering, especially at this time of large-scale development, as discounts can generally be negotiated before the apartment or apartment complex is built.

Villas
"Turkish villas, particularly at the luxury end of the market, are in short supply," says Pelakanou, whose company deals exclusively in villas in Turkey. However, there are opportunities for the purchase of villas in the country's TDRs, away from large cities and where there has been some restriction on overdevelopment. "The ancient city of Side on the Turquoise coast is an excellent location around which to purchase a villa or family home," adds Pelakanou. "Building is restricted here due to the national park land so you can be sure that your property's views won't be spoilt." "Anywhere that has not been spoilt by overdevelopment that can compromise the value of villas is a good place to find this type of property," agrees Bentley. "Kalkan, Kas, Datca and Dalyan all fit this description but even Bodrum and Alanya can be good as long as you choose the area carefully." Older Turkish villas in need of modernisation start at around £35,000 and new properties £65,000 for a small semi-detached villa. The average price for a Turkish villa is now around £85,000 for a three-bedroom, semi-detached villa to £110,000 for a three-bedroom detached villa. 

Conclusion
The Turkish property market has come a long way in just ten years and has benefited tremendously from the government's investment in the tourist and property industries. With the future looking bright and all the frameworks seemingly in place to ensure the healthy development of the Turkish property market, now seems to be a good time to invest in your own piece of a country which, in the words of Ataturk, the founder of the Turkish Republic, 'looks to the West whilst remaining proud of its heritage'.   

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Article published in June 2007