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 promise.

Despite being the economic and cultural hub of Turkey - the city is expected to be named the European Capital of Culture in 2010 - Istanbul was voted only the 37th most expensive city in the world in a recent survey, while prices for apartments on the outskirts of the city can be picked up from as little as £35,000.

What's more, Istanbul's population is currently growing by 1.5 per cent a year, and this is a statistic that is catching the eye of property investors looking to take advantage of the city's potentially rewarding rental yields. According to some sources, rental yields are reaching up to 7.6 per cent for apartments in the city centre at present, while developments in the suburbs are giving returns of up to 8.8 per cent.

With all this in mind, it is no real surprise that foreign investment in Istanbul property is estimated to reach an all-time high this year, with more than $15 billion set to be spent - according to the International Investor's Association.

"Istanbul might be way down the list of the world's most expensive cities, but it has property to suit the budget of a billionaire," says Justin Walker from Spot Blue. "While there might be a global credit crunch, buy-to-let properties in Istanbul are proving popular for a younger demographic who are looking to use their profit to get on the UK housing ladder.

"There are a range of city-centre apartments in the popular neighbourhood of Beylikduzu for under £36,000, just 45 minutes from the airport. There are fantastic rental potentials in this bustling part of the city from a growing domestic and international population in Istanbul.

"Moreover, for a higher budget we're selling a stunning 6.5 million euro reconstructed palace with grand interiors, studio penthouse and amazing views over the Bosphorus," he adds.

Recently released figures from the country's Land Registry General Directorate reveal that Istanbul is already the second-most popular Turkish destination for foreign property buyers, with 8,830 properties in the cultural city owned by foreigners - only the Mugla province, located in the south-west of the country on the Aegean coast, has more (12,865).

In total, Turkey has 73,000 foreign property owners, with the coastal resorts of Aydin (7,415), Bursa (5,241) and Izmir (4,145) also all proving to be popular locales.

However, the Istanbul Chamber of Commerce has claimed that a property shortage could be looming as the country becomes more popular with overseas buyers. In fact, it is estimated that in the next eight years a projected 4.4 million homes will need to be built in Turkey to cope with demand, with much of this construction being concentrated in the increasingly popular city of Istanbul.

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Article first published 15 April 2008