According to currency exchange specialist Moneycorp, a recent decrease in the value of the Turkish lira – part of an economic blip – has helped to create unprecedented real estate bargains for sterling buyers in recent months. At the Turkish currency's lowest point in recent months (23rd June 2006), £100,000 – or the cost of the typical two-bedroom apartment in a popular Turkish resort – would have bought 320,000 lira.

Yet barely six months previous to this, £100,000 was worth around 240,000 lira – a difference of £28,000 on the market low, and clearly a useful sum for any Brits keen to buy a second home or investment real estate in one of the country's many popular resorts.

Moneycorp's David Kerns, when asked if he views Turkish real estate as a good buy in light of the recent currency fluctuation, replied: "It does depend on how you view risk. As with any volatile economy there are bound to be more ups and downs, as evidenced by the Turkish lira's yo-yo performance over these past six months".

One should bear in mind, though, that many Turkish real estate agents and developers will accept payment in sterling and euros, hence exchanging pounds to lira may not be essential in every case.

Although the Turkish economy may indeed be experiencing some short-term upheaval, Turkish real estate agents and developers have pointed to several factors that should ensure the country offers solid investment potential on a mid- to long-term basis.

Firstly, although Turkey is perhaps eight-to-ten years from joining the European Union, it appears to be ready to adopt an 'open skies' policy in the near future, which often quickly leads to the arrival of low-cost flights. Indeed, with Easyjet flying into Istanbul three times a week from 1st August 2006, many industry commentators believe that low-cost flights to the Turkish Aegean and Mediterranean coastlines are just a matter of time.

Secondly, although EU membership will undoubtedly support the Turkish economy and, as one aspect of this, its property market, real estate agents remain confident that the health of Turkey's property market is not dependent upon EU membership in the same way it clearly was for countries such as Estonia and the Czech Republic.

Nadir Nuritidinov of ASEM Construction, which is currently marketing real estate developments in the resorts of Altinkum and Bodrum, commented: "Everyone in Turkey remains optimistic about Turkey's eventual EU membership. Even before EU talks Turkey has already become a hotspot for real estate because of the ease in purchasing the property, constant price rises and low taxes. A British national can purchase Turkish real estate in his or her name without going through any hassle."

Clearly, the Turkish government has already begun to reach out to foreign investors, and this includes overseas real estate buyers. This year, the government lowered the taxes for overseas investors and made the property purchase law for foreigners easier. Britain currently leads the list of foreign nationals buying Turkish real estate. From 7th January 2006, when new laws governing the purchase of property by foreigners in Turkey was put into effect, to mid April 2006, 588 British citizens purchased 420 properties in Turkey. During the two years prior to these new laws being implemented, 8,625 British nationals acquired 6,333 properties in Turkey. British purchases are at their highest concentration within the towns of Fethiye and Didim.

Thirdly, and finally, the Turkish real estate market has been attracting thousands of British buyers despite not being able to offer much in the way of comprehensive mortgage products, but that is about to change – and property prices could change with it.

Amar Sodhi of Avatar International, which currently has Aegean coast real estate on its books, explains: "The lack of any mortgage product thus far has created a price ceiling on the real estate market, controlling much higher price increases. However, the introduction of Turkish mortgages is imminent and banks have started working on products that foreign investors will be eligible for."

Currently, the only product available from outside the Turkish banking sector is offered by HSBC and covers completed properties only, but buy-to-let and off-plan mortgages are in the pipeline and are expected to be available within the next few weeks.

Nirvana International, which has three traditional-style real estate developments on offer near the Turkish golf-centred resort of Belek, is currently in negotiations with a number of corporations to offer its clients one of the first off-plan Turkish mortgages available. "We anticipate this launch to be in September", says the company's Robert Nixon, adding that features would include "five-year fixed-rate terms, interest rates between 4.5 and 5.5 per cent, and 80 per cent loan to value mortgages".

So although Nuritidinov, Sodhi and Nixon don't believe that low-cost flights and mortgages will help maintain the present rate of real estate price rises, said to be as high as 25 per cent per annum, all feel that double-digit growth is sustainable into the mid-term – especially with EU membership still to come.

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Image: Gumusluk Villa from Avatar

Article published on 27 July 2006