Turkey Has Outgrown the Need for EU Membership [Opinion]

Turkey has outgrown the need for EU membership and become a world beating property investment destination while doing so, writes Liam Bailey.

There has been a lot of talk in the press this week about how Turkey -- frustrated by the EU process seemingly going in the wrong direction -- is turning to the east in the hope of expanding its global influence and economic growth potential. While reading these articles it suddenly occurred to me: Turkey has outgrown the need for EU membership -- it is going on fine without it.

What benefit would full EU membership have to Turkey's property investment package? The answer is: very little.

In the Eastern Bloc, EU membership brought about a substantial gain in the economies of several countries, by bringing about massive growth in tourism, exports and their services sectors.

Tourism to Turkey has grown massively in the last few years; hitting over 28million visitors last year. Even this year, during a global recession Turkish tourism has continued to grow massively.

The economy has taken a battering but that is hardly a criticism given the number of economies it shares a common recent history with. No one is saying that UK property is not a worthwhile investment just because its economy fell into recession - are they?

In fact it is the way the crisis has affected Turkey that make property in the country look like an even better investment.

Yes, the economy has contracted by over 5% this year. But the economy has not collapsed into a heap, and/or been forced to take its begging bowl to the International Monetary Fund in order to survive, as some other EU members and hopefuls have been: Hungary, Ukraine, Latvia, and Belarus. Even Russia is falling over itself trying to protect the rouble against a $33 barrel of oil.

Even Germany, Europe's largest economy is expected to have contracted by 9% this year. Meanwhile Turkey has been outside of IMF assistance since May this year, and Turkish Prime Minister Recep Tayyip Erdogan is resisting signing a new deal, because it would weaken his growing international prowess as a regional power.

Meanwhile in Turkey, like many EU countries and those around the world, economic prospects are beginning to improve. Everyone is picking themselves up and surveying the smoking rubble to see just how bad things got, and how bad things could have got.

The Turkish real estate industry grew by 2% in the two months ending October according to Turkish news agency Hurriyet. This, an acceleration on the 3% growth recorded in the previous 9 months.

This is mainly based on domestic demand, because of the low interest rates, but in terms of private buyers from overseas, there has never been a better time to buy Turkish property, especially if you're British.

While the pound is struggling to gain any real ground against the euro and US dollar -- largely because the Bank of England wants it to stay weak so UK companies can gain a better international export foothold -- the good old British currency is riding high against the Turkish lira.

In the last few weeks Turkish property has fluctuated between being 9% cheaper to British buyers than it was in April, and being 11% cheaper to British buyers. As the currencies currently lie Turkish property is almost 12% cheaper to British buyers than it was in April (based on a 1.00GBP/2.516TYR exchange rate at the time of writing.).

Forex company Moneycorp recently told Write About Property in a podcasted interview that the pound would be staying strong against the lira for the foreseeable future, but it is not an ever-lasting window of opportunity.

Nor is the record low borrowing rate in Turkey. It is a misconception that foreigners cannot get mortgages in Turkey. Yes, it is true that mortgages can only be obtained on completed properties. This rules out off plan purchases, but on completed properties, foreigners are just as able to secure finance as Turks.

The borrowing rate in Turkey has recently been cut by a further 25 basis points to the record low of 6.50%. This means that foreigners can pay off loans much quicker, reducing the necessary financial commitment, and putting a Turkish property purchase within reach of more people than ever before.

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