Why is Turkey Property Such Hot News Right Now?

Turkey's profile as an international destination of choice for tourists, holiday home buyers and even holiday property investors (fly-to-letters). It used to be that one of the main reasons to recommend buying property in Turkey was because EU membership was on the horizon, but since then Turkey has become a strong and powerful package all on its own, and property there is predicted and capable of growing and earning strong rental yields with or without EU membership.

We haven't really published a guide like this since things changed so drastically, and we thought that now would be a good time to do so. But why is Turkey so hot?

Economy Growing Faster than Rest of Europe

According to Turkstat data Turkish GDP grew 11.7% in the first quarter of this year compared to the same quarter of last year. This follows a growth of 6% in the final quarter of last year. Comparing this to Spain which contracted –1.3% and –3.1% respectively, the UK which shrank  –0.2% and  -3.1% respectively, Germany which grew 1.5% in Q1 following a –-2.2% contraction in Q4, France which grew 1.2% following a 0.5% contraction, and Italy which grew 0.5% following a 2.8% contraction, you can see why the Turkish economy is becoming such hot news.

A strong economy means a strong currency, healthy inflation (if carefully managed) and therefore growing property prices.

Strong Tourism Growth

The latest data on tourism from the tourism ministry shows that Turkish tourism grew 9.6% in the first half of this year, compared to the first half of last year. While the British travel industry is reporting a struggle, the Turkish tourism ministry shows that any drop in British visitors is being more than compensated for by growth in visitor numbers from Russia, Syria, Iran and Bulgaria

Tourism growth is one of the most important factors in the success of the Turkish property market. Again this is because most buyers are buying holiday homes and almost all of them will plan to rent it out for an additional income.

Marinas, Resorts and Success Stories

The volume of positive news relating to the overseas property market in Turkey is about the biggest in the world right now. Each week we hear of a new marina, new investments, new hotels from Hilton, Marriott, and other success stories, with very few if any negative news to temper it. For instance, there have been no reports of developments cancelled, or investors out of pocket, or certainly no more than in any market.

Thus, each week confidence in the Turkish property market grows. In a risk averse world confidence is a main driver of sales, and that is why Turkey's fortunes continue to improve.

Emerging Market Picks Part I: Latin America

After almost 2 whole years in the doldrums, emerging market property investment is picking up in support once again, thanks in no small part to the massive acclaim of Brazil, which has grown into one of the world's highest profile markets.

Thus, we have decided to conduct our first review of which emerging markets around the world, starting with Latin America. No, it's not just to get another tuppence worth in on Brazil, but because Latin America is very much becoming a centre for emerging market growth, with many hot markets and we wanted to lay out what markets we feel are offering the biggest potential for growth.

Brazil

We would love so much to have been different, to have been able to be controversial in saying Brazil wasn't one of the hottest emerging markets in Brazil, or the world, but we just can't do it. Brazil has so many strong sectors, as do many Latin American economies, but then Brazil has also discovered oil.

Brazilian agriculture is in the top 5 in the world, in terms of volume of production and head of cattle. Then you have the booming services sector, fuelled by leaps in budget aviation and technical and administrative outsourcing over recent years. Then you have the discovery of oil, which will add millions of dollars in revenues as it is tapped and exploited.

All this is fuelling phenomenal economic growth, which is increasing employment and affluence within the Brazilian population. As such the demand for affordable housing to buy and rent is growing massively. The north east, and especially cities like Natal and Sao Paulo have been found to be leading this growth in terms of percentages.

Availability can be a problem for foreigners, but we have just brought on the Edifício Dr. Geraldo Furtado development in Natal. The development is specifically targeted at the local market, which means low prices to foreign investors.

Panama

You don't hear much about Panama these days but that doesn't mean it lost all the growth potential it had in 2006, 07 and 08. While many markets crumbled at the hands of the crunch, and developments were postponed and cancelled, the construction boom in Panama continued, as the economy has continued to grow by around 5% per annum.

The economy is forecast by both the World Bank and International Monetary Fund to grow by over 4.5% this year (4.5% and 5% respectively).

Then there is the expansion of the Panama Canal. 5% of global shipping cargo passes through the canal, but it has grown outdated and too small for the larger super-freighters that now rule the seas. The multi-billion dollar expansion will add to Panama's economic growth.

Panama property is not the cheapest in the world, but it is very competitive. We have a development of luxury apartments in a resort on the Caribbean coast at prices starting from £55,000.

Studio Apartments in Hurghada from £8293 - Incredible

Azure Overseas are happy to announce the lowest priced property in Hurghada ever has just been added to the site. We recently raved about the new Tiba Heights 2 development, but the Isida development is closer to the sea, has a bigger pool, bigger gardens and is 10% cheaper.

You can now buy an apartment in Hurghada for just £8,293. Developments like this are the reason why Hurghada property is set to become one of the biggest stories ever seen in overseas property. For the price, Isida is top quality, and with an array of features including:

• Located just five minutes' walk from a public beach
• Good location in the heart of the fast evolving Al Ahyaa area of Hurghada.
• Large swimming pool on site with dedicated childrens' section
• Gardens around the project
• Communal roof terrace with seaviews
• Centralized satellite television, telephone and internet links to all apartments
• High speed internet to all apartments
• Two elevators to all floors
• 24 hour security
• Ten years' builders' guarantee
• Low annual maintenance fee of just LE2500 (GBP280/EUR340)

The only reason why you don’t read more about Hurghada in the press is because of the obstacles that the economy still must overcome, most prominently the massive gap between rich and poor. But at such low prices, and with so much growth potential, for many people it is well worth throwing in, and as a result Hurghada property is currently one of Azure Overseas’ biggest sellers.

Both the World Bank and the International Monetary Fund are forecasting growth of more than 4% in the Egyptian economy this year (4.5% and 5% respectively), and the IMF is forecasting growth of 6.3% next year. Both are known for being bearish on markets, because they decide which will get loans and which won’t.

You tend not to think about it because Hurghada is known for low prices, but a studio apartment for just over 8 grand, in a luxury resort, in a place with a warm climate year round, clean, safe beaches, and tourism from britain alone growing at 20% per year (Association of British Travel Agents), is nothing short of incredible. Little wonder that projected yields are 10% upwards. It is off plan, and so certainly a high risk category investment, but if you do the proper research this risk can be minimised.

Dubai Property: The Good the Bad and the Bare Naked Truth

There is a lot of hosh and poffel being talked about the Dubai property market at the moment. According to Colliers International prices were 2% higher in the first quarter of this year compared to last year, the 4% quarterly increase was the third consecutive growth recorded by the firm. Echoing Colliers findings of a market currently stabilising, Asteco said that prices were flat in the second quarter compared to the first.

But then comes a cold stark report in Bloomberg of a barren market with insufficient sales to allow buyers to gauge prices. If you ask me this is the most realistic story, and I am sure anyone who watched the recent Homes from Hell Dubai Dreams program on ITV will be of the same opinion.

Let us not forget that £50 billion worth of construction is on hold in Dubai, and that several of Dubai's largest developers are still juggling huge debts that could yet be defaulted. At a time when French leasebacks giving returns of 4% max are more popular than off plan properties capable of returning twice that, because investors just don't want to take any risk, it is hard to see sales increasing in such a volatile market.

Dubai property prices have fallen a reported 50% since the start of the downturn, but in reality that may only tell a fraction of the story; if a property is only worth what someone is willing to pay for it then how much is a property worth that no one wants?

Further, how much is a property worth that has views on 1-4 sides of unfinished foundations and uncompleted towers?

What's worse is I can't even see any hope in Dubai's future. Okay, if sales do increase on the towers that are complete or being completed and the market verifiably stabilises, then new developers will undoubtedly want to take over the uncompleted ones and get them up and going ready for the growth cycle. It is worth that initial sales spurt will come from that I can't envisage. Answers on a postcard, or in the comments, whichever is easier.

Turkey Property Investment Recommended by GPG and Me

The well respected Global Property Guide publication has given a glowing recommendation for investment in Turkish property, particularly Istanbul.

According to the firm's research for its mid-year investment recommendations, yields on Turkish property in Istanbul are currently averaging 5.48%, which is higher than average yields in Italy (5.04%), France (3.85%), Spain (3.81%) and Portugal (3.63%).

These yields, as with most -- if not all -- of the GPG rental yield figures is based on residential rentals, which means they do not give a clear indication as to the kind of yields a holiday property might make, which can often by higher than residential yields depending on a number of factors.

This is unfortunate, because most overseas buyers of Turkish property are currently aiming at holiday lets, and there have been several reports of those buyers earning yields of 6% net.

Basically, yields on holiday property in Turkey will tent to be higher, because property in the touristic areas tends to be cheaper than that found in Istanbul, while rental rates on holiday lets tend to be higher, which can actually be higher than residential rents in Istanbul or the same depending on the property and exact locations in question.

Given these truths it is only a matter of how much paying occupancy the holiday home owners can achieve, which then depends on the amount of time they want to spend in the property.

The best strategy for holiday home investors in Turkish property, like those anywhere else in the world is to rent out the property for the entire season and use it during low season. This is a problem for some owners who don't do sufficient research and subsequently find out that the area they have bought in is completely closed off during low season, with not even so much as a shop to buy essentials like milk.

This is in fact one of the reasons why Turkey is currently seeing its popularity with this type of investor soar: because most buyers are currently doing a lot of research, they are finding out that most of Turkey's touristic areas are open all-year round.

Turkish Property Investment Making the News

Turkish property is currently among the most talked about in the world of overseas property, and for all the right reasons.

There are two main stories in the past week: Global Property Guide stating that the average rental yield on Turkish property is 5.48 per cent, which is much higher than the yields on offer in France (3.85%), Spain (3.81%) and Portugal (3.63%) and reports on the massive numbers of British people owning property in Turkey.

According to the Turkish Land Registry's latest figures, 32,000 Britons own Turkish property covering 6 million square meters. This is twice the area of property owned by Germans (3.5 million square meters), which is significant because Germany is Turkey's largest tourism market. The report received coverage in the Telegraph.

These reports follow several other features on the draws of Turkish property to appear in the national press, including one article calling the Turkish resort town Belek the next Algarve. If this had been a few years ago it would have been insignificant, but now, when the press is being extra cautious in its praise, this is all a big testament to the potential of Turkey.

Speaking of potential, nearly all the articles you read about Turkey, especially in the industry press, talk about the investment potential of Turkish property. However, this potential is being missed out on at the moment, because the majority of buyers are lifestyle buyers, with investment being a secondary consideration on their minds.

Sure, the majority of these people are still benefiting from the investment potential, because they are renting out their property when they or their family and friends are not using it. But the keywords there are "when ... are not using it", meaning they are not realising the maximum potential return from investment in Turkish property.

Survey Indicates UK First Time Buyers May Turn Back to Overseas Investment

OMG I thought I had fallen into a time conduit and been sucked into 2005 then... I read an article in Sky News pertaining to a survey in which nearly a quarter of UK first time buyers have said they would consider buying a home overseas for its greater investment potential and increased value for money.

Such articles were commonplace in the mid-noughties when it was thought that many first time buyers were investing in overseas property in order to use the rental income to boost their earnings sufficiently to get a mortgage in the UK.

So... seeing one now I immediately thought: what kind of source are we dealing with here; Friday night in the Tamworth Arms. I was wrong though, the survey comes from a more reputed base than any of those seen in the mid-noughties. In this case the survey was commissioned by Moneycorp and surveyed a pool of 2000 first time buyers.

Obviously it would have been better if the survey had been commissioned by someone less partial. That said: a pool that size has to be given a great deal of validity, especially when the survey's other findings are confirmed by many other sources.

Namely: the survey also found that 70% of first time buyers have given up on owning a home in the UK. This is confirmed by several other prominent sources recently.

Not least the recent report by Nationwide, which found that the average house price is now 5.5 times the average salary. This is far greater than the long-run (30year) average of 4 times. Add to that the fact that first time buyers need at least a 10% deposit in order to get a decent deal on a mortgage and you can see why owning a home in the UK is currently outside the reaches of most first time buyers.

With that knowledge the only surprise is the percentage of them considering a purchase overseas. Don't get me wrong it is a good surprise, because it confirms earlier reports that investors are once again entering the overseas property arena, after almost-nothing but lifestyle buyers since the crunch. Time will tell if considerations become determinations and desires result in increased sales.