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Strong growth predicted for Turkey’s foreign housing market in 2016
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Strong growth predicted for Turkey’s foreign housing market in 2016

22,830 homes were purchased by foreign buyers during the first eleven months of 2015 according to TurkStat, and real estate experts predict even more will be sold in 2016.

Istanbul has some of the strongest price growth in Turkey

Real estate is most popular with buyers from Saudi Arabia, the UK, Kuwait and Germany according to the Association of Real Estate Investment Companies in Turkey (GYODER). Saudi Arabians have become the biggest buyers in terms of square metres, doubling the surface area of total stock they own to 1,240,000 square metres between 2014 and 2015. British, on the other hand, are first by number of buyers: 4,251 people bought property there during the first nine months of 2015. In the meantime, Russian activity has decreased both in terms of surface area and buyer numbers.

GYODER forecasts 5–6% growth for the foreign housing market this year. This upward trend is echoed by the Istanbul Constructors Association who announced that total foreign investments in real estate could hit $5.5 billion for 2015.

Experts attribute enhanced foreign interest in real estate to the currency situation as the Turkish lira (TRY) has significantly weakened against the American dollar and British pound over the last two years.

Foreign capital may also be contributing to higher property prices. House prices were up 18.9% by Q3 2015 year-on-year compared to 2.7% global average growth according to Knight Frank. Figures by the Central Bank of Turkey confirm this growth, with average house prices in Turkish Lira (TRY) nearly doubling between January 2011 and November 2015, from TRY 900 per square metre to TRY 1,800 per square metre.

The strongest hikes in Turkey’s House Price Index (20% and more) were recorded in popular tourist areas like the southwestern Mediterranean region and along the Aegean region coastline (i.e. Anamur/Alanya to Izmir) as well as Istanbul. Second strongest regional increases (15-20%) were located mostly in the West along neighbouring coastal areas and near the border with Greece and Bulgaria.

Turkey’s Mediterranean coastline is a popular British destination

Real estate developers are positive that investments will continue to rise as the sector adapts to foreign expectations in terms of construction standards and design.

However, total capital inflow from abroad witnessed a stark drop off since 2014: only $10.8 billion were invested during the first eleven months of 2015 compared to $42.72 billion the previous year. The World Bank has lowered forecasts for GDP growth until 2018, slowing to 3.5% in 2016–2017 and 3.4% in 2018, in comparison to 4.2% in 2015. The government is also struggling to reduce unemployment, which is still in the double digits (10.5%). The decline comes against a backdrop of entrenched war in Syria, Islamic terrorism and turmoil in the Middle East as well as internal political disputes and recent discord with Russia.

The market fell foul of leading foreign investors from the US and EU towards the end of 2015 and Turkish real estate actors are preparing for a swing towards the East. Dubai International Real Estate Fair Turkey representative and LMG Global Investment CEO Gökhan İlgar declared that Turkey must focus on commercial projects to attract Arabian capital, in particular, and to increase bed capacity in hotels in big cities as reported by Turkey’s Daily Sabah newspaper.

Coldwell Bank President, Gokhan Taş is enthusiastic about continued growth: "in 2016, we will break a record in the history of the Republic of Turkey as interest rates have fallen due to the confident and stable economic environment."

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