(MENAFN- Khaleej Times) Favourable reforms and the dollar peg make real estate an attractive proposition Istanbul and Turkey are gaining in popularity on the radar of Gulf property investors. Despite the recent geopolitical uncertainties, investors are still deploying money in these markets, courtesy favourable policies and reforms launched by the government.
One of the incentives introduced by the Turkish government earlier this year is its golden visa scheme. The government announced that it would grant citizenship to foreigners who buy property worth at least $1 million and invest a minimum of $2 million, or deposit at least $3 million in a bank account for more than three years. The Turkish government predicted that the new law would trigger an extra $1 billion in revenue from property sales in 2017.
Additionally, recent changes in stamp duty, land registration and VAT laws are all expected to impact real estate investment positively.
According to property consultant CBRE, GCC countries currently account for about 50 per cent of all foreign sales into Turkey. Istanbul attracted the highest number of foreign buyers.
Investors from Saudi Arabia have emerged as the largest GCC real estate investor in Turkey and the third largest among foreign investors. Buyers from Iraq (first place), Saudi Arabia, Kuwait (fourth), Qatar (seventh) and Bahrain (10th) emerged among the top 10 foreign buyers in the first nine months in 2016, according to Gyoder, the country's Association of Real Estate Investment Companies.
A draw for GCC buyers
Historically, GCC nationals have made aggressive real estate investments in Turkey, purchasing one in every four properties bought by foreigners in 2015 alone, says Gyoder's Q3 2016 report.
Foreign investors purchased 18,189 properties across Turkey in 2016, and Istanbul was on top of the list with 5,811 houses.
"When we look at similar examples in different parts of the world, this sales figure for a cosmopolitan city like Istanbul tells us that there are significant opportunities ahead. We believe demand will have a significant boom thanks to the stable environment in our country with the disappearance of uncertainties and adoption of other structural steps such as conferring citizenship to foreign investors and offering them exemption from VAT," says Ahmet Akbalik, board member of Gyoder.
Foreign investors from Saudi Arabia, the UAE, Kuwait, Iraq and Iran accounted for most house purchases in Turkey in 2016.
"The main priorities for Gulf investors is the valuation potential of the real estate they purchase and the strong financial structure of the company realising the project. This is followed by proximity to the sea, historical and touristic sites of Istanbul such as Grand Bazaar, Sultanahmet [Blue Mosque], Eminoni, Galata and Karakoy, and at the same time proximity to the city centre as well as to facilities like shopping, healthcare, sports and education premises," adds Akbalik.
Istanbul has always been the favourite of all foreign investors, thanks to its location, easy transportation possibilities to all parts of the world, rich cultural and historical fabric and living standards.
Other favourites
This was followed by Antalya in the south of Turkey, where foreign investors purchased 4,352 properties. "Antalya is mainly preferred by Russian investors rather than investors from the Gulf," says the executive.
After Antalya comes Bursa where 1,318 properties were sold to foreign investors in 2016 and Aydin with 871 properties.
In Istanbul, the area of Buyukyali is becoming a favourite settlement area owing to the transportation and infrastructure investments, according to reports by EPOS and Reidin.
"Square metre prices in Zeytinburnu coastal strip is estimated to increase by 108 per cent in the next five years as experts believe the area will undergo a similar change as was experienced in the coastal strips of London and Barcelona," observes Akbalik.
The recent appreciation of the US dollar against the Turkish lira will benefit foreign investors. "The US dollar has appreciated by about 20 per cent against the Turkish lira since September 2016. This means that a property previously worth $1 million fell to about $800,000. Considering VAT exemption, the price of the property will further fall to $664,000," Akbalik points out.
This also makes Turkey property attractive for Gulf investors whose currencies are pegged to the dollar.
"Demand for Turkey tended to decline recently due to the ongoing uncertainties. However, since the referendum, the wheels of the economy and the industry have begun working in harmony again. We believe there will be very significant investment opportunities and a serious increase in demand for Turkey property," concludes Akbalik.
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Deepthi Nair I cover all things related to real estate in the UAE. Working as a print journalist in Dubai since 2008, I have reported on all the flashy new projects in town. Dubai's passion for setting new records continues to amaze me. I love to do stories that strike a chord with the average expatriate in the UAE. If you have any news related to your community or rents, you know who to get in touch with at Khaleej Times. When I am not working, I travel, catch up with friends, mall trawl, catch up on movies, explore new places in town or just unwind in a spa. Originally from India, I have been a journalist for more than 11 years. Language has been my forte right from school. That's me in a nutshell
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