This week alone Turkey has appeared in 5 predictions to be one of the hottest overseas property destinations in 2011. I apologise if that sounded as if I was surprised, because I am not, in fact the only thing that could surprise me in this respect is such a set of predictions that didn't mention Turkey, I have not been surprised like this so far for 2011, and I do not expect to be.
Think about it logically and rationally; think of all the things in the pro column for Turkish property, and all the things in the cons column, here I'll do it with you:
The Turkish economy has emerged from recession with vigour to become, not only the fastest economy in Europe, -- which isn't saying much right now --, but one of the fastest growing economies in the world. The OECD, which has just predicted growth at 8/5% for this year as a whole -- the highest prediction among leading organisations thus far -- predicts it to remain in a prominent position in the global economy for the next few years at least.
Turkish GDP grew 11.4% in the first quarter of this year, and 10.3% in the second quarter, following its emergence from recession in Q4 2009 with a strong growth of 6.4%. It is outpacing the growth of the fastest growing economies in the EU by at least 100%
Most of us have now heard of the EU sovereign debt crisis. Basically many European countries, including but not limited to Spain, Portugal, Greece, Ireland and Italy, have been running up huge debt, but covering it because of economic growth, leaving them in a huge hole when the growth stopped. Well, I did say basically. All those countries currently have budget deficits of over 9% at last measure.
Meanwhile Turkey under Prime Minister Erdogan has been paying down public debts since electing the AK Party in 2002. In 2009 the Turkish budget deficit was measured at 5% and is thought to have fallen. In fact, according to Turkish Finance Minister Mehmet Şimşek the budget deficit for the years 2002 - 2010 is 2.6%. When revealing the 2011 budget Şimşek said that the aim was to service the needs of the country, while "protecting Turkey’s fiscal stability".
Turkey has never been the easiest country for foreign buyers to get a mortgage in. While this may normally have put mortgages in the cons column a great irony has come to bear. After the Turkish financial crisis of 2001, the banks were massively reformed, in a similar way to western banks after the recent global crisis. This made mortgages harder for foreigners to get, but now, because of these reforms the Turkish banking system is one of the strongest in the world, and liquidity is high.
Turkey is probably still not the easiest country in the world for foreigners to get mortgages, but it is no harder than it was during the boom, which means it is easier for foreigners to get a mortgage in Turkey, than in the UK or most European countries.
Low, stable interest rates
While interest rates are currently low almost everywhere, in Turkey the low rate is not a knee jerk reaction to the crisis -- although it did act as a catalyst in them coming down so fast -- but a budgetary response to years of fiscal responsibility, paying down public debt and reducing inflation. This means that there is far less chance of them being jerked back up any time soon. So, for anyone able to get a mortgage in Turkey, they will get a great deal.
Low property prices, fantastic value for money
Despite reportedly growing by up to 25% and even 50% in some coastal areas in the last 12-18 months, Turkish property is still some of the most affordable in Europe. According to the Global Property Guide report titled "Turkey: The Best Residential Investment in Europe?" property in Istanbul currently costs.
The biggest problem Turkey faces has long been unemployment, which at 14.1% (estimated) in 2009 is well above the EU average. However, according to the most recent reports, unemployment is falling, as you would expect during a period of such rapid economic growth as we are currently seeing in Turkey. Unemployment growth is being boosted by companies like Tesco rapidly expanding their operations in Turkey and bringing thousands of jobs into the economy.
According to recent data the unemployment rate had fallen to 11.30% by September this year. While this is still far too high it is an exceptional drop in the space of 9 months.
Tricky path to EU accession
Turkey's EU accession is blocked by France, Germany and others, and probably will be until the Cyprus issue is resolved, which still looks a long way off. This is far from being as big of a problem as it was during the boom. With the EU embroiled in a sovereign debt crisis no one would have dared predict, and a seemingly ever greater threat that the Bloc might disband (which would be much to the detriment of all) or at least end its monetary union, some even say EU membership would harm Turkey more than it would help it at the moment.
Never the less a problem it still is. Many people still see EU accession as the only real sign of economic and social stability, and others seek it for the freedom of visa requirements, either way it is a consideration in the cons box for foreign property buyers.
Border with Iraq
Many people mistakenly think that Turkey is bordered to Iraq. While it is technically, there is a buffer zone in the form of de facto Kurdistan. There are problems between Turkey and its Kurdish population, which wants independence, but the Kurds across the border in Northern Iraq also want independence from Iraq, and are in conflict with other factions in Iraq. Thus, the border with Iraq is not like an open door to the Iraq war; Turkey's only problem from that side is the dispute with the Kurdish people, which they are currently working on a solution for.While the dispute often (though less often than before) turns violent, the violence is not aimed at tourists or foreigners and rarely spills out of the Kurdish region and its immediate vicinity.
While Turkey still has its problems, all are far less of a downside than the upside of the pros. Turkey is most definitely a good place to invest in property, now, in 2011 and for the foreseeable future.