Turkey is currently at the very start of the long road to possible EU inclusion, meaning there are still another 5-10 years before prices rise substantially. Prior to EU membership, there are many factors yet to be discussed and many of Turkey’s issues that need to be corrected before incorporation will be seriously considered.
However Turkey has some strong backers for its entry and when it does get accepted into the EU, it is reasonable to expect the price of property to rise greatly in line with a huge surge in tourism.
Many investors are purchasing in Turkey with EU inclusion as a major driving force, while looking to take advantage of the current low property prices and growing rental market.
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The country once known for it's mass tourism and cheap developments is moving upmarket.
As a whole, Turkey's property market has been previously dominated by the necessities of providing cheap housing for a young and rapidly growing urban population.
However, shortly after the introduction of new government laws enabling foreigners to buy land in Turkey, the real estate market has rapidly attracted the interest of European buyers.
These new laws and Turkey's progress on adaptation to the E.U has made the proposition a lot more attractive. Although interest from overseas buyers and investors is currently focused almost exclusively in areas that lie along the Aegean and Mediterranean coast, the demand for holiday homes is fuelling an unprecedented building boom. As a result, property prices are rising rapidly.
Even though Turkey is in the early stages of a significant property boom, prices rose by an average 52% over the last 12 months in the coastal areas. All indicators show that this is just the beginning and prices are expected to rise sharply over the next 5-10 years.
No Capital Gains Tax
Turkey also offers some tax incentives that are of high interest to property investors, such as its regulations regarding capital gains tax. If you sell your property after four years, there is no capital gains tax. Property that is sold before the period is over will be charged at the standard rate of income tax (between 15% and 35%), calculated on the difference between the buying and selling price.
Read More: Why go to Turkey? >
Turkey has many market drivers that make it an ideal location currently for property investment. Here we look at some of the reasons why Turkey is one of the world’s hottest investment property locations.
- Excellent capital growth projections of around 25% per annum
Land prices in Turkey have risen in recent years and, in many cases, doubled. In 2005 to 2006, property prices have risen by 25–40%. Recent research shows that by comparison investments made since 1994 have yielded the following average returns:
- Stock market - 18% (gross)
- Turkish property - 568% (net)
- Pension plans significant loss (net) Source: invest-in-turkey.co.uk)
- In the opinion of ‘A place in the Sun’ in the October 2004 edition of their magazine, price increases in beach areas are expected to rise initially by 50% and then over the next two to three years by 100%.
Taking an average of 25% capital growth, a property purchased at GBP 60,000 with sustained growth over five years will have a market value of GBP 183,105, entailing a huge 305% return on investment.