Turkey’s Property Sector Favorite of Foreign Investors

Turkey’s property sector has exceeded growth expectations on a surge in foreign purchases, according to a recent report by the Association of Real Estate Investment Companies, or GYODER.

The association’s “Turkey and World Real Estate Sector Report” for the fourth quarter of 2010 was released at a press conference in Istanbul on Tuesday.

“As a whole, post-crisis normalization and growth went hand in hand in 2010,” GYODER said in a statement accompanying the report. “Growth has created very convenient conditions for the commercial real estate market, too.

“Between 2006 and 2008, property sales to foreign nationals stood at $3 billion,” Işık Gökkaya, the chairman of GYODER, said at the conference. “In 2009, the figure retreated by $1.8 billion. But in 2010, such sales rose to $2.5 billion.”

The chairman recalled that Istanbul ranked at the top in February’s “Developing Trends in European Real Estate Markets” report by PricewaterhouseCoopers and the Urban Land Institute. “This report showed that the problem of reciprocity should be solved immediately. In 2010, real estate sales to foreign nationals rose by 40 percent, reaching $2.5 billion. Foreigners’ interest in and appetite for Turkish property continues to increase. If the reciprocity problem is solved, we think the figure may double.” Reciprocity is a requirement that a foreign national is allowed to buy property in Turkey only if Turkish citizens are allowed to buy property in the person’s home country.

Surge in construction

Gökkaya said the construction sector expanded 18 percent in 2010, also noting the rise in property loans.

“New construction permits rose 35 percent in 2010 annually,” he said. “The property supply nearly doubled in the fourth quarter compared to the fourth quarter of 2009 and new permits broke a record, reaching 817,092.”

Property loans were concentrated in Istanbul, Ankara, İzmir, Antalya and Bursa, according to the report. The loan stock in Istanbul reached 22 billion liras and was at 8.1 billion liras in Ankara. For İzmir, Antalya and Bursa, the figures were 4.5 billion liras, 2.05 billion liras and 1.8 billion liras, respectively.

However, as of the fourth quarter, interest rates have started to rise, reflecting the Turkish Central Bank’s policy to limit loan expansion and prevent “overheating” in the economy.

With six initial public offerings, or IPOs, in 2010, the number of publicly traded real estate investment trusts rose to 21. In 2009, their overall market value was at around $3 billion. This year, the figure surged to $7 billion, while net asset values of the 21 companies increased to $9 billion, according to GYODER.

Tuesday, April 5, 2011
ISTANBUL – Hürriyet Daily News