Priding itself as the gateway between Asia and Europe, Turkey is successfully attracting Gulf nationals to its real estate sector.
Last year, the country changed the law to facilitate property investments by Gulf nationals, allowing them to buy properties by passports only and offering a one-year residency permit to foreign investors and their families.
The last eight months saw some 2,000 units being sold to investors from the Gulf region.
“Foreign investments are important to any country, one, for the diversification of the investors base, and two, you are opening up [your economy],” said Ahmet Kayhan, chief executive officer of Reidin.com, an international real estate information company focusing on emerging markets.
Opening up, in the case of Turkey, which has at present a balance deficit, will bring in foreign money that is required to further grow the Turkish economy, he noted in an interview with Gulf News.
The Turkish real estate sector, meanwhile, is already a vibrant one due to the “big local demand and strong local interest in it and the [high] percentage of young population of under 35 years old in the nearly 75 million population country”, Kayhan said.
On the other hand, Gulf states, which are rich in oil and gas, also have a high percentage of people under the age of 25.
Turkey has a strong interest in the Gulf region because “we see a great potential” to invest in the Turkish property sector, said Idris Demirhan, regional manager of Agaoglu in Dubai, a leading Turkish real-estate developer. Agaoglu opened an office in Dubai in March last year.
Turkey is interested in the Gulf region for many reasons, including religious and cultural bonds, coupled with a deep and long economic relationship, Demirhan explained in an interview with Gulf News.
“Politically, we are in the same region, and we are affected by each other... We are sharing same things and feelings, [there] are many things are in common,” he said.
Turkey’s geographical location, between Europe and Asia, green environment, moderate weather conditions and shopping malls are among the main factors behind choosing to invest in property. However, the number of Gulf nationals buying properties in Turkey is described as âminimal’ compared to the overall investors in the Turkish properties sector, experts said.
According to Kayhan, of the $558 million foreign investment in the Turkish property sector last year, less than $100 million was invested by Gulf nationals.
Westerners, mainly Europeans, constitute the highest foreigners buying properties in Turkey, with Germans and Britons topping the list. Westerners prefer coastal cities and towns to buy properties in and to use them as their summer [vacation] homes.
For the Gulf nationals, Turkish cities are expected to replace Paris and London in terms of property investments, said Demirhan.
“Because you can find in Istanbul whatever you can find in Europe and Asia, and it is very close [to the Gulf region],” he said. Also, Turkey is like a melting pot for different people coming from different cultures and backgrounds, he added.
According to Ozlem Gokse, vice chairman of the Turkish Association of Real Estate Investment Companies (Gyoder), Turkey attracted $2.5 billion (Dh9.2 billion) in foreign direct investment into real estate.
“We expect this to grow to $5 billion in the short term, eventually rising to $10 billion per annum in the long term,” he said.
Turkey’s economy grew at the second-fastest rate in the world in 2011 at 8.5 per cent, while Organisation for Economic Co-operation and Development (OECD) data shows that the Turkish economy will be the bloc’s fastest-growing member in 2011-17, with average annual growth of 5.7 per cent.
According to some press reports, GDP (gross domestic product) per capita is set to rise from less than $11,000 at present to more tha $14,500 by 2016.
Turkey is one of the eight growth markets in the world along with Brazil, China, India, Russia, Mexico, Indonesia and Korea, said Kayhan.
“These eight countries are estimated to produce nearly 46 per cent of the world economy by 2050,” he said.
The real estate sector is also expected to grow fast in the next few years, while “the value of the property will be growing much higher than the rest of the world”, according to Kayan.
Worldwide, Turkey, said Demirhan, is the second largest country witnessing construction work after China.