Gulf investors maintain interest in Turkish property despite turmoil
Gulf property investors are likely to remain unfazed by the security concerns in Turkey, thanks to their tolerance for risk and the country’s economic potential.
Despite fears of a second coup attempt coupled with a recent intensifying of violent attacks from Kurdish PKK militants, property brokers say that interest from Gulf investors remains strong.
“GCC countries currently account for more than 50 per cent of all foreign sales and are expected to increase demand in the short to mid-term,” said Diana Dogan, head of research at broker CBRE Istanbul.
Earlier this month Kuwaiti real estate firm Mazaya announced it had acquired a further 50 per cent stake in Ritim Istanbul, a development of six tower blocks comprising more than 1,000 homes, 150 shops and nearly 100 offices.
Mazaya, which signed the deal after the botched coup, is keen to pursue other opportunities in Turkey.
“Any political disturbance internally or externally always has an impact on the market’s economic and financial situation following the external appetite for supply and demand, but this is a short-term effect,” said a Mazaya spokeswoman. “The Turkish market has all the strong parameters to promote itself in the GCC.”
Brokers in Turkey say that GCC investors are likely to have a higher appetite for risk than their European counterparts.
CBRE figures show that the number of property sales to UK investors – some of the biggest buyers in Turkey’s popular resort centres on its Mediterranean and Aegean coasts – have fallen 16 per cent so far this year, with 408 sales made between January and June compared to 486 sales over the same period last year.
“Arguably, Gulf investors are accustomed to a certain amount of change, so we believe the events in Turkey will not deter them,” said Julian Walker, a director at Spot Blue, a property broker which specialises in selling Turkish property to overseas buyers. “The combination of Turkey’s pivotal position bridging East and West, its bullish economy and its predominantly Islamic nation are still an attraction to investors from the Middle East.”
According to Knight Frank, Istanbul had the third fastest house price increases in the world in the year to the end of March 2016, with an average property price growth of 19.6 per cent. At the same time, Turkey’s third largest city, Izmir, experienced the ninth fastest global house price growth, with prices rising 16.7 per cent.
Foreign investors also make up only a tiny fraction (1.78 per cent) of housing sales in Turkey, according to CBRE
“We don’t currently feel that the recent coup will have much of an impact on sales volumes, velocity or achieved price,” Ms Dogan said.
“The government is well aware that residential construction is a key sector in Turkey’s growth and will push banks to reduce interest rates to help maintain sales growth.”
Despite the coup attempt and a series of recent bombings in both Istanbul and Ankara, CBRE predicts that Turkish house prices will continue to rise between 10 and 15 per cent over the next year. The increase will be driven by the country’s rising population, a recent interest rate cut and a stream of refugees coming to Turkey from Syria who are pushing up housing rents.
The broker says that this sort of increase would be in line with house price growth over the past three years that was also a period of currency depreciation, sociopolitical unrest and conflict.
But Turkish companies are scaling back their marketing of property to overseas investors.
The number of Turkish companies taking stands at the Cityscape property exhibition in Dubai next month has fallen this year to 20 from more than 50 last year following the attempted coup and a recent increase in political unrest.
“One of the main reasons we are seeing a reduced Turkish presence at Cityscape is that local developers have refocused their attention on their core consumer demographic instead of trying to achieve block or single unit sales from the Middle Eastern market,” said Ms Dogan.
Mr Walker said there was a drop in inquiries from overseas investors after the attempted coup, but pointed out that this an opportunity to buy.
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