Do you have a property for sale in Turkey? Should you be worried about the recent developments in that country? Is 2023 going to be a good year or a bad one for Turkey? Turkey is a large peninsula that bridges the continents of Europe and Asia. Turkey is surrounded on three sides by the Black Sea, the Mediterranean Sea, and the Aegean Sea. Istanbul, the largest city in Turkey, is built on land in the Bosporus seaway.
Turkey has been in the news for the wrong reasons lately. First, there were a series of terrorist attacks in Istanbul and other cities that killed hundreds of people. Then there was a failed military coup that tried to replace President Erdogan.
Following the failed coup attempt, President Erdogan has strengthened his hold on the country and has ruthlessly taken down anyone who has been opposed to him. There have been many complaints of human rights violations made against the present Turkish administration.
Even so, the property market in Turkey continues to remain strong. Nothing seems to have materially changed in the country, there’s a lot of interest in Turkish properties from overseas investors. The Chinese are big investors in Turkey, as are wealthy Arabs.
Russians continue to show an active interest in the country, despite the recent political confrontation between Turkey and Russia (which has been solved recently and things are pretty much back to normal).
There are many Germans and British nationals who are interested in Turkey as well, for different reasons. There are many Germans who have origins in Turkey and for them to buy properties in their home country is only a logical decision. British investors are attracted by the relaxed pace of lifestyle in Turkey, the beaches, the rich culture and friendly local population.
What has gone into Turkey’s favour is that it is not yet a part of the European Union. So it has remained unaffected by Brexit. While many countries within the EU have been affected by Brexit, Turkey has been able to largely escape the worst of the turmoil.
Turkey is certainly more sheltered than other countries in Europe. It is not affected by the currency fluctuations in Europe and there is no instability in the Turkish economy such as that seen in Britain following Brexit.
Still, it’s not all smooth sailing for the real estate market in Turkey. While it remains the top performing housing market in the world with home prices doubling in five years and rising by 18% in 2021, and by a similar margin in 2022, there are worries about a real estate bubble developing in Turkey.
There are reasons for this – major real estate developers in Turkey have borrowed a lot of money to finance their businesses. While ordinary Turkish citizens don’t rely much on mortgages, and generally repay their home loans on time, the same cannot be said about the large real estate developers in the country.
In fact the share of borrowing by the real estate developers in Turkey represents 20 percent of all corporate loans. An increasing portion of this debt is going wrong. The non-performing loans have doubled over the last couple of years.
Another reason is that the real estate market in Turkey is heavily dependent on the U.S. Federal Reserve. Any decision by the Fed to increase interest rates will increase borrowing costs in Turkey. That’s why, if you are looking to sell your property in Turkey fast, you should watch the situation there very closely.