Turkey overview

With its stunning landscapes and ancient culture, Turkey is a fascinating country with a fast growing economy that has for some time been exciting investors.

The 6th largest economy in Europe, Turkey is fast becoming a key player in Europe. Complying with the political criteria for EU membership and achieving the EU goals of a more powerful, secure and stable future.

This is just one step towards a promising future for Turkey. With a cost of living amongst the lowest in Europe, the country, and particularly large cities such as Istanbul, is attracting many young people who are looking to live and work there.

In addition, there has been massive internal migration from rural areas to cities, triggering a huge demand for residential housing with little development space available. Such strong population growth in these areas is good news for investors who are seeking good returns in areas that are still relatively low investment cost.

Turkey's credit rating has recently been increased by three financial institutions: Fitch, Standard & Poor's and Moody's.

For the past 7 years, Turkey's GDP has recorded an average annual increase of 4.3%. At a time of a global economic crises, this is an incredible performance and this is expected to continue. According to the OECD (Organisation for Economic Co-operation and Development), Turkey will have the third highest economic growth rate after China and India by 2017.

Another great contribution to Turkey's economic success is, of course, tourism. According to the Ministry of Culture and Tourism in Turkey, tourist numbers have been increasing by roughly 3 to 4% per year for the past 5 years and now stands close to 30 million which brings the government great revenue.

Turkey's infrastructure has undergone massive technological changes in the last 10 years which also have contributed to its success. With well-developed and low-cost sea transport facilities, as well as railway access to Central and Eastern Europe, its ability to export goods has been a financial winner. Although demand for Turkish exports has slowed due to the global economic climate, it is now back on track, with the first quarter 2011 figures 22% up on last year.

Istanbul

Istanbul has all the characteristics of an exceptional property investment market, with PricewaterhouseCoopers ranking Istanbul as the best city in which to invest in terms of new acquisitions and development, a second for existing development.

Turkey's recovery from the global economic downturn has certainly been speedy, with its largest city, Istanbul, demonstrating the most dramatic change.

While the downturn initially prompted property sales in Turkey, (down by 30 or 40% in some cases), the swift turn around explains why Istanbul is one of the leading cities for capital growth, with many properties still undervalued.

For the past few years, Istanbul's population has been growing at an astonishing rate, with an estimated 250,000 new properties now required every year to meet demand. When compared with 39,500 new residents between 2008 and 2009, this rate of population growth truly is astounding. This constant demand for rented accommodation is boosted even further by a large young professional contingent who are not necessarily looking to buy.

According to the Brookings Institute, the city was the fastest-growing city in the world, with 7% GDP growth and 10% employment growth. 55% of all trade in Turkey is generated from Istanbul. In a city where there are so many opportunities, particularly in the retail sector (which, according to PwC is promising $5 billion of investment and 135,000 new jobs), it is not surprising that demand for rental accommodation is outstripping supply.

Not only does Istanbul offer a true European lifestyle, modern residential developments with luxury amenities are becoming the norm. Due to lack of land being available, there are plans to demolish some of the poorly-built homes in the city to replace them with luxury residential apartments.

The high demand for rental housing in Istanbul and low availaility means that rents are high, with possible yields between 5 and 8%, depending on location.

Istanbul's economy growth is further enhanced by the relocation of many European Headquarters, and still tourism remains a thriving industry. As Europe's Capital for Culture 2010, there has been investment in the city, which has been instrumental to its current exciting juxtaposition between the east and west.