A few years ago talk of a foreign property-buying boom in Turkey would likely have ended with the speaker walking shame-facedly into the gloom, hoots of derision ringing in his ears: far from being a flourishing market, as far as overseas buyers were concerned Turkey was a closed shop, with non-Turkish nationals facing numerous impediments to freehold ownership in the country. Yet in recent times - specifically, since July 2003 when decades-old legislation regulating foreign ownership was amended in order to spur on foreign investment in Turkey - the country has burst onto the international property stage as one of the most important, and fastest-growing emerging markets in Europe. Now, with thousands of Britons, Irish, Germans, Dutch and Danes each year buying in the country's burgeoning hotspots, and with the domestic market being dragged upwards on the coat-tails of the foreign-buying boom, it is the far-sighted investors who plunged early into Turkish property bath who are having the last and longest laugh.
Turkey shares with many other current emerging markets the golden twin benefits of good affordability and high capital appreciation, and as such has been drawing an increasing number of investor-buyers. Nevertheless, it's also an excellent destination for more lifestyle-oriented buyers - unlike certain other investor hotspots - and the ongoing boom is taking place alongside, and in a synergetic relationship with, a boom in Turkey's tourism industry. While newspaper headlines touting Turkey as "the next Spain" may be wide of the mark, there's no doubt that the potential growth of the country's property market will be assisted immeasurably by the increased investment and brand awareness being generated by tourism much as the protracted booms on Spain's Costa del Sol and Costa Blanca were initiated by the eruption of mass tourism to those coasts in the 1970s and 1980s.
One look at Turkey in an atlas and it's easy to see the similarities with Spain and the great advantages that Turkey enjoys when it comes to tourism. The majority of Turkey's border is coastline - some 7,200 kilometres of shoreline, against which lap a number of different bodies of water (the Mediterranean, Aegean and Black seas, and the Sea of Marmara between the Bosphorus and the Dardenelles), already established as significant tourist destinations. While Turkey's climate may not be as welcoming all year round as is that of southern Spain, particularly on the Black Sea coast, its Mediterranean and Aegean resorts offer solidly reliable, and at times sizzling, summer seasons, and it's no surprise that the majority of foreign buyers are purchasing in these areas: the vast majority of acquisitions by foreigners are being made in the stretch of coast from the Dardanelles round to the area around Alanya, north of the western tip of Cyprus.
Most of these purchases have thus far been made in one or other of a relatively small number of hotspot resorts, among which Alanya, Bodrum, Dalaman, Didim, Fethiye and Kusadasi feature most prominently. This isn't because other stretches of coastline are unattractive or in other ways unsuitable; it's just that Turkey is years behind more popular Western Mediterranean destinations in terms of infrastructure and, for the moment at least, the comparatively small number of buyers moving into the country are, in general, preferring destinations that already have good tourism set-ups, are well served by air routes (the budget travel boom has been a huge boon to Turkish tourism and property) and already have foreign communities of significance.
These established destinations, serving a healthily growing number of international visitors drawn to their traditional sun, sea and sand assets (as well as to the many sites of huge historical interest along Turkey's coastline and throughout its interior) provide investors with an appetising pool of potential short-term rental tenants, as well as with a smaller (but, again, growing) pool of longer-term residents.
However, buyers looking for rental yields should be aware that short-term rents are by no means the money-spinners in Turkey that they were for years in, say, Spain or Portugal. Firstly, the tourist season on Turkey's Mediterranean and Aegean coasts is shorter than in the Western Mediterranean (and much shorter on the Black Sea) thanks to the less mild climate; the main season is between June and early September (and many coastal resorts more or less shut down between October and April), and even if one takes a more generous spread it's easy to see the difficulties involved in generating a year's worth of rental income in only three or four months. Secondly, because Turkish tourism is seen by many as a more affordable alternative to established Western destinations, market forces mean that rents are comparatively low, and while property values are also low comparatively, they have increased at a much faster rate than have the costs of, say, hotel accommodation and dining out, meaning that annual yields as a percentage of a home's value remain low to middling: perhaps three to six per cent over the year in the more popular hotspots, before deductions for costs and tax.
The bottom line is that while rental returns are obviously a tasty incentive, and should become more so as time goes by, they are more often than not insufficient to cover mortgage repayments in their entirety - certainly once payments to management and marketing companies have been taken into consideration. This is only a rule of thumb, and a number of guaranteed rental schemes (or, more promisingly in the long term, tie-ins with major tour operators providing a constant stream of tenants) have been put in place by developers that do indeed cover mortgage payments, at least for the first couple of years; nevertheless, in general, investors would be looking to capital appreciation to provide the profits from their endeavours and may have to top up mortgage repayments from reserve capital until resale. (This is less the case in Istanbul and Ankara, where yields for decent apartments and single-family homes are currently around ten per cent, and it is expected that the next few years will see a large and very profitable buy-to-let boom in Turkey's major cities.)
For the pure lifestyle buyer, of course, these may well be minor considerations. Those looking just for a holiday home will find a substantial portfolio of high-quality villas and apartments in many key locations, with prices (not to mention the cost of living) low compared with most of the rest of coastal Europe. In terms of what's available it's very much a case of horses for courses: buyers with lower budgets might look at mass-tourism hotspots Antalya or Alanya where compact apartments are available for as little as £15,000, while more affluent buyers might turn to the Bodrum Peninsula, and Bodrum (increasingly touted as the "Marbella of Turkey") in particular, where a luxury three-bedroom villa might set one back £250,000 to £300,000 - much less than the cost of an equivalent home in the aforementioned glitzy Spanish resort.
Of course, comparisons with Spain can be invidious for both countries; while many Turkish destinations are beautiful, thriving and profitable, the country doesn't have the solid infrastructure that has turned southern Spain into such a cosmopolitan destination; likewise, Spain can't hope to compete with Turkey on price, for that reason among many others. But buyers looking for a high-quality lifestyle overseas could do much worse than to consider Turkey. The culture is fascinating; the cuisine is superb; the people are welcoming and intensely proud of their country's achievements; and much of the coast is simply stunning. Throw double-figure capital growth into the equation and you've got the foundations for what could be a long and spectacular property boom. The new Spain it's not: it's the new Turkey, and that's already proved more than enough for the growing number of Brits choosing to set up home overseas in one of the most vibrant buying destinations on the planet.
