Turkey Property Investment Facts
When it comes to finding the best property investment potential in the world all eyes have turned to Turkey since the country began talks towards achieving EU accession and the Turkish economy officially became a market economy.
The future prospects for Turkey are very positive indeed and this translates well and directly to the Turkish property market where investor interest has surged throughout 2005 and where property prices are beginning to creep up fast.
While property prices in parts of Turkey may be about 10 years behind those in Spain for example, this trend is starting to change because the levels of interest in Turkish property have surged particularly along the Riviera region in southern Turkey. And since it was announced that Turkey is now on target for EU accession investor confidence in Turkey has reached an all time high.
Turkey has long dreamed of a place in Europe and has made a concerted effort in recent years to change legislation, practices and regimes to align the country more with its European neighbours. Cleary this has worked to Turkey’s political advantage but it has also worked well economically for the country. As Turkish resorts begin to feel more Southern European in their flavour so their attraction intensifies with European visitors - and tourism numbers in Turkey have increased substantially in the past five years as a direct result.
The Turkish tourism board are now spending a lot of money promoting the resorts along Turkey’s Mediterranean coast and as a result tourism, second home, holiday home and retirement home interest in these parts of Turkey have surged. For an investor this is highly encouraging. Those buying to let have more tourists interested in renting out their properties during Turkey’s long summer season - and as all investors will tell you, short term tourist lets can be highly lucrative. Those buying off plan at pre-construction prices are likely to find strong interest in the resale market for their properties when they come to completion from those who want to buy a holiday or retirement home in Turkey.
As the resorts in Turkey come up fast and more money is spent on improving roads, airports and general infrastructure so private investment is being poured into the creation of resorts, spas, golf courses and superior tourist facilities. In Belek for example five golf courses have already been completed and five more are in the planning and creation stages. Money can be made through investing in such ventures and money can be made from the commercial side of property investment in Turkey by targeting tourist accommodation in the most popular resorts for example.
Investors looking to diversify away from Turkey’s hugely popular coastal regions are currently focused on Istanbul and Ankara where the local economies are vastly improved and where domestic purchasing power is strongest in Turkey. Here there is demand for apartments to let and commercial and office space to lease. Elsewhere the property investment opportunities are less well defined but as Turkey has already proven, given a little time and a great deal of personal and governmental effort the Turkish people can transform their economy and country and this can only bode well for the future prospects for all investors in Turkey and for the Turkish people as well.
Turkey Property Buying Process
The principles relating to the ownership of property in Turkey are laid out in Article 35 of the Turkish constitution and the laws relating to the foreign freehold ownership of land or real estate in Turkey have recently been revised and relaxed meaning that the property buying process in Turkey today has been simplified.
An investor wishing to enter the Turkish property market needs to be aware of certain restrictions that apply to the foreign ownership of properties or land of a given type in a particular location; furthermore it’s imperative that detailed and thorough title searches are carried out by an investor’s lawyer because problems have been known to arise with vendor’s not having the right to sell property for example.
Basically the process to purchase investment property in Turkey is straightforward if an investor is aware of the potential pitfalls and the restrictions that apply. This guide to the property buying process in Turkey highlights the main issues property buyers should bear in mind; but nothing can replace good legal advice and the first thing an investor should do before even making an offer on a property is find a local real estate lawyer to represent their interests.
In Turkey the sale of property to overseas buyers depends on the principles of reciprocity - if the country from which the investor heralds grants the theoretical right of freehold ownership of property to a Turkish citizen then the overseas buyer will be given permission to buy property in Turkey.
Land in Turkey is allocated a specific function according to the zoning schemes of the nearest town or village and if a piece of land is deemed to be agricultural for example and is offered for sale to an investor for development, certain issues will present themselves because the buyer’s intended use for the land does not match its defined function. Therefore it is imperative that a solicitor checks whether any restrictions exist in relation to any parcels of land a property investor is interested in buying for example.
Other restrictions that exist relate to land or property that is physically located outside the designated centre of the nearest town or village; the Village Act stipulates that foreigners are not permitted to own such real estate. And the final main restriction that can limit a property investor’s choices in Turkey is the restriction surrounding military land. Overseas buyers cannot buy land or property in the vicinity of military land.
If an investor is in doubt over any of these issues or is concerned about any real estate they are interested in buying in relation to these restrictions they should not even submit an offer to purchase before consulting their lawyer.
Once a property has been identified by the property investor as fulfilling all their investment criteria, an offer to purchase can be submitted to the vendor and upon acceptance it’s usual for the buyer to sign a conditional preliminary contract and pay a deposit of up to 10% of the property’s underlying price. The contract is mainly conditional to the completion of satisfactory title deed searches, and if the purchaser pulls out of the contract for any reason than those laid out under the terms of the contract then they forfeit their deposit. Likewise if the vendor withdraws from the sale they are expected to compensate the disappointed investor. It’s wise to have all these stipulations detailed in the preliminary contract, and any promises that have been made by the developer or vendor that are binding for the sale should also be included in any and all contracts entered into.
It’s imperative that the property investor’s solicitor do thorough searches of the title to the land or property to ensure that the vendor has the legal right to sell and that there are no outstanding debts or legal problems with the property. If the investor is buying an older property they should have a full structural survey done as well – especially if buying in an earthquake prone area as some structural issues can exist that are invisible to the naked eye.
When all has been proved to be in order with the investment property in Turkey the final contract is signed in front of a public notary by the vendor and the purchaser (or lawyers with powers of attorney), and the sale is completed when the balance is transferred to the vendor. The buyer’s solicitor will apply to have the title transferred and for the new title deeds to be delivered in the name of the property investor. This process can take a few months and in the meantime the majority of related taxes and fees will be due.
Finally, an approximation of the additional fees and taxes would include lawyer and notary fees, buyer’s tax of 1.5% of the property’s value, government and community taxes, insurance, property management charges and utility connection fees.