Turkey property has been named as one of the hottest investments in 2011, and for the foreseeable future as well. With 6.8% GDP growth in 2010, inflation down to the 41 year low of 6.4% also, public debt low and falling, demand for housing growing at a far faster rate than supply, and a rapidly growing mortgage market this is hardly surprising.

Normally in emerging market property investment hotspots the capital city attracts the most attention, but in Turkey it is not the capital, but Turkey's cultural and financial centre Istanbul. Istanbul is frequently talked of as the hottest property investment spots not only in Turkey, but one of the hottest in Europe and the world as well. Here's why:

Strong Economic Growth

The Brookings Institute ranked Istanbul the fastest growing city in the world for 2010 in a report issued 5 January 2011. According to the report the Istanbul economy grew 5.5% on a per-capita basis in 2010, while employment grew 7.3%.

Undervalued Property

According to the Global Property Guide top end properties in Istanbul's high-end districts are currently priced at an average of 2,386 EUR per sqm. This is compared to 3,523 EUR in Montenegro, and 6,622 EUR per sqm in Athens. The fact that Istanbul property is near the bottom of the price table for European cities signals that it is undervalued and represents strong growth potential.

Strong Rental Yields

Global Property Guide research also shows us that low prices are fuelling strong rental yields in Istanbul as well, with small apartments yielding higher than their large counterparts. According to the report yields for 75-80 sqm apartments range from 5.65% in Sisli district to 7% in Beyoglu, with yields for Turkey as a whole average 6.10%.

Massive Mortgage Growth

According to official figures the number of mortgages taken out in Turkey has grown 32% this year, and similar growth is predicted for next year. Data from the Turkish Central Bank shows that 48.9 billion liras worth of mortgages were taken out in the second quarter of this year, up from 38.6 billion in the second quarter of last year.

Rapid Population Growth Causing Housing Shortage

Of the 500,000 housing units needed in Turkey by 2015, 250,000 will be needed in Istanbul. Due to the massive numbers of people moving to the city from towns and rural areas across Turkey, in Greece and throughout Europe for better job opportunities, on top of natural growth, the Istanbul population is expected to grow from the current 12.7 million to 15 million by 2015 -- a growth of almost 20%.

Conclusion

In Istanbul we have a city with a population growing massively in numbers and affluence, at a time when interest rates are low and look like staying low for the foreseeable, and mortgages readily available. As a result demand for housing is at an all time high. Because the property market is still very young and largely unregulated there are still opportunities to buy properties at very low prices. Now is the time to buy in Istanbul.

Article written by Aydin Cakir - Director of New Home in Turkey.