Mention the European Union economies in conversation these days, and you're bound to hear "bad news" opinions about unsustainable debt levels and scuttled property markets.
One country - Turkey - has gone against the grain. Bucking the various crises going on around it, this Eastern Mediterranean nation, sitting at the crossroads of Europe and Asia, has been quietly - and successfully - going about its business.
After nearly a decade of political and economic stability, memories of Turkey's troubled past are diminishing - elbowed out by a new era of prudent financial policies and major structural reforms. Evidence lies in the numbers: Turkey's GDP more than tripled to US$736 billion last year, up from US$231 billion in 2002. Exports reached US$114 billion, up from US$36 billion in 2002. Similarly, tourism revenues, which were about US$8.5 billion in 2002, exceeded US$20 billion last year.
United States research group Brookings Institute found Istanbul, Turkey's largest city, to be one of the fastest-growing cities in the world last year. "Their study found that Istanbul's GDP grew over 7 per cent during the year, and that employment grew by over 10 per cent," says David Cox, founding director of Property Frontiers. "This is no mean feat when you consider the fierce competition from cities in China."
In the Emerging Trends in Real Estate 2011 report produced by PricewaterhouseCoopers and the Urban Land Institute, Istanbul ousted London as the top spot for new acquisitions in Europe, moving up from fifth place a year ago. Last year, a Global Property Guide report identified Turkey as "Europe's most attractive property market", offering "unusual value" due to low property costs - much lower than comparable European countries - high gross rental yields, typically averaging about 6.10 per cent, and up to 7.5 per cent, according to the report, and low taxes, especially on capital gains. As noted in the report, "there are zero capital gains taxes on properties held more than five years in Turkey".
According to the Association of Real Estate Investment Companies, foreign property investors have taken notice, accounting for up to US$645 million worth of Turkish real estate sales last year.
Cox agrees. He says economic and employment growth are two of three main factors that make Istanbul properties "a fantastic investment" - the third being population growth. By 2023, it is estimated that Turkey will require 500,000 additional homes, and 250,000 of these will be needed in Istanbul. "The picture painted here is of a population growing rapidly in number and in affluence, a combination which can only lead to increasing demand for properties to buy and rent, and then increasing demand for bigger and better properties. This makes Istanbul an excellent candidate for residential property investment," he says.
