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Old 14th December 2017, 12:15   #1 (permalink)
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Istanbul’s prime market hit as investors rethink Turkish property

articles a few months old but looks interesting

With the referendum on April 16 endorsing a new constitution, Recep Tayyip Erdogan could become the most powerful president in Turkey’s history. His adversaries, including opposition politicians and an increasingly persecuted media, will not be relishing the prospect. To his supporters, however, the move befits a president who, they claim, has been the architect of the country’s economic renaissance.Turkey’s growing residential property market has been a boon for the country’s autocratic leader.

Istanbul, home to almost one in five of the country’s 75m population, has led in terms of price gains. Average property values in the city roughly tripled in the seven years to the start of 2017, according to Knight Frank. Nationwide, prices rose almost 2.5 times over the same period.The gains have been driven by an expanding middle class with access to mortgage finance for the first time, says Kate Everett-Allen, head of international research at Knight Frank. Falling interest rates have helped make new home loans affordable. From more than 50 per cent in the early noughties, by the middle of 2009 interest rates had fallen below 10 per cent, and have not been above this level since.

Istanbul’s growing population, as people have arrived from other Turkish cities and the countryside, has also pushed up prices, says Firuz Soyuer of Pamir & Soyuer, an Istanbul agent.The city has long been a popular second-home location for buyers from the Gulf, says Soyuer; for many, it is the nearest spot to home that offers coveted European lifestyle trappings, from greater freedom for women and a more forgiving climate to a decent drink. Steady international interest has helped to drive prices in the city’s best areas, such as Bagdat Avenue on the Anatolian side of Istanbul, and Istiklal Avenue on the European side; both are close to $11,000 per sq metre, says Knight Frank.

In the upmarket district of Sisli, Property Turkey is marketing a two-bedroom apartment in Trump Towers for $921,000. The same agent has a three-bedroom apartment in Istinye, with views of the Bosphorus, for $1.69m. Bargain hunters, meanwhile, might consider a one-bedroom apartment in a high-rise building in the Bahcesehir neighbourhood, on sale for $125,000 through Haxton International.Domestic buyers have been crucial to Istanbul’s rise. More than their western European counterparts, Turkish investors have always had a preference for property over more liquid assets such as equities, says Soyuer.

He reckons that half of all new homes built in Istanbul in the past decade were bought as investments rather than to live in.This surfeit of demand helped Turkey become the world’s fastest growing property market in 2015, according to Knight Frank. In 2016, the agent says, the market gained 13 per cent; average prices in Istanbul were up 12 per cent.The story for the city’s prime market is different, however. Knight Frank’s prime home index — most constituents of which are priced in dollars — has been falling since the start of 2016, losing 8.4 per cent that year. Much of this is down to the depreciating Turkish lira, which has lost more than a quarter of its value against the dollar since July. Foreign exchange traders are dumping the currency in part over fears about Turkey’s deteriorating political and economic fundamentals.

With the economy already creaking under the pressure of 3m-odd Syrian refugees, a failed coup last July saw it slump 1.8 per cent in the third quarter of 2016, its first period of contraction since 2009. In April, inflation hit 11.9 per cent, its highest level since 2008.Worse still, the country is increasingly dogged by terrorist attacks. In December, bombs planted at a football stadium in the centre of Istanbul killed 39. Days later, Russia’s ambassador to Turkey was assassinated at an art exhibition in Ankara; a shooting at a New Year’s Eve party in Istanbul left another 38 dead. In the 18 months to the start of this year, more than 300 people were killed in separate terrorist attacks in Istanbul or the capital Ankara.“Even before the coup, the stalling economy meant investors, both foreign and domestic, were rethinking Turkish property,” says Soyuer.Erdogan’s tightening grip on power, meanwhile, means many affluent Turks are looking to shift their money abroad.

By the start of October, the president’s draconian response to the coup had seen 100,000 people being dismissed or suspended from their jobs, 70,000 detained and 32,000 arrested.Aran Hawker, an agent and property developer in Istanbul, says many of his more wealthy clients fear their assets will be seized in the post-coup purges. “My clients are looking actively in the EU, particularly in Portugal, where the golden visa programme [providing residency to anyone spending more than €500,000 on property] provides them with an insurance policy if life gets too dangerous, or unbearable, at home,” he says. The referendum result will not have filled them with much confidence.

Buying guide

● Flights connect London with Istanbul in about four hours
● If property is held for more than five years, capital gains on sales are exempt from tax; if held for less than five years, gains are taxed as income
● Foreigners spending at least $1m on property are eligible for Turkish citizenship on condition their home is not sold within three years

Last edited by ahmed226; 14th December 2017 at 12:23..
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