Buying Property in Turkey Feasible or Risky?
The Turkish lira during this year lost its value by a boat rate of 40%. Since the beginning of this crisis, the Turkish government has been trying to stabilize and compensate for the imbalance. But this decline is a golden opportunity for real estate investment at low prices to take advantage of this difference from the decline until the value of the currency back to its previous level.
The questions that ask themselves urgently:
- Is investment in this decline useful, or risky?
- Is this decline continuous or temporary?
To answer these questions objectively, let us begin by limping to the characteristics of the Turkish economy.
The Turkish economy has been expanding and flourishing over the last two decades with very high growth rates, which have led to inflation, because the economic growth rate demanded the injection of cash flow into the Turkish economy through lending operations and inclusively, the operations of the increase in lending demanded cuts in interest rates so as to facilitate people to invest with this reduction and increase financial expectations, with this reduction and increasing financial expectations, there has been a large expansion and spread in the Turkish economy exceeded 10%, which led to inflation and consequently with an increase in cash flow and increased inflation was likely to decline the value of the Turkish currency. It is noteworthy that one of the side effects, or less symptom of the great economic growth achieved by the Turkish economy during the last period is the decline of the currency due to inflation, which can make this inflation as a healthy and positive phenomenon. But America's economic war on the whole world, from China to Russia to Iran, but to all the big economic countries, even those that are on strategic economic partnership like Canada and the European countries, swept this war even on Turkey and led to a decline in the exchange rate of the Turkish currency Against the dollar.
The other question now arises:
Will this decline continue, and to what extent is this impact, is it temporary or temporary?
First: 50% to 60% had a direct impact on the economic crisis between the United States and Turkey as a result of raising the tariff and raising taxes on Turkish products, whether on exports or imports, which created imbalance in the trade balance.
Second: It was part of the natural sequence of the decline of the Turkish currency as inflation increased. The question is, will it continue for a long time? The answer concerns the nature of Turkish reactions and how Turkey will deal with the new reality.
The dialectical question embodied in:
Is it a chance to invest now in Turkey or not?
In order to answer this question transparently, let us begin to imagine the nature of possible solutions, which is twofold:
The first solution is to reduce the interest rate, directly with the interest rate hike, accompanied by a reduction in the volume of cash flow in the market and thus the currency will recover.
The second solution, which is proposed by the Turkish government, is to increase production. In other words, Turkey was producing 1,000 units with $ 1,000 in cost fir export. Now it produces a thousand and four hundred units until it achieves the same amount, i.e. $ 1,000. Therefore, it needs to increase the volume of production, which is a bit of fatigue for the Turkish economy, especially as some exports depend on raw materials coming from abroad and may affect them.
Here again we are asked:
Would investing directly in Turkish real estate be worthwhile? Yes, it will be useful if the objective is to achieve capital returns through revaluations over a period of time. It is believed that in the three years - according to the readings of the indicators - will increase by 30% on the value of assets in Turkey.
The second issue, are laws in Turkey stable laws? Meaning is the investor, is in safe for himself?
History data confirm that over the past 30 years Turkey has been a state if legislator and laws that encourages foreign investment. It was a stable country despite the volatile movement of the economy, but the laws related to investment attractiveness were very consistent.
Therefore, the two points, namely, the emphasis on capital investment in the process of re-evaluation are good, and the laws are also good.
Regarding the real estate investment opportunity in Turkey, we find a negative opinion -as said by some observers- that they are negative index by suggesting that -i.e. investment - is invisible as the lira depreciates, and Turkey's economy is unstable.
We put this negative view of the analysis objectively to verify its validity. And start with the issue of the Turkish lira and the economy.
The Turkish lira has continued to decline for a certain period of time, but the Turkish economy is an existing and stable economy. It is not an imaginary economy. It is an economy that is accompanied by inflation, but it is an existing economy and the Turkish lira will achieve 20% of its losses in the coming year.
Real estate in Turkey is protected by a system of laws and regulations that proved their worth and durability during the period of shaking that hit Turkey. For example, Turkey experienced a coup attempt, yet the investment promotion system remained in place. On the other hand, there are those who support real estate investment in Turkey and see it as a real opportunity for many factors related to the infrastructure in Turkey and accompanying the property and embodied in:
- a legal system that supports this,
- A good economic system,
- Good sculptural structure,
- A very stable political system; a good example; when the Turkish state was subjected to economic war, all the strong political opposition inside Turkey joined together with the elected government to face the fierce onslaught coming from abroad to defend the homeland.
With a tiny proportion of reservation, that any economics in the world is not 100% immune, as well as the Turkish economy, but in light of the previous indicators of the stability and balances, namely, political, economical, legal and historical depth of the Turkish economy, and its being not imaginary economy, geographical areas, and technical skills of its experts and manpower, and also being supported by various international economic companies, can be very much assert to conclude saying:
The real estate investment may not have a large direct return on the property on a shirt term, but will have a large capital return over the next three years, during the asset assessment. In either case, the result will not be fraught with any risks.
to learn about some of the most important investment opportunities in turkey please see those links :
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