Real Estate

Turks drawn to overseas property investments

November 22, 2024, 3:22 PM

The Dubai Marina promenade. The emirate's constant population growth and stable economy attracts Turkish property investors

Turkish property market cooling
Investors looking for stability
$1.8bn invested overseas in 2024

Turkish property investors are increasingly looking further afield as they seek real-estate opportunities.

High interest rates and cooling returns on assets at home make the domestic market less appealing both to Turks and foreigners.

While Turkey remains a property investment destination, with a net positive balance of capital movement, inflows are tapering off just as outflows are gaining pace.

Turks spent $1.8 billion on overseas properties in the first nine months of this year, just over half of all outbound investment in the January to September term.

By comparison, $2.2 billion of foreign investment entered the domestic real estate market through to the end of the third quarter, according to data issued by the Turkish central bank on November 12.

For Turks, investment in countries that have a stable currency or one fixed against the US dollar, such as the UAE, means asset value is better protected, Armağan Demir, founder and CEO of Birchfort Real Estate, told AGBI.

“Rents returns are better, as are returns on the core investment, hedging against foreign currency risks,” said Demir, a Turk who has been based in Dubai for 25 years.

Dubai has a particular appeal to Turks. A UAE media report claimed Turkish nationals are ranked fourth on the ladder of foreign property buyers in the emirate.

The appeal, both for those looking for a new home and those seeking investment properties, is because of the ease of accessing credit in Dubai, the ability to obtain a residency permit through the golden visa scheme, and earning potential on assets, Demir said.

“There is also of course the attraction of Dubai for its developing economy, and with the average population increase of about 200,000 a year there is continuous demand for newly built residential property,” he said.

Owning an overseas rental property not only provides Turkish investors with a foreign currency income stream, but also with an appreciating asset, said Demir, a significant benefit after the economic turbulence Turkey has experienced in recent years.

Inflation topped 75 percent earlier this year, and the lira has depreciated by 90 percent over the past decade.

At the same time as Turks’ interest in the overseas property market is scaling up, foreign investment in Turkish residential real estate has cooled.

Sales to overseas buyers are down 37 percent in the January to October period, according to data issued November 13 by statistics agency Turkstat.

Just 19,200 homes were sold, sales being dominated by investors from Russia, Iran and Ukraine, where once the top places on the investment ladder were dominated by buyers from Arab Gulf states.

Despite the slowdown in sales, Turkey is likely to remain a significant real estate investment market, but that market now has an address on a two-way street.