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When you purchase a property in Turkey, there are three key
drivers to investment return:
Rise in Property Value
Future prices will depend on property demand, both domestic
and from overseas. At present the outlook is very encouraging,
the Turkish economy continues to grow at a healthy pace (the
Istanbul Stock Exchange (ISE) rose nearly 60% in 2005) and
demand from overseas is very high thanks to the great value
on offer.
However, your choice of property is crucial to maximising
investment returns. While buying a new build on a large, predominently
English, complex might look attractive and strightforward,
you'll probably end up paying over the odds and the resale
prospects could be poor. From our experience you stand a greater
chance of making money by focussing on smaller, more unique,
complexes or stand alone properties.
Renovating a run-down property can be excellent way to add
value, although tread carefully as it's also an easy way to
lose money if badly managed! It also goes without saying that
keeping your property in tip-top condition is key to retaining
its value, so using a property manager makes sense if you're
not on hand to do so yourself.
Rental Income
If you don't plan to live in your property year round then
consider renting it to generate income. Holiday lets during
the summer season (May to September) are by far the most popular
(and lucrative), although it is occasionally possible to let
to locals during the winter months. As a ballpark guide you
can generally expect to receive 2-3% of your property value
per month during peak season.
Currency Movements
Although often overlooked, currency movements can have a significant
impact on investment returns. For example, suppose you buy
a property for YTL 125,000 at exchange rate of YTL 2.5 = £1,
i.e. the property costs you £50,000. If the Turkish
Lira then strengthens against the Pound, to YTL 2 = £1
then your property would be worth £62,500 (£125,000/2)
even if it hadn't increased in value. Of course the reverse
is also true and currency movements are irrelevant if the
money will remain in Turkey, but given the Turkish Lira is
generally gaining in strength this may give returns a welcome
boost.
Please contact us if you would
like to discuss investment opportunities in greater depth.
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