Where are the overseas investors?
By Roxanne James

Booming Turkish Tourism Overlooked by Foreign Investors

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With many international investors having a perception of Turkey as a high-risk destination, some great value opportunities are being missed out on!

The last two years has seen Turkey's popularity among international tourists rising phoenix-like from the ashes, making it one of the world's most visited destinations. This June will mark 60 years since the first international branded hotel - Hilton's Istanbul Bosphorus - opened its doors in Turkey's then freshly emerging market.

The scale of Turkey's meteoric rise as a holiday destination could never have been predicted at that time, although it is evidenced now by the sheer volume of international hotels that have sprung up since, particularly in the country's largest city of Istanbul.

Where are the overseas investors?

As of February 2015, Istanbul is home to more than 800 properties and 50,000 rooms, with 4,981 more under development. More than 41 million tourists entered Turkey in 2014, dwarfing the 16.8 million welcomed a decade earlier. So where are the overseas investors?

With the majority of investment in Turkey's tourist infrastructure and hotel development coming from the country's own construction companies, it would appear that foreigners are still reticent to commit their capital.

This has resulted in a wealth of opportunity being seized by domestic investors, while foreigners are seemingly unaware of Turkey's vast economic improvement, possibly due to the country's questionable geopolitical stability in recent years.

Political and economic commentator, Erdal Tanas Karagöl recently highlighted the dynamics that should have foreign investors sitting up and taking notice:

"We are now talking about a country which no longer is indebted to the IMF and surpasses many developed countries in terms of macroeconomic aspects like inflation, deficit spending, GDP. Turkey put forth a series of plans and programs for a new production structure and economic transformation with 2.9% growth rate in 2014, compared to countries of the EU where growth rates are below 1%."

Turkey's affluent classes have expanded in recent years resulting in steady growth in its main residential property markets. Istanbul's suburbs have seen significant growth in the local rental markets, attracting domestic investment with promising returns potential.

Hotel Management International magazine comments in its Spring 2015 edition: 'With Turkey's economy continuing to outperform many of its rivals, secondary cities like Adana, where the robust textile and leather industry attracts a significant amount of international business travel, have presented excellent opportunities for operators to capture the corporate customer. In regional cities like Malatya, the rise of the Turkish middle class has meant a growing requirement for mid-market accommodation'.

As Turkey's international branded hotels steam into the country preparing to ride the upward yield curve, fresh opportunities for investment are rapidly sprouting across Turkey. Residential property prices remain heavily discounted to the pre-financial crisis peak, creating plenty of opportunity for profitable margin play.

Whatever the perception of Turkey, it is without doubt one of the most attractive markets around for international property investors and well worth closer inspection!

 

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