North Americans See Turkey As An Investment Opportunity
According to a December 2011 article in the New York Times, a relatively stable Turkish economy, along with its central location for managing the business in both the east and the west, is causing an increased interest in real estate investment, on behalf of North Americans.
The prime focus of foreign real estate investors is, as expected, large and central areas, such as Istanbul. While these properties are more expensive and often larger than what is available in surrounding areas, it is never the less touted as the "best buy". According to the opinion in the article, this is because homes that are not centrally located within Istanbul will not likely retain and improve their value with the same consistency as Istanbul property. Despite this, many local sellers are successfully marketing their properties to foreign investors.
North Americans are obviously not the only foreigners who have deemed Turkey to be a safe and profitable country in which to invest their money. In a very short period of time, Istanbul has experienced an influx of interest from the Middle East, Turkic countries, and Europeans.
According to a law partner quoted in this New York Times article, 60% of foreign real estate investment still comes from the Middle East while just 20% comes from a mix of Europe and the US. This number, however, is expected to rise.
Obviously, purchasing property in Turkey is not as easy as simply finding a suitable investment and handing over the cash. Non-Turkish citizens usually must pass a clearance check from the military, a process within itself. Thanks to streamlining, however, this process can be completed in less than a month. It is also necessary for a buyer to ensure that their country will allow them to invest in Turkish property.
Once approval has been met, a foreign investor will likely turn to a bank or lending house. If the buyer is currently employed or has a promise of employment, any major bank can check credit and financial status. With this information in hand, the bank will likely grant financing to foreigners.
A major shock for a foreign buyer might lie within Turkey's short lending cycle. While North Americans (and Europeans) usually enter into a mortgage agreement of as many as three decades, Turkish mortgage lending agreements are usually signed for a ten-year term. Also, Turkish interest rates may not be competitive with rates within a foreign buyer's home country. It is for this reason that many foreign buyers seek financing from banks within their home country.
Aside from mortgage payments, a foreign buyer must also be aware of additional costs, such as closing costs, which may or may not be higher than they are used to. Earthquake insurance may also be a surprise cost but lawyer fees, commissions to their real estate agent, and property taxes should be expected.
Despite a weak world economy, one thing remains clear. Foreign buyers are turning their attention towards Turkey and finding it to be a viable and attractive country in which to invest.