Dubai: Turkey is gradually becoming an investors’ paradise — especially when it comes to real estate investment, officials and analysts say.

The Turkish government has recently opened up its land and property sector for foreign investment by amending the Law of Reciprocity that lifts the condition of reciprocity for foreign corporates and individuals investing in property in Turkey.

“It is expected to particularly affect residential sales by individual investors, especially from the Gulf countries, but the law is not expected to make a major impact on the commercial real estate market,” said a latest report by Jones Lang LaSalle, a global real estate advisory.

“GCC nationals can now own properties and holiday homes on a freehold basis. The new law will help a good flow of investment from the Gulf region,” Ali Ayhan Fidanci, a real estate consultant, told Gulf News. “However, one has to be careful on the local laws and taxation issues as each city is guided by its own investment and landownership limits.”

Credit rating

Moody’s recently upgraded Turkey’s credit rating from Baa2 to Baa1, placing the country one notch below the investment grade.

Ozlem Gokse, Vice Chairman of Turkish Association of Real Estate Investment Companies (Gyoder), says, “Last year, the Turkish economy grew at 7.5 per cent — the second highest after China. Today Turkey has a natural advantage as a safe haven for investment. With the relaxation of the Law of Reciprocity, we expect a large number of GCC investors investing in Turkish real estate in the short term.”

She said, Turkey attracted $2.5 billion (Dh9.2 billion) in foreign direct investment into real estate. “In the medium term, we expect this to grow to $5 billion in the short term eventually rising to $10 billion per annum in the long term,” she added.

In the medium to long term, Jones Lang LaSalle says, it expects that there will be more institutional investors entering the Turkish market, with possible intervals due to the pricing gap and legal challenges.

Turkey has a population of 70 million with an average age of 29 years with more than half of the country’s population is below the age of 35. The country will need massive investment in housing for its population.

“Since European investment is declining due to the economic crisis there, Turkey is turning to the East for investment. We have re-established our old cultural links with the East which will eventually result in investment,” she said.

Turkish property prices are very attractive, officials say. Prices of studio apartments range as low as Dh140,000 to Dh160,000 while a fully-furnished apartment could be bought for Dh220,000 — much lower compared to prices in Dubai.

Good proposition

Matthew Green, Head of Research & Consultancy, UAE Middle East Research, CBRE, says. “With the rest of the mainland Europe embroiled in crisis, Turkey definitely offers a good proposition for real estate investment.”

Added Alasdir Macdonald, Senior Director of Knight Knox International property brokers: “Property prices in Turkey are quite low, thus making it attractive for investment. Investors could easily get just under 10 per cent capital growth and rental yield of 8 per cent per annum.”

He said, villas are sold at Dh1.2 million in prime locations.

Tolga Kesiner, Director at Turkish Property Centre, says, he is amazed with the investor response at the Cityscape. “This is our first time participation at the Cityscape and the response from the Emirati investors has been quite positive.

“With the new law in place, a lot of local investors are closely looking at the Turkish property market,” he said, adding that Turkey offers a “return on investment in 12 to 13 years with 8 per cent guaranteed rental returns”. Fidanci says, in some areas, investors could achieve total return on investment within five years.