Several factors are aligning to make Turkey the best residential property investment in Europe, a new report says.
Low taxes, economic growth, a stable government, low mortgage rates and reasonable transaction costs are among the variables making Turkey an attractive investment for foreign buyers, according to Global Property Guide, the research company.
"The housing boom's pre-conditions are repeating themselves in Turkey today," said Global Property Guide publisher Matthew Montagu-Pollock. "Turkey experienced a long history of inflation and monetary mismanagement, but since 2002 that history is behind it--with benefits which are clear today."
Residential prices across Turkey dropped about 15 percent from peaks in June 2007, although the drop may be closer to 30 to 70 percent, after adjustments for inflation, according to the report.
"Property in Turkey is now substantially undervalued using all conventional metrics," the report says.
High-end property in Istanbul costs about 2,386 euro a square meter, compared to 3,932 euro a square meter in Madrid or 14,421 euro a square meter in London, GPG says. Gross rental yields can range from 6.1 percent to 7.5 percent, which is "significantly higher" than most other European cities, the report notes.
Last week Turkey voted in favor of a series of social reforms, which is good news for the property market, argues Aydin Cakir, director of New Home in Turkey
"The yes vote indicates that confidence in the government is high," Cakir writes in his GPG column. "It also means that the people are behind the government in its efforts to reform the secular Muslim state as far as is needed to join the European Union."