The real estate market and the Turkish economy in 2018
Over the last few years, Turkey met with turbulent times following a failed 2016 coup, as well as a series of devastating terrorist attacks. However, in 2017, the country bounced back with style, and everyone was amazed at what they could achieve despite the hurdles facing them.
All this is prompting business investors and real estate speculators to ask what 2018 holds in store. More importantly how the economy and real estate market will perform.
To predict this, it is worth looking at some of the achievements in 2017 to show just how much of a good start, the Turkish economy has.
The real estate market & Economic Achievements of Turkey in 2017
- Foreign direct investment finished the year at 7.4 billion USD
• FDI from European countries increased by 2.4% year-on-year
• Turkey is expected to register an annual growth of 7% for the year
• Production of crude steel rose to an all-time high of 37.5 million tonnes
• Exports increased by 10.2% to 157 billion USD
• The Borsa Istanbul broke records to reach an all-time high.
• House sales rose 5.1%, while sales to foreigners increased by 22.2%
• Turkey’s tourism revenue rose 18.9% to 26.3 billion USD
• The Turkish economy was the fastest growing out of all the G20 countries
The real estate market &Turkish Medium-Term Program - 2018 to 2020
So, with a mass of stellar achievements in 2017 as well as a clear set of guidelines on areas that they need to tackle, many are predicting how the Turkish economy will perform in 2018. Bloomberg has already cited Turkey as an attractive merging market alongside Mexico.
The Turkish government is also expecting a 5.5% growth, that will occur from the services, industrial and agricultural sectors as well as an expectation that tourism figures could well return to earlier record-breaking statistics. At one point, the tourism industry became the sixth best performing in the world.
While it would be easy to paint a utopian picture, Turkey still has challenging work ahead if they want to achieve their 2023 vision plan of being one of the top performing economies in the world. The medium-term program for 2018 to 2020 focuses on areas of the economy that are underperforming.
Produced every year by the Development Ministry, approved by parliament and including a three-year outlook, the MTP will concentrate on unemployment, account deficit and more importantly, inflation of which the Deputy Prime Minister Mehmet Simsek has said is top of their list of priorities in 2018.
Inflation: the target inflation rate for the Turkish economy in 2018 is 7%, a decrease in the current rate of 9.5%. Tax adjustments, monetary policy, and guided prices are expected to help them achieve this. They are also predicting stability in the Turkish lira import prices to aid this.
Unemployment: One of the most significant problems to tackle is the current unemployment rate of which they aim to decrease to 10.5%. They will focus on high-quality jobs as well as the quality of the labor force to achieve this.
The Turkish Real Estate Market in 2018
One major contributor to the economy has been the housing sector, and the rebound it saw in 2017, could happen again in 2018.
Earlier the Turkish government introduced several incentives to help the real estate sector in attracting foreign investors, and these include the VIP Turquoise card system as well as exemption from paying Vat, according to specific terms and conditions.
In 2017, foreigners bought 22,234 homes, and one of the most popular areas for them was the eastern Black Sea district that saw a staggering rise of 155% year-on-year, primarily from Middle East buyers.
The districts of Istanbul and Antalya also saw a rise in foreign purchases and all indications are that this stream of foreign income will continue into 2018 given the excellent exchange rate between Turkish lira, and other currencies.
One development to watch is called by industry experts to drop the required real estate purchase limit for citizenship from 1 million USD. The amendment to the law, passed in January 2017, was welcomed by some but many cited the required investment amount as too high, and the government needs to lower this amount to attract more interested parties.