What’s going on here?
Turkish investors are increasingly looking overseas for property investments, driven by soaring domestic prices, high mortgage rates, and regulatory uncertainty at home.
What does this mean?
Traditional real estate investments in Turkey are losing their shine due to skyrocketing prices, diminishing returns, and unsettled regulations. Monthly housing sales have plunged to their lowest in a decade, prompting many Turks to set their sights abroad. In 2023, the shift towards economic orthodoxy within Turkey further catalyzed this trend. Popular destinations like Montenegro, Spain, Dubai, and London have seen a surge in Turkish investments, which quadrupled since 2021, hitting $2 billion last year. With the appreciating lira and high domestic prices, this figure may soar to $3-4 billion this year.
Why should I care?
For markets: A surge in outbound investment.
Middle-income Turks, not just the wealthy, are diversifying their investments globally to hedge against Turkey’s volatile economy and high inflation. The Real Estate Service Exporters Association notes this trend reflects a broad desire for more secure investments. With government measures like the 25% rent hike cap recently lifted, regulatory unpredictability remains a significant deterrent for domestic investments.
The bigger picture: Securing better returns abroad.
High property prices in Turkey fail to match low rental incomes, stretching the investment return period to 30 years. Comparatively, the ROI in the UK and Spain is under 18 years, while in Montenegro it’s less than 12 years, making these regions more appealing. Turkish construction companies like Fenercioglu are also expanding internationally to cater to this rising demand. These trends underscore a strategic shift in how Turks approach real estate investments amid domestic challenges.