Invest in a Turkish property delightPosted on: 20 July 2010 by Mark O'haire
Sun, sea and scantily priced second-homes make Turkey a wise buy in the current financial climate. Laura Henderson reports.
Go back to the 90s and soon-to-be-hip Turkey was a classic bucket and spade and Lycian ruins experience. These days, creeping urbanisation has in parts taken its toll.
Vast swathes of frontline, particularly around Bodrum and Marmaris on the Aegean coast, have been submerged in a tidal wave of identikit resort developments and ‘foam party’ nightlife.
Mass-market tourism however, makes up just a tiny portion of the country’s meze of tourist offerings. Stray off the beaten track a little and there’s ample evidence that the real Turkish spirit lives on.
Since July 2003 decades-old legislation regulating foreign ownership was amended in a bid to lure foreign investment. Full liberalisation of property laws bit in 2005, backed by a comprehensive IMF restructuring programme, but it wasn’t until 2006 that grass-roots changes started to take full effect spurred on by EU accession talks and tourism hitting the top of the charts as the country’s highest export earner. These days, the country attracts a healthy 25m plus tourists a year, with UK visitor numbers alone, confirm ABTA, predicted to swell by 20% this year. “As emerging destinations go, Turkey has immense appeal to lifestyle buyers,” explains David Richardson of Property Sun Turkey. “Miles of unspoilt coastline, great weather and a fascinating culture all of which are fundamental to its long-term appeal. The cost of living is a further bonus - the pound’s relative strength against the Turkish lira making it 30% cheaper, which compared to Euro-zone old-timers like Spain and Portugal makes for an affordable holiday base.”
As with other emerging markets, high capital appreciation in recent years, coupled with grassroots growth in the independent tourism sector has delivered reliable results for buy-to-let investors. Prior to 2000, over 70 per cent of visitors were accommodated in package hotels. Now serviced apartments and private rentals are increasingly dominating the holiday mix. Over 60,000 of us have made the leap from holidaymaker to fully-fledged homeowner; direct flights to Istanbul, Bodrum and Izmir on the Aegean and Dalaman and Antalya on the Mediterranean fanning out the second-home network, with a new international airport in Alanya set to open this year.
Ambitious plans announced by the Culture and Tourism Ministry covering the next 15 years - the creation of tourist development corridors and several super-yacht marinas, is encouraging in these turbulent times suggests Robert Nixon of Nirvana International: “It speaks volumes for the future potential of the destination which is still undergoing a slow-burn transformation. Five-star tourism infrastructure is underpinning the property market and intensive high-rise developments are being passed over for integrated, low-density projects, with a keen focus on maintaining the quality of the natural environment. From a buyer’s perspective, it’s exactly the kind confident approach they want to see in the current climate, before putting pen to paper.”
Investors to date have mostly gravitated to one or other of the first-phase hotspots along the Aegean and Mediterranean coastlines, among which Bodrum, Kusadasi, Marmaris, Antalya and Fethiye feature most prominently. Now, with infrastructure spreading its tentacles further down the coast, up-and-coming offshoots like Cesme, Gocek, Konakli and Alanya are now sharing the spotlight.
Property ownership does carry potential downsides. Buyers, for example, looking to cover their running costs through rentals should be aware that short-term rents are by no means year-round. The tourist season on Turkey’s Mediterranean and Aegean coasts is shorter than the western Mediterranean: the main season is between June and early September, with many coastal resorts closing down between October and April. Certain restrictions also apply to foreign ownership. “Land in Turkey is allocated a specific function according to the zoning schemes of the nearest town or village,” explains Dorotha Kanbolat of Let’s Go To Turkey. “That means that if a plot deemed to be for agricultural use is offered for sale to an investor, legal repercussions surrounding the defined use of the land will inevitably arise. Issues surrounding secure property title have sometimes caught ill-prepared buyers out in the past. If you’re buying a resale property – it’s essential to appoint an independent lawyer to check out title deeds to ensure that the vendor has the legal right to sell and that there is no outstanding debt on the property. A lot of it boils down to just plain common sense, but it’s amazing how many people throw caution to the wind when they clap eyes on the property of their dreams.”
Just twenty-five minutes from Dalaman airport, Gocek’s picture-postcard harbour has attracted the yachting set for years. The resort may lack a beach, but it more than makes up for its sand-free status with its string of little coves on the Twelve Islands, just a gullet ride from the resort’s circular bay. Down town, the promenade is the community hub – a cluster of cafes, patisseries and restaurants overlooking the sleek schooners that line the marina. Head into the heart of the town and the resort reverts back to its traditional Turkish roots with its vine-clad homes, mosque and colourful bazaar, while the nearby untouched rural mountain villages offer superb walking, nature reserves and historic ruins.
Tulip Properties is marketing Gocek Royal Villas, an exclusive development of eleven architect-designed hillside homes sporting decked terraces, private pools and gardens. Property owners are just a stone’s throw from the facilities at Port Gocek including: a beach club, sailing school, sauna and state-of-the-art fitness centre. Prices start from £333,000.
Lying half way down the west (Aegean) coast, with a pristine backdrop of cultivated aniseed, artichoke and sesame fields, compact and bijou Cesme sports a castle-museum, a small collection of low-rise hotels and traditional houses in the domed Ottoman style. First colonised as a health resort thanks to its many thermal springs and clear blue waterfront vista, these days, it’s the beaches and the sulphurous hot springs that bubble up in several spots cross the peninsula that are again the main attraction: the little town having carved itself out a reputation as a trendy getaway off the man tourist drag.
Sunny Days Properties has a beautiful three-bedroom luxury stone villa with landscaped garden, pool and sun terrace on the market for £390,000. Sporting a cool whiteout interior with wooden flooring throughout, the property is within strolling distance of the best restaurants in town.
Turkey’s principal holiday resort in the Mediterranean region, Antalya offers something for everyone from find sandy beaches for water sports to forests and mountains for hiking and jeep safaris; attractive Antalya city sporting shady palm-lined boulevards, a prize winning marina and picturesque old quarter, Kaleici. Five-star resort hotels and summerhouses are filling up with Scandinavian and British clientele, but the resort retains a good deal of local charm due to the many farms in the area. Sought-after areas include Kalkan and Kas and upmarket Lara Beach and Side for haute-gamme apartments; Side considered the most sophisticated tourist area in the region, with stylish studios fetching upwards of £70,000.
Nearby Belek is a prime location for golf property, while buzzing Kemer the purpose built resort just 40 minutes from Antalya sports stunning traditional homes set back in the forest and mountain areas just a short drive to the marina. Property Sun Turkey has a characterful stone built three-bed, three-bath villa in the Kas area for £120,000. Sporting a private pool, large, landscaped gardens and terrace for al fresco dining, the property also comes with a full property package including high quality white goods.
Buying in Turkey
Once a property has been selected and a price agreed, both parties may sign a preliminary agreement, with a deposit paid. Full checks are then carried out on the property and its title deeds (TAPU).
Buyers must register with the local tax office as well as providing the TAPU office with proof of ID and a copy of the current TAPU.
It is the responsibility of the TAPU office to make an application of purchase on your behalf. Once clearance has been given-buyer and seller sign a final contract in front of a public notary (or lawyers with powers of attorney), the balance is paid and formal title deeds are transferred to the buyer.
Fees & Taxes
1. Stamp duty 3 per cent – split equally between the developer and the buyer.
2. Legal fees up to 5 per cent
3. Estate agent’s fees up to 3 per cent
4. 1.5 per cent of the purchase value is payable when transferring the title deeds.
5. In addition you must budget for land registration fees, notary fees and translation services – allow around £500.
6. Property tax, paid annually to the local government, is at a rate of 0.3 per cent of the declared value of the property. Revaluation of the property is conducted by the local government every five years.
7. Tax on rental income ranges from 15-35% depending on rental volumes (allowance before tax in sterling of approximately £4,000 before coming into lower rate of 15%).
8. If you sell your property within five years, you will be liable for Capital Gains Tax (CGT) of 15-35% depending on the capital amount
By Laura Henderson
Property journalist, columnist and author
Laura is a UK-based property journalist and author specialising in domestic and overseas markets. A regular contributor to the Financial Times, Sunday Express, Daily Telegraph and Homes Overseas magazine, she also edits a monthly property column for the Scotsman newspaper and is the author of several on-line investor guides for among others, Channel 4 Homes.
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