Does investing in property still make sense in Turkey? Liam Bailey reckons the coutry’s vital signs are looking good.
Everyone knows Turkey is booming, as it has weathered the financial down turn much better than the vast majority of countries with perhaps the exception of China. Its economy is growing thanks to the rapidly expanding industrial sector, and many economists feel that the country deserves to be bumped up by the ratings agencies, making now the ideal time to invest before this happens. There are several good reasons why it probably will.
The capital city of Istanbul is a thriving metropolis which is a magnet for tourists and also the fashion industry. It is currently rated as one of the most dynamic centres in the world, even higher than four major Chinese cities.
Turkey has huge economic potential which is underpinned by a stable government which seems committed to attracting investment by offering favourable conditions to foreigners. As if to further underline this point the Turkish Central Bank cut interest rates a week ago — to what is a record low for the country — in the hope of stimulating fresh growth on top of the already impressive growth figures for this year.
Much of Turkey’s growth is being fuelled by consumer demand, for which most of the goods are being imported. Further, Turkey doesn’t have much in the way of energy resources. This has led to speculative investing as interest rates here are still higher than many parts of the world.
The government is trying to address these imbalances by making it more and more attractive for foreigners to invest, with renewable energy investments being made particularly favourable.
Many large Western companies are opening up bases here as the economic conditions for trading are so favourable.
Turkey’s geographic position makes it very attractive to investors. Turkey lies in the middle of the east and the west, giving those trading from Turkey easy access to the high income European markets, the emerging markets of Eastern Europe, Russia and Central Asia, and Middle Eastern markets. This adds up to over 1 billion potential consumers and provides access to many markets which are virtually untapped.
Turkey also has a close economic connection with the EU, and enjoys approved access to the countries of the EU which allows the movement of goods between the countries without them being subject to customs duties or quantitative restrictions. It was implemented to ensure that Turkey had the same privileges as other EU countries prior to it being offered full membership talks which will lead to its eventual accession.
Finally Turkey also offers a strong labour pool, with most of the 70 million population being under the age of 35, as well as a rapidly growing middle class to fuel the mounting consumer boom.
This all points to Turkey being a hotbed for investment, and most analysts, including spokespersons for the major ratings agencies, predict that Turkey will be brought up to investment grade within 12-24 months.