Stop machine
Over the past few years, the Turkish economy has had very good indicators: from 2002 to 2007, inflation decreased from 54.4 to 8.75%, the ratio of public debt to GDP – from 80 to 39%. In short, there was every reason to declare the country a profitable investment field, including from the point of view of buying real estate, which struck the imagination of Europeans with its cheapness. After foreigners were allowed to buy real estate in Turkey in 2003, the British, Germans, French and Dutch have already managed to firmly settle on the local shores. The Russians, as always, were a little late, but now the number of Russian owners is constantly growing.
By the beginning of the global financial crisis, the banking system in Turkey was already quite stable, but it did not have time to acquire the shortcomings of the American and some European banking systems. Thus, the mortgage law was adopted here only in the spring of 2007, and it has not yet received a "western" scope. The loan requirements were quite conservative. Mortgages were issued only for completed objects, for a period of up to 20 years with a mandatory down payment of at least 30%, rates started from 7.8% per annum in euros and from 8.4% per annum in US dollars. When assessing the borrower's income, only the salary transferred to the bank and the pension were taken into account. There was no question of sub-prime lending.
Therefore, the crisis did not cause much commotion in the banking environment. However, the general economic situation in the country has deteriorated markedly over the past year due to a decrease in exports, which provided most of the budget.
The demand for Turkish goods in Europe has dropped significantly.
According to the Ministry of Finance of Turkey, the budget deficit for the first half of 2009 was 13 times higher than a year earlier. By the end of July, the unemployment rate increased to 16% in urban areas, and to 7% in rural areas.
Market paradoxes
The real estate market has not been left out of the crisis vicissitudes. Many Turkish developers have found themselves in the same situation as Russian ones: the inflow of funds has stopped, as the demand for housing at the project stage has fallen. Buyers, especially European ones, are now considering only fully or almost completed houses. As a result, a number of developers, suffering from a lack of funds, freeze objects. "For the most part, we are talking about projects at the initial stage, or those on which work was planned to begin this year," says Alyona Onder from Solim SG. In any case, there are no loud speeches in the press, no rallies of deceived buyers here.
Another expected consequence of the crisis was a decline in domestic demand and falling prices. This affected primarily large cities – Istanbul, Ankara, Adana. Thus, according to the Internet portal Global Property Guide, prices fell by 50% on the outskirts of Istanbul, and by 20% in the central districts.
The situation on the coasts seems all the more striking against this background. There is a feeling that the Turkish market of resort houses lives its own life. Antalya, Alanya, Bodrum, Belek, Izmir demonstrate stability throughout the difficult 2009.
In January-February, there really was a threat of falling prices. The British, frightened by the crisis, began to sell newly acquired houses. So, the Property Wire newspaper wrote that thousands of objects appeared on the market at once on the west coast of Turkey (in Fethiye, Marmaris, Bodrum and Didim): the owners began to experience difficulties with mortgage payments and were also afraid of the decline in tourist flows that provided them with rental income.
Thanks to the fear of homeowners and appetizing discounts, a number of deals were concluded that were very profitable for buyers. Moreover, according to Alena Onder, the main buyers of "discount" housing were Russians. But the fleeting "sale" has ended, and the overall price level has recovered. So, a house bought in February at a discount for 180,000 euros is already worth 270,000 today.
The situation is explained by Ruslan Gavrilov, president of the Runiga group of companies: "Turkey as a holiday destination began to develop at the expense of European tourists back in the eighties, so the level of service there is very high. The Turkish real estate market is characterized by very good quality of construction, engineering, and projects in general. It is still undervalued, the price-quality ratio is higher here than in any European country, including Bulgaria. That is why resort real estate in Turkey, despite the crisis, has not fallen in price."
Signs of stability
During the crisis year, the demand from foreign buyers not only did not fall, but even increased. "Already, many real estate companies have a turnover that exceeded last year's," says Zhanna Nikhaenko from Advex Real Estate. According to the Institute of Statistics of Turkey, 194,743 residential properties were sold in the country in the second quarter of 2009, which is 78.89% more than in the first quarter, and 72.20% more than in the same period last year.
Moreover, according to Zhanna Nikhaenko, Russians are now more likely to rely on a high budget: "Previously, they mostly bought inexpensive apartments. But now there are many people who want to buy expensive housing – individual villas with large plots. This is a new trend. Turkey attracts wealthy buyers because it is a reliable, calm and geographically close to Russia country."
Alyona Onder adds: "We ask each customer to understand the reasons for the purchase. For the last year, almost everyone has been saying the same thing – people are not chasing big profits, but just want to save their money."
Buying for yourself
It is obvious that the Turkish economy has not yet emerged from the crisis and a number of indicators look quite deplorable. Thus, according to the September information of the Welt newspaper, the German DekaBank called Turkey the country whose GDP was most affected by the crisis. According to the bank's calculations, the decline has already amounted to 14.2%.
However, the government is actively engaged in anti-crisis struggle.
Tax deductions from consumer loans were reduced by a third, and the budget of KOSGEB, an organization to support small and medium–sized enterprises, increased. The Central Bank of Turkey is ready to provide a loan to banks in need for up to 1 year and has repeatedly reduced the refinancing rate. As a result, some changes for the better are already being noted.
However, tourism now brings less money to the country than before. According to the Institute of Statistics of Turkey, income from the tourism industry in the second quarter of 2009 decreased by 9.6% compared to the same period last year. At the same time, the tourist flow has not decreased, but each of the vacationers now spends an average of $590 in Turkey instead of $658 last year.
It is difficult to say exactly how this affects the demand in the rental sector, but in recent years, renting out housing has brought owners a good income by European standards – 6-8% of the cost of housing per year.
Even now, Bulgaria and Egypt can compete with the local real estate market for cheapness. So, the average cost of 1 sq. m. m in apartments – 800 euros, in villas – 1000-1500 euros. At the same time, the houses are rented with interior decoration. Apartments with an area of 45 sq. m. m in the new complex can be purchased for 30,000 euros. Villa with an area of 200 sq. m. m with a plot of 500 sq. m. m – for 200,000-250,000 euros.
It is widely believed in the English-language press that in 2011-2012, when the world economy finally recovers from the crisis, the "golden age" of Turkish resort real estate will certainly return. However, up to this point, high rates of price growth in the local housing market are hardly worth forecasting. Demand from Europeans frightened by the crisis is unlikely to grow significantly in the coming years, and no one will be able to predict how much the Russians will be able to "shake up" local prices. Therefore, now it makes sense to consider buying an apartment in a Turkish resort from the point of view of its own use or as a full–fledged alternative to a bank deposit - with a residence permit in addition.
