Turkey has undergone a profound economic transformation over the past decade and its economic fundamentals are quite solid. Turkey is 17th largest economy in the world and the 6th largest economy in Europe, with a GDP of approximately USD 820 billion in 2013.
The demand drivers of the Turkish real estate sector are advantageous geographical location, population growth and demographic advantage, increase in income per capita, extensive urban renewal and development, large capacity and power in the construction sector and ease of doing business. The real estate sector in Turkey represents 19,5 percent of total GDP, which brings great investment potential to the sector. The GDP share of the real estate sector increased by 2,3 percent in 2000 and 3,8 percent in 2012. The average share of construction, real estate, rental and business activities and new house sales in total GDP increased by 16,7 percent from 2000 to 2005. However, the sharpest increase, of 20,5 percent, was between 2006 and 2009.
On the investment side, FDI inflow rose to USD 12.5 billion, while real estate and construction garnered USD 1.6 billion of total FDI in 2012. Sales of real estate to foreigners began to increase following enactment of the reciprocity law and reached USD 2.64 billion in 2012. The Ministry of Environment and Urbanization announced that real estate sales to foreigners increased from 2 percent to 5-6 percent in the last ten months of 2013.
The current situation, along with strategic plans and future projects in the pipeline, bears huge potential for investors in Turkey’s real estate sector:
- The number of real estate properties sold reached 290,000 in 2012.
- 299 shopping centers are operational in Turkey with a total gross leasable area of 8.2 million square meters.
- Office construction licenses obtained throughout Turkey have increased 27 percent, reaching 6.84 million square meters.
- According to the Turkish State Railways’ (TCDD) investment program, USD 240,145 million will be spent on building logistics centers.
- 91 shopping centers in Istanbul represent 46 percent of the total leasable shopping center area in Turkey.
- As of 2012, there are a total of 2,870 licensed hotels with a total bed capacity of more than 700,000, although there is still a gap between supply and demand, particularly in Istanbul.
Furthermore development and the setting of new targets continue with urban renewal and mega projects, including Marmaray, Kanal Istanbul, the third Bosphorus bridge and third Istanbul airport. The Turkish government has decided to renew and retrofit buildings vulnerable to natural disaster, including 6.5 million residences, with a budget of USD 400 billion.
With its existing potential, mega projects and ambitious targets set for 2023.
