Turkey has undergone a profound economic transformation over the last decade and its economic fundamentals are quite solid. It is the 17th largest economy in the world and the 6th largest economy in Europe with a current GDP of approximately USD 820 billion in 2013.
The advantageous geographical location, population growth and demographic advantage, the increase in income per capita, extensive urban renewal and development, large capacity and power in the construction sector and ease of doing business are the demand drivers of the Turkish real estate sector. The real estate sector in Turkey represents 19.5 percent of the total GDP, which brings great investment potential to the sector. The share of the real estate sector in GDP increased by 2.3 percent in 2000 and by 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 between 2000 and 2005. However, the sharpest increase was observed between 2006 and 2009 with 20.5 percent.
Looking at the investment side, it is seen that the FDI inflow rose to USD 12.5 billion, whereas real estate and construction received USD 1.6 billion of the total FDI in 2012. Following the enactment of the reciprocity law, sales of real estate to foreigners started to increase 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.
As regards major facts and figures about the current situation, strategic plans and the future projects in the pipeline, Turkey’s real estate sector bears huge potential for investors.
- The number of houses sold reached 290,000 in the property market in 2012.
- 299 shopping centers with a total gross leasable area of 8.2 million square meters are operational in Turkey.
- 91 shopping centers in Istanbul represent 46 percent of the total leasable shopping center area in Turkey.
- Office construction licenses obtained throughout Turkey 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.
- As of 2012, there are a total of 2,870 licensed hotels with a total bed capacity of more than 700,000, while there is still a gap between supply and demand, particularly in Istanbul.
In addition, targets are being set and development also continues in urban renewal projects and for mega projects, including Marmaray, Kanal Istanbul, the third bridge on the Bosphorus and the third airport in Istanbul. The Turkish government has decided to renew and retrofit buildings that are prone to destruction during natural disasters, which includes 6.5 million residences, with a budget of USD 400 billion.
With its existing potential, mega projects and ambitious targets set for 2023, Turkey offers great opportunities for investors in the real estate sector.
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