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Turkey

Florida Of Europe? As Crisis Deepens, Euro Zone Retirees Look To Turkey

The euro zone’s lingering economic woes and ends to buying restrictions are making Turkey suddenly look like the place to be – especially for Western European retirees. Vacation homes go for as little as 130,000 euros. Pool included.

Easy going in Alanya (ozgurmulazimoglu)
Easy going in Alanya (ozgurmulazimoglu)

By Richard Haimann

DIE WELT/Worldcrunch

Apartments can be had starting at just 40,000 euros. And for 130,000 euros, a house with a pool. Thanks to its low real estate prices and living costs, Turkey is becoming exceptionally attractive for western European retirees who are afraid of the dwindling purchasing power of their pensions.

The euro crisis has German seniors seeking Turkey out as a safe haven. Ever more of them are buying inexpensive real estate there as a second or permanent home, according to Hans-Rainer Lindner, a partner in the German company Türkei-Objekte, which specializes in "dream properties in Turkey."

In Alanya, Turkey, Ibrahim Fide, owner of the Prima real estate company says the "typical German customer is over 60." Apartments on the Turkish Mediterranean coast that are available for the equivalent of 40,000 euros are new, two-room flats. Houses for 130,000 euros are free-standing, with 120 square meters of living space, terrace, garden, and swimming pool.

Living expenses including food are so low that "three kilos of tomatoes cost 80 euro cents," says Lindner. "A German couple could live comfortably in Turkey on 700 euros a month."

That makes the country very interesting to all those who fear the euro crisis is going to send prices shooting sky-high, and leave them with a pension that won't be sufficient.

Dwindling buying power

Turkey is not, however, immune to the turbulence of capital markets. Rising oil prices are driving up living costs. In its latest forecast, the Turkish Central Bank predicts a rise of 7.62% this year. Most affected would be the prices of electricity, oil, but also food.

Since the euro crisis started becoming increasingly critical last year, the euro has fallen against the Turkish lira. In the summer of 2011, one euro bought 2.55 lira: now it's only 2.32 lira. That means the buying power of the euro in Turkey has gone down by 9% within nine months.

This is due on the one hand to the fact that many Turks working in euro zone countries have transferred their savings back home to protect them from the turmoil of the crisis. Another factor is that Turkey's robust economy is increasingly drawing companies from the euro countries.

Automobile and machinery manufacturers, IT companies, and various providers from Germany, France, Italy, and the Netherlands have either set up in the country or have made production deals with Turkish companies. That fuels demand for liras.

"At the same time, you're seeing increased demand for real estate in Turkey," says Lindner. According to the Central Bank in Ankara, the Turkish economy grew by 7.5% in 2011. The Turkish Statistical Institute says that unemployment rates fell from 15% to 10.2% in 2011.

"A large middle class is in the process of growing in Turkey, and its members want to fulfill their dreams of owning their own home," Lindner says. "That means that in the next few years prices of apartments and houses are slowly but surely going to climb."

Expect more foreign property buyers

New laws intended to open the Turkish property market up to foreign buyers should further energize the market. Until now, only citizens of countries that allow Turkish citizens to buy property in their country have been allowed to buy land, apartments or houses in Turkey. The E.U. countries do permit this – but not the super-rich Persian Gulf countries.

The new Turkish law is expected to come into effect in September. Also to be lifted are the size limits for properties bought by foreigners; under the new laws, it will be possible for foreign buyers to purchase surfaces of up to 30 hectares without seeking special permission.

This will enliven Turkey's real estate market considerably, agents believe. "There will be a lot of buyers, particularly from the Gulf region," says Feyzullah Yetgin, general manager of Calik Real Estate. "Demand could rise significantly very soon," Prima owner Fide agrees.

A first wave of interest in Turkish properties began in 1997 in Germany, Great Britain, Austria and the Netherlands. More recently, buyers have benefitted from the wake of the financial crisis as many British home owners have been selling. To reduce the loans on their books, many banks in Britain froze loans for holiday homes, so during 2009 and 2010 many British owners were forced to sell, which brought prices down.

Last year, however, the market rose again. According to Turkish Statistical Institute figures, in the fourth quarter of 2011, real estate sales rose 21.8% as compared the same period the previous year.

"Anybody who's toying with the idea of buying a holiday property or a main home in Turkey should start researching the market right now," says Türkei-Objekte's Lindner.

Read the original story in German

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