Buying Property in Turkey
Someone has left a message on one of my
blogs informing me that, despite my reservations, he is
planning to buy real estate in Turkey in a few weeks time, and
he is dealing with ďa reliable companyĒ in London.
Let me start by saying that I am not the ultimate oracle, and
there are other views besides my own, but I canít help feeling
that investing in Turkey is rather foolish. It is some time
since I lived in Turkey, and I suspect things have changed for
the worse since I was there. However, let me give at least
some reasons for my view. First, general considerations when
buying in a foreign country.
If you are intending to live abroad, then renting is a great
way to get started. It is always cheaper to rent than buy. I
have dealt with this subject many times, but once again, here
are the bones of the argument.
You presumably start with money in the bank. If you exchange
that for a house, then you have the house but donít have the
money. Alternatively, most people have a house in their home
country which they wish to sell in order to buy abroad. If you
have the house abroad you no longer have that money, so you
canít use it to invest. 10% return on money invested is easily
achievable. I proved that when I ran my investment bulletin
called The Big Pension.
Each month I introduced my clients to safe investments that
brought in a minimum of 10% + the inflation rate rounded up.
Once you have emptied your piggy bank of, say, £100,000 to buy
your home abroad you have effectively deprived yourself of at
least a 10% return on those funds, the official term for that
is the Opportunity Cost. In this instance we are talking about
a loss of £10,000 income. Why not keep the money, invest it,
and use the income to rent? That way you have the money and
the home abroad.
Renting also lets you keep your options open. It also keeps
you out of the foreign government system, and keeps you clear
of local taxes, insurance and maintenance costs.
Second, by buying a home in another country you are investing
in that country. Do you believe that investing in Turkey is
going to be a good investment? You need to check out the
currency, the economic base, the skills of the government, and
all that goes with it.
Now letís look at some specifics in no particular order.
1 Can you speak the language? If not, how
much English is spoken where you intend living? In Turkey they
speak a language that is very different from European
2 What about the culture? It is alien to
Western Europe. There is the different religion which comes
with a totally different legal code, and customs, and a rather
disturbing attitude to women.
3 What about safety? Turkey is at war, which
is hardly a helpful start. There is open war between Turks and
Kurds which has been ongoing for decades. There is hostility
towards neighbours both north and south. In the south there is
raging civil war in Syria. In the north there are hostilities
with Russia. In the west there is simmering distrust and bad
feeling towards the eastern states of the EU. Internally there
are the rumblings of civil war which have recently erupted
into a situation where civil rights are almost non-existent.
Hardly the prerequisites for starting a new life abroad.
4 What the above three elements mean is that
in any conflict or argument or attempt to hang on to any
personal or property rights, a foreigner will find he has no
enforceable rights at all. Entering into such a situation is,
in my opinion, sheer lunacy. If things go well, things will go
well. If they do not go well, what is your redress? Your only
redress is to attempt to sell. But if things go badly, there
will be no-one wanting to buy. If you sell, will you be able
to export your money? When I was there I could not export
5 Think about your means of support. You
should aim to invest into the same currency as your principal
income. There is a double bind here. If you invest when the
currency is low, as it rises, so your effective income
decreases. If the currency tanks, the value of your house
tanks with it.
6 What is the resale market like? In normal
tourist markets sales are notoriously slow. In a market such
as Turkey, sales are likely to be almost non-existent, which
is why your ever smiling salesman is so desperate to shift a
property. He wants his commission. I, on the other hand, have
no axe to grind.
The place to buy in Turkey is Istanbul, where there is a swift
turnaround. In the tourist areas the turnaround is
snail-paced. Istanbul is also a safer place to live.
What I would suggest to anyone thinking of buying in the
Middle East, quite apart from the fact that this part of the
world is a war zone, is to live there for six months before
making any decision. I found the countryside an alarming place
to live, whereas I quite liked life in Istanbul. You may find
the opposite, but at least try it for six months first. I
think you will be surprised.