Marmaray and High-Speed Train to Increasing Investment Appeal of Istanbul Property Market

The Marmaray Project, described as one of Turkey’s greatest railway engineering projects ever, is a much needed solution to the effects of Istanbul’s traffic congestion and expanding suburbs, caused by the city’s rapidly growing population. It is expected to open at the end of October 2013, four years after the initial completion date.

The four main components of the Marmaray Project include an underwater railway tunnel beneath the Istanbul Strait - the deepest immersed structure in the world, improvement of the Gebze-Haydarpasa and Sirkeci-Halkali suburban railway lines, electrical and mechanical upgrades, including rebuilding 37 stations and three new ones, and the procurement of new rolling stock.

“The Marmaray Project will be a real shot in the arm for Istanbul as a whole, but a number of districts will really benefit,” said Julian Walker, Director at Spot Blue. “It will not only provide an east to west transport corridor between the European and Asian sides of the city, but there will also be a connection at Yenkapi to the north-south metro line, completing a very effective and convenient transport system. Turks will find it much easier to commute from the city’s suburban areas and developments close to stations should be very appealing to foreign buyers, including buy-to-let investors. Only recently we sold a $150,000 apartment in Istanbul’s Bahcesehir district to someone from the Middle East.”

Halkali is a district on the western edge of the European side of Istanbul and the furthest terminal on the new suburban rail line. It will be linked by a high-capacity line with Gebze on the Asian side of the city. The journey time between these two terminals will drop to an estimated 104 minutes with the new rail service, from the current 185 minutes. Halkali also has rail connections to other cities, in and beyond Turkey.

Marmaray

Walker continued: “Halkali is already a busy hub, thanks to its excellent connections, and the Marmaray Project will enhance this. We have opportunities to invest in a selection of new developments there, with prices starting at around £36,000 for a studio apartment, rising to around £104,000 for a three-bedroom apartment. The other bonus about Halkali is that is it very close to the city’s Ataturk Airport.” Other areas on the European side where Spot Blue has investment opportunities include Beylikduzu and Bahcesehir.
“Otherwise, on the city’s eastern side we have opportunities in Erenkoy, which is on the new Halkali-Gebze line, so with great transport links. There we have smart four-bedroom apartments from around £450,000,” added Walker.

Meanwhile, Turkey’s first high speed inter-city rail service running between Ankara and Istanbul, is due for completion next year. There are plans to connect this with the new Marmaray suburban line, thus effectively completing a high speed train line between Asia and Europe.

7 Tips for Safe Property Investment in Istanbul

Investing in property abroad can be a minefield for the unwary particularly in emerging markets such as Turkey say analysts at property investment firm Colordarcy.com.

Colordarcy is a leading property investment company that specialises in finding positive cash flow investment properties worldwide. Colordarcy investment property portfolio includes some of the best properties for sale in Brazil, Florida, Turkey and the United Kingdom.

Loxley McKenzie, Managing Director of Colordarcy comments, “The best place to invest for capital growth in Turkey is Istanbul. The city offers a more reliable rental market and is recognised as the hub of economic growth.

Unfortunately there are good and bad areas to invest in Istanbul as there are on some areas of the Turkish coast.”

Colordarcy offers the following seven tips should help investors avoid some of the potential pitfalls of investing in property according to

1. Carry out due diligence
Doing due diligence is the equivalent of doing homework on an investment. “Many people will enjoy a holiday in Turkey, then quickly decide to invest”, McKenzie adds, yet it is important to take a whole variety of factors into consideration before signing on the dotted line.

The first things to consider are the build quality and the location of the property and its price relative to other similar properties in the area. If it is a buy-to-let investment then you will need to look closely at the likely rental yield. Will it cover your costs and generate a profit?

2. Use a reputable overseas property company
Unless investors have good first-hand knowledge of where they want to invest, a lot of money and heartache can potentially be saved by using a reputable agent who specialises in that particular country.

There are many horror stories about investors who have sent large deposits only to find that all that money is lost when developers go bankrupt or have problems with building permits.

A good overseas property agent can give piece of mind.

3. Beware of buying off-plan
A lot of people will advise against investing in off-plan property in any country, particularly an emerging one like Turkey.

However in a growing property market like Istanbul, it can be tempting for investors to try to achieve potentially high earn returns by buying off-plan and reselling the property at a higher capital gain.

This is a high risk strategy which may not always pay off. It is far better to either buy key ready property in Istanbul and have the option to walk around the development before investing or ask an agent to source property from a developer with a strong track record.

The best place to invest for capital growth in Turkey is Istanbul. The city offers a more reliable rental market and is recognised as the hub of economic growth. Unfortunately there are good and bad areas to invest in Istanbul...

4. Make sure you obtain a TAPU (title deed) for your property
In some cases investors have had their overseas property dream turn into a nightmare when they realise that they didn’t legally own a property they invested in. This is usually because they have failed to obtain a TAPU which is the most important document an investor can own to prove ownership to the authorities.

There have been cases where property developments in Turkey have been sold to a third party leaving property ‘owners’ powerless when they try to prove that they own a particular apartment or house.

5. Take out earthquake insurance (Dask insurance)
The risk of a 7.6-magnitude earthquake striking Istanbul by 2030 is greater than 60% (Source: Guardian: A disaster waiting to happen - why a huge earthquake near Istanbul seems inevitable, 2006). With this in mind it is worth investors taking out insurance on their property to protect against such natural disasters.

Dask insurance is a special insurance introduced by the Turkish government to provide protection against the devastation earthquakes can cause. Incidentally DASK insurance is only available for property owners who can produce a TAPU.

6. Use an independent Turkish lawyer
Investors would usually employ the services of a qualified lawyer when investing in their own country and the should do the same when investing in Turkey.

A good Turkish lawyer will know property laws inside out and will be a native speaker. This will come in handy when checking paperwork.

7. Research the city
Istanbul is a large city and there are many districts within its boundaries. This can make it difficult for investors to decide on the best areas to invest. Generally it is better to invest in areas close to the city centre or Taksim such as Beyoglu.

Huge development projects including a new airport and a proposed centre for technology are set to increase the already strong appeal of Istanbul city centre among investors.

In general Colordarcy analysts advise against investing in outlying areas far from the centre unless some kind of rental guarantee can be offered.

The KDV Tax On Turkish Property

Analysts at Colordarcy say that the hike in Turkish property tax for smaller apartments means that prices could well increase by more than 18% this year. Those already owning property in Turkey or who are purchasing key ready might well benefit from the resulting uplift in 2013.

This is the good news.

The bad news is, this latest change means that KDV tax, which once amounted to just 1% on property with a closed living area of less than 150 square metres and 18% for properties over 150sqm, will now be 18% for most properties – even those less than 150 square metres.

Will this make a big difference to overseas property investors?
“Not if investors are thinking of investing in a property above 150 square metres or in many cases if a property is already built.

What may happen is, tax rises could have an impact on property values as it may push up the price of smaller apartments and, in turn, place upward pressure on apartments that are a larger size.

This makes buying off-plan apartments in Turkey a little more tricky for anyone looking for a good deal. It will depend on three things: are developers prepared to absorb the cost? The value of the land the property is built on and when they built it.” says Loxley McKenzie, Managing Director of Colordarcy.

Colordarcy are keen to point out that if investors are looking at investing in a key-ready apartment in Istanbul, then you may well escape the increase in KDV. The new law only applies to building plans submitted in 2013.

If the land is assessed as being low in value, then the KDV rate may be 8% or less, so it is best to check before making a purchase.

When asked how investors might be able to avoid the impact of the change to KDV tax on Turkish property, Colordarcy’s legal expert in Istanbul said, “Since this is now law, there is no possibility to avoid it, however, before making an investment, we do advise our clients to obtain official information from the seller which shows the KDV amount of the real estate.

For example, if the seller obtained building permission and completed other legal requirements for construction in 2012, new KDV rules will not apply to this project.

If an investor is in any doubt, it is always possible to request documents from sellers which will show if the new KDV rate has been added to the value.”

Interestingly the new KDV tax law will only apply to new build properties sold by developers and not to those properties exchanged privately or those that are considered used.

Investors should not be too worried by this development according to Colordarcy, as the tax will be a direct cost to developers, though there is a strong chance they will pass it on to the buyer at some point.

Large developers may well delay passing on this cost to gain an advantage over smaller competitors. Even so, 75% of all properties purchased by overseas property investors in Turkey is under 150 square metres.
Colordarcy strongly advise choosing a large reputable developer, or a trustworthy property agent to ensure they get the best deal in 2013.

Turkey Property Purchasers to be Granted One Year Residence Permits

Extended residence permits for owners of property in Turkey are being introduced by the Turkish government in a move to attract further foreign direct investment.

“This is a welcome and logical move by the Turkish government,” says Suleyman Akbay, MD of the property firm who exclusively specialise in property sales along its popular Aegean and Mediterranean coastline and now Istanbul.

“Spurred by the encouraging effects of the reciprocity law removal which has since seen foreigners purchase some 11,000 properties in Turkey (Source: Turkish Environment and Planning Ministry), and which produced an astounding fourfold increase in acquisitions in the immediate month following enactment, the government is rightly acknowledging that the laws and procedures concerning residency in Turkey are a significant hurdle for foreigners considering investing here”, adds Akbay.

Turkish Law already permits citizens of many countries to obtain a residence permit, but the new ruling recognises ‘property ownership’ as a means for qualifying for longer periods of stay. Formerly, property buyers were subject to tourist visa limitations where they could only stay for three months out of every 180 days before having to apply separately for residency.

The latest ruling adds to a string of favourable law changes being introduced to ease barriers to investment in the country. Last year’s relaxation of restrictions on the amount of land a foreigner could buy and the removal of reciprocity conditions, which had stipulated only citizens or firms of countries in which Turkish nationals could buy property could do likewise in Turkey, has proved the most significant for Turkey's property industry.

“Noting the increasingly prominent march of the Turkish economy which is already conspiring to attract significant foreign investment, we’re confident that this latest announcement will add yet more spring to our overseas investors’ steps – and that’s before we note the fantastic climate, favourable rental opportunities and low cost home ownership options”, concludes Akbay.

The new property residency law is expected to come into force in early 2014.

Oceanwide Properties is currently offering a selection of luxury two, three and four bed frontline sea view villas in Kalkan with an exclusive limited time pre-completion purchase offer and £99 inspection visit, valid until 30 June 2013. The development is located within 90 minutes of Dalaman International Airport and is due to complete in 2014. 

Buy To Let In Istanbul Among World’s Best For Financial Returns Say Colordarcy

The Telegraph included Istanbul in its article 'The world's top 20 cities to buy-to-let property' this month.
Loxley McKenzie, Managing Director of Colordarcy comments, “It comes as no surprise that the Istanbul property market is attracting the attention of the national press. Colordarcy analysts have been highlighting its potential for the past 12 months.

Rents may well be static or growing modestly in the UK, for example, with RICS forecasting just 2% growth this year. In Istanbul, however, it has been a totally different story. We have seen rents rise by more than 15% in Istanbul and prices rise by nearly 20% in the year to January.”
Colordarcy analysts point out that income from rent is likely to be much higher in Turkey as the incomes of the local population rise and demand for property in Istanbul increases. Foreign investors are also arriving in increasing numbers, which only serves to increase competition for available property.

The case for turning attention away from the UK and other European countries towards Istanbul property has never been stronger according to Colordarcy. McKenzie added, “Finding good rental income is what property investment is all about. Capital growth is just the icing on the cake.”

According to Colordarcy analysts, a property market will have either rising rents or rising prices. Only rarely do both happen together. Yet this happened in Istanbul and several other cities in Turkey in the year to January 2013 according to residential property statistics release by Readin.

Residential rents for existing homes in Istanbul increased by 15.24% while prices for existing homes increased by 19.47% in the same period.

All the indications are that Turkey’s property market has yet to peak and the secret sauce that makes every property market tick is adding more spice to Istanbul’s potential as one of the world’s best buy to let property markets.

The availability of finance and the ability to take on loans to buy property is crucial to the long term stability of any property market. As mortgages have been harder to come by in most European countries, Turkey’s mortgage market has expanded rapidly. This has been helped along by tumbling interest rates that have fallen from more than 20% in 2009 to less than 10%. As a result, borrowing far more affordable for those who aspire to own their own homes in Turkey.

The amount of housing loans has increased by a factor of six, from TRY12.4 billion in 2005 to TRY86 billion in 2012 (Source: Global Property Guide).

What makes all this possible is a well-managed economy according to Colordarcy. All the main economic indicators for Turkey have turned green – GDP is predicted to be hitting 4% this year while unemployment continues to fall (Source: Turkstat).

Colordarcy is a leading property investment company that specialises in finding positive cash flow investment properties worldwide. Colordarcy investment property portfolio includes some of the best properties for sale in Brazil, Florida, Turkey and the United Kingdom.