The re-election of Prime Minister Recep Tayyip Erdogan and his AK Party in Turkey has been welcomed by foreign investors, and should help to maintain healthy conditions for growth in the country’s real estate and tourism sector, said Turkish property agency Spot Blue International Property in April.
“Continuity is important for helping Turkey to move beyond its status as a mature emerging market,” said Julian Walker, director at Spot Blue International Property. “Erdogan, who first became prime minister in 2003, and his party can now persist with schemes aimed at attracting foreign investment and advancing the country on the international economic stage. To highlight this, below are five keys areas where Erdogan’s focus can continue to make a difference to Turkey.”
- Erdogan and his AK Party are committed to driving key infrastructure projects in and around Istanbul, which will not only improve the lifestyle of Turks but also make the city more attractive to foreign investors. Examples include last autumn’s opening of the Marmaray rail tunnel connecting the European and Asian sides of Istanbul, a third rail-road bridge over the Bosphorus – the widest of its kind in the world and due for completion in 2016, an extension of the Istanbul underground and the construction of Istanbul’s third airport, set to be the world’s largest. According to the Turkish Ministry of Finance, foreign direct investment (FDI) into the country in 2013 totalled $12.686 billion.
- Erdogan continues to be instrumental in opening up Turkey’s real estate market to a wider international market and maintaining healthy investment conditions. A pivotal development was the introduction of changes to the reciprocal law in May 2012, resulting in increased numbers of investors from the Middle East and Russia. His government is also pioneering a country-wide scheme to re-develop run-down residential districts, ensuring all new housing is earthquake proof. According to Turkey’s Statistical Institute (TurkStat), foreigners bought 12,000 properties in Turkey during 2013, worth an estimated $3 billion and representing a 15% year-on-year increase. The southern province of Antalya and Istanbul attracted the highest number of sales to non-Turks. Turkey recorded the fifth highest rate of house price growth, namely 13.8%, in Knight Frank’s Global House Price Index for Q4 2013.
- In May 2013 Turkey paid off its final $412 million instalment of debt to the International Monetary Fund (IMF), after a 52-year IMF loan agreement but, more significantly, making Turkey free of any foreign debt for the first time in more than a century. This step formed part of Erdogan’s ongoing efforts to minimize government debt and confirms Turkey’s status as a ‘maturing emerging market’ no longer reliant on external fiscal assistance.
- Growing GDP remains paramount to Erdogan. Rating agency Fitch’s forecast for economic growth in Turkey is 2.5% for 2014 - on a par with the UK - and 3.2% for 2015. TurkStat figures show GDP growth of 4.4% in the final quarter of 2013 – ahead of forecasts. Compare this to the European Union and Eurozone – the European Commission forecasts growth of 1.5% for the former and 1.2% for the latter in 2014, and 2% and 1.8% respectively for 2015. Good news for the average Turk has followed: per capita income has tripled from $3,500 in 2002 to $10,666 in 2012.
- Turkey has grown into a major tourist international destination under Erdogan’s rule. The country welcomed a record 34.9 million tourists in 2013, a year-on-year rise of 10%. Compare this to the 13 million who visited in 2002. Symbolic of Turkey’s progress is the growing status of its national carrier, Turkish Airlines, one of the world’s fastest growing airlines. In January 2014, the airline recorded a 24.3 per cent year-on-year rise in passengers numbers and increased the number of destinations it covers by 12 per cent, reaching to 243 from 218 last January.