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Economic Situation

PAST

Turkey has been through many upheavals and changes over the past centuries and decades.

There was a strong German influence in Turkey, dating from the First World War and this has only recently started to decline.

Turkey has in the past been a relatively poor country, however it does have its natural resources and gas and these, together with a growing manufacturing industry and fast growing tourist trade are contributing to a rapidly growing economy.

Turkey has traditionally been a cash trade country, as have most Middle East Countries. Credit was both hard to get and extremely expensive, as Turkish Lira interest rates were very high, until recently, over 60%. Changes however are on the way. Also, the Turkish Lira has suffered a large number of major devalutions over the years, which has discouraged foreign investors into Turkey, both corporate and private. This has also prompted local businesses, including and particulary estate agencies, to quote in hard foreign currencies. Sterling has and still is predominant at this time and in this region, although with the declining pound at the moment, there is indication that the Euro has become the common currency in Europe.

PRESENT

Turkey is preparing to join the European Union and to assist reforms in the economy in order to meet EU standards and regulations, the ECB (Europeon Central Bank) are now working with the Turkish Central Bank. Already one can see changes, particularly in interest rates, which have already been reduced to under 20% within the next 18 months or so and down to single figures within the next three years. Bad news perhaps for those expats who invest their savings in Turkish Lira and manage to live entirely on the interest , however there is still time to use the old addage ‘Make hay while the sun shines’ you have a little while yet to earn good income from Turkish interest rates.

The Turkish economy is strengthening and looks set to continue that trend. The likelyhood of further major devaluations looks low and the lower cost of borrowing will inevitably attract foreign investors.

The one area of attractive investment in Turkey at this time is property. So many Europen particularly British people are fed up with low returns on investments in Europe and the UK, also they are tired of the fast rising cost of living and what some see as a trend towards police states within Europe. Europeans in Spain and Portugal are also now thinking the same way and there is growing influx in Turkey of private investors and individuals who just want to enjoy low costs of living and a relaxed way of life, in a warm climate, whilst realising a good return on their investment. There is no doubt that Turkey is The Place To İnvest, at least for the foreseeable future.

FUTURE

Turkey is inextricably headed towards Europe and is expected to accede within the next five years or so.

Membership discussions will start again in 2004, with a view to confirming Turkey’s compliance with all the necessary criteria by 2006. The Turkish economy is expected to grow by 3 – 5% during the accession period, encouraged by the ECB and assisted by some aid from Europe. In the meantime, Europeans and in particular, Brits, are anticipating the event and are investing heavily in property here. İt seems inevitable that property prices will rise eventually to European levels, probably to those of the Costa Del Sol on the South coast of Spain. In fact the Turkish government plan to create the Riviera of Turkey within the Fethiye region, so it is possible Fethiye will become the most expensive coastal region in Turkey over the next few years.

The tourist trade is growing rapidly as the word spreads that Turkey is becoming a higher class tourist area. This in itself will give the region an even higher profile and will consequently enhance the property market.

Fethiye in particular, which includes Çaliş, Oludeniz, Hisaronu is gaining in popularity over Marmaris and Bodrum and is also taking business from Spain and Portugal, in terms of both tourism and property.