Guide to Turkey. Modern Day Turkish Economics. Foreign Direct Investment in to Turkey

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2 Guide to Turkey Recently Turkey and the Turkish economy have been benefitting from a boom in many senses of the word. Tourism rates are higher then they have ever been, the economy seems to be going from strength to strength and the number of people buying property in Turkey is at an all time high. This report seeks to identify the strengths as well as the weaknesses with the Turkish economy and property market to offer the Opulent investors a true reflection of the current property purchasing conditions in Turkey prior to making any investments there. Should you have any questions on any of this please feel free to info@opulentinvest.com or speak to your investment advisor. Modern Day Turkish Economics In the late 1990s, Turkey was running 90% inflation and attracting almost no foreign investment. As recently as 2002, Turkey was using up almost 90% of its tax revenues to pay the interest on its debt. Today, these problems have all but disappeared. In part this is due to a buoyant level of growth with GDP in recent years currently standing at 8% as well as the countries ability to attract a strong amount of FDI of late. There have however been some concerns recently around the monetory policy of Turkey and their inability to reduce interest rates to curb rising inflation and stem a depreciating currency. This section of the report attempts to provide a realistic and unbiased review of the Turkish economy in particular paying attention to what we at Opulent believe to be the key components. Foreign Direct Investment in to Turkey

3 Countries Investing in to Turkey The Positives Turkey has the worlds 15th largest nominal GDP and 17th largest GDP by PPP built largely on the countries expertise within the agcricultural and industrial sectors. Turkey s once-fragile banking sector was strong enough to get through the 2008 financial crisis with only a brief, albeit deep, recession. Then, as the United States unleashed an unprecedented monetary stimulus, Turkey floated on a sea of money. Growth roared ahead, the economy expanded by 9.2% in 2010 and 8.8% in 2011, although higher interest rates slowed the overheating economy to 2.2% growth in 2012

4 Growth Forecast for Selected Countries Turkey s achievements are all the more remarkable when one considers its neighbourhood. Its neighbours to the west, Cyprus and Greece, are at the epicentre of the eurozone crisis. To the south-east is war-torn Syria, which has already disgorged almost 400,000 refugees into Turkey. To the east lie Iraq and Iran. And to the north-east lie Armenia and Georgia. If there is a more complicated neighbourhood in the world, it would be difficult to find it. Growth data for the first nine months of 2013 showed a discernible improvement in the economy in contrast to the the previous year. Turkey s economy maintained its recovery trend with 4.4% growth in the third quarter of 2013 compared to the same period in Real GDP Growth of selected countries According to data released by TURKSTAT, GDP in the first three quarters of 2013 rose 4.4% compared to the same period in the previous year. While consumption contributed 3.6%, and private and public sector investments 1%, to GDP growth, net exports had a negative impact on growth of 2.2%. As of the end of 2014, the Turkish economy is expected to have achieved growth of approximately 4%.

5 Real GDP Growth of selected countries The key government objective is to be a top 10 economy by 2023 and how the country plans to get there is through a massive spending spree and inward investment. To be precise the government is planning on spending $250bn on things like infrastructure notably with a 3 rd airport in Istanbul ( 22bn), A new Canal project project to ease shipping traffic in the Bosphurous as well as an improved metro network in Istanbul and a brand new airport tipped to be the largest airport in the world. Unemployment in the country has slowly decreased over the years although has tailed off a little of late. Turkish Unemployment Rate

6 The Turkish Economy - The not so positive Some economic experts have recently reported somewhat of a strom cloud gathering over the Turkish Economy attributable to the Turkish ministry of economy seemingly incompetence around dealing with the countries out of control inflation and budget deficit. Inflation is running at over 7%, the currency has slipped a little and the current-account deficit is around 7% of GDP. These are all raising alarm bells and investor confidence has subsequently suffered a knockback in recent months. Turkey has however appointed a new prime minister whose critics are backing him to try and put this right and the government have already began to implmenet austerity measures to curb this. Most economists are citing an increase in interest rates to be one way to curb the rising inflation in the country and get the economy back on track, something the Turkish government have been criticised for not implementing as yet in fear that it will put the brakes on an otherwise growing economy. Property Investment and Turkey Turkey is day by day attaining itself a more significant place in both the global political and economical landscape. One of the prime components of Turkey s success is undoubtedly the real estate market which in recent years has been the subject of much investment both from local and international investors. According to a recent study on real estate conducted by PwC Turkey Istanbul continues to be one of the most popular destinations for future development opportunities in the coming few years ahead of many developed Europian cities. According to a recent survey by Knight Frank, Turkish existing property prices rose by 12.2% second quarter of 2013, the highest to be seen in Europe, while officials now expect foreign real estate investment to hit $5bn by the end of In the first quarter of 2014 Turkey ranked 4 th on the global price index demonstrating a 13.8% change compared to the same quarter the previous year. Rental yields have grown steadily over the year leading up to 2014 and were hovering around the 5% mark for Istanbul. Knight Frank Global House Price Index

7 In part the recent growth has been attributable to the increase in the number of visitors coming to Turkey. Foreign visitors to Turkey increased by 3.24% year on year in the first three months of 2014, reaching 4.35 million, according to data from the Ministry of Tourism and Culture. The second quarter recorded even greater growth, up 6.8% year on year, peaking at 10.9 million. In terms of revenue, tourism generated a record high of $8.9 billion in the second quarter of 2014, a 7.9% increase over the same period last year. Turkey welcomed more than 35 million foreign visitors in 2013, becoming the sixth most popular travel destination in the world, but is forecast to receive 43 million tourists in 2014, with the sector generating revenue of $36 billion. Sales to foreigners in Turkey rose 60% year on year during the first six months of 2014, totalling 8,507 property purchases, according to figures from the Turkish Statistical Institute (Source Property Wire). For the same period, Istanbul alone recorded a 150% increase in foreign buyers, putting it ahead of the tourist province of Antalya, home to the popular resorts of Alanya, Belek and Kalkan. Meanwhile, the average price of a new Turkish home was 12.05% higher in June compared to June It was one of the strongest months for the Turkish property market with 600 foreign purchases in Istanbul, followed by Antalya at 586 and Aydin at 108. The Turkish Ministry of Economy confirmed that foreigners bought $1.26 billion worth of Turkish real estate in the first four months of the year, which was $893million more than in the same period in In addition to the strong overseas demand Turkey has also witnessed a strong local demand for properties again pushing prices upwards. 60% of the population in Turkey is under 30 and with the unprecedented growth in the economy of late much of the young people are now earning more, a middle class is emerging and no longer do they want to live in shared houses with up to two families which has again meant an increase in demand for property. Istanbul leads the way in terms of destinations for property investment. Property price growth in Istanbul was more than twice the rate of growth in April compared with a year ago, according to the latest figures to be published. In the first two months of the year prices in the Turkish capital appeared to be rising at a more moderate pace than in Then in April by more than 1% in a month, according to the data from Gyoder. Investors however should not be limited to just Istanbul. After doing lots of research in the Turkish market, Opulent believe there are other pockets of Turkey that can demonstrate signifcant returns over a medium to longterm timescale. One such area is the popular Turquoise Coast, the stretch of land that runs from Bodrum at the northern tip right the way down to Antalya at the southern tip. Such areas are usually favoured for holiday home or lifestyle purchasers but if purchased at the right time, at the right price and in the right location investors can make handsome returns in these areas too. In summary, there has never been a better time to Invest in Turkey. Investors who take the leap now stand to gain. Opulent have a variety of investments in Turkey for more information please contact info@opulentinvest.com

8 Istanbul was elected as top city in Europe for development prospects according to the ULI PwC 2013 report 500,000 Housing sales annually in Turkey Up to 400 point direct flights from Istanbul, 22 Direct Access to the capital cities within 2 hours Attractive Foreign Direct Investment, FDI grew from USD 5.6bn to USD 29.4bn between 2002 aand 2011 Expected to be the 9 th largest economy in the world by 2050 Currently 16 th largest economy in the world and 6 th largest in Europe Turkey is visited by over 36m tourists in 2012 Turkey is the 6 th most favourable tourism destination in the world 19 cities over 1 million population Currency is Turkish Lira