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Economic Factors Paper

Turkey has many market drivers that make it an ideal location currently for property investment. Here we look at some of the reasons why Turkey is one of the world’s hottest investment property locations. * Excellent capital growth projections of around 25% per annum Land prices in Turkey have risen in recent years and, in many cases, doubled. In 2005 to 2006, property prices have risen by 25–40%. Recent research shows that by comparison investments made since 1994 have yielded the following average returns: * Stock market – 18% (gross) * Turkish property – 568% (net) * Pension plans significant loss (net) (Source: invest-in-turkey. co. uk) * In the opinion of ‘A place in the Sun’ in the October 2004 edition of their magazine, price increases in beach areas are expected to rise initially by 50% and then over the next two to three years by 100%. Taking an average of 25% capital growth, a property purchased at GBP 60,000 with sustained growth over five years will have a market value of GBP 183,105, entailing a huge 305% return on investment. Turkey is just entering the EU process Turkey is currently at the very start of the long road to possible EU inclusion, meaning there are still another 5-10 years before prices rise substantially.

Prior to EU membership, there are many factors yet to be discussed and many of Turkey’s issues that need to be corrected before incorporation will be seriously considered. However Turkey has some strong backers for its entry and when it does get accepted into the EU, it is reasonable to expect the price of property to rise greatly in line with a huge surge in tourism. Many investors are purchasing in Turkey with EU inclusion as a major driving force, while looking to take advantage of the current low property prices and growing rental market. Turkey is at the brink of a property boom

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With so many indicators, many of which are outlined on this page, its clear to see that Turkey is at the beginning of a “property boom”. A boom period generally indicates a time when demand for property outstrips supply. This is currently the situation in Turkey especially in the major investment areas such as Bodrum, Istanbul and Dalaman. Turkish economy is very strong with 5. 5% GDP growth in 2005 The Turkish economy is currently very strong and undergoing much growth. After an average growth of only 2. 8 % for ten years from 1993 to 2002, Turkey was able to achieve a growth rate of 5. % in 2003 and a substantially higher rate in 2004. Turkey now has the 22nd largest economy in the world. Excellent value front line properties with high capital growth potential What is really attracting interest from international property investors is the current value for money of properties in Turkey. The Turkish market still offers excellent quality properties at prices that most other locations of a similar calibre could not offer 10 years ago. These prices, combined with the outstanding expected growth and powered by strong market drivers, offer property investors a unique opportunity.

Over 25 million tourists visit Turkey each year and boost the property market A major indication of the current state of any property market is the tourist trade. In Turkey the tourist market is expanding massively as the country gains more exposure in the international press. The possibility of it becoming an EU member country is slowly beginning to take hold. Current demand for Turkey is reflected in the 25 million tourists it attracts per annum. This translates into solid rental yields by buy-to-let investors who purchase in the best tourist locations.

Golf tourism evolving in Antalya, making golf investments more valuable Golf has been a strong market driver in many successful property markets around the world for many years. Spain has used golf to generate a very strong secondary season with thousands of golfers flocking to its shores to play golf during a time when they can’t play their sport at home. With golf being so popular around the world many developments are now being constructed around or near golfing facilities. Turkey and namely Antalya is no different. Turkey offers a modern infrastructure Many emerging markets have limited infrastructure and this is always a roblem that can stunt development. However Turkey has a solid and modern infrastructure that is rapidly growing in line with its economy, tourism and property markets. Turkey is considered to be a highly dynamic country by the World Trade Organisation Turkey is a dynamic and emerging country equipped with a network of well-developed infrastructure and a globally competitive work force. Its unique position at the crossroads of the world trade routes and its proximity to the developing energy producing areas in the Caspian and Central Asia are factors that further raise its economic potential for the coming years.

Turkey is also home to a thriving tourist industry and a fast growing property market, attracting huge international interest. Property prices are on the increase Land prices in Turkey are said to have doubled over the last 2 years. “A property that cost ? 35,000 in 2004 but starts from about ? 60,000 shows that prices have increased by as much as 30% in some areas but the build quality is of a high standard and, relatively speaking, property in Turkey remains a bargain. ” (The Times Online February 2005). No capital gains tax

Turkey also offers some tax incentives that are of high interest to property investors, such as its regulations regarding capital gains tax. If you sell your property after four years, there is no capital gains tax. Property that is sold before the period is over will be charged at the standard rate of income tax (between 15% and 35%), calculated on the difference between the buying and selling price. General economic overview The Turkish economy is composed of a mix of industry and commerce. Along with a traditional agriculture sector that still accounts for more than 35% of employment, it has a strong and rapidly growing private sector.

However, the State still plays a major role in basic industry, banking, transport, and communication. The largest industrial sector is textiles and clothing, which accounts for one-third of industrial employment; it faces stiff competition in international markets with the end of the global quota system. However, other sectors, notably the automotive and electronics industries, are rising in importance within Turkey’s export mix. In 2004 GDP growth reached 9%. Inflation fell to 7. 7% in 2005 – a 30-year low. Turkey offers a very competitive cost of living.

This is another driving factor for tourists and those looking to re-locate. Money still goes much further in the warmer Turkish environment. A beer will cost you about €0. 60 and a meal in a restaurant starts at about €8. 00. (2005 Turkish Embassy information). INFORMATION ON TURKEY Turkish economy which is the 17th largest economy in the world, according to World Bank rankings with a GDP of US$800 billion. Turkey’s dynamic economy is a complex mix of modern industry and commerce along with a traditional agriculture sector that still accounts for about 25% of employment.

It has a strong and rapidly growing private sector, and while the state remains a major participant in basic industry, banking, transport and communication, this role has been diminishing as Turkey’s privatization program continues. Turkey is becoming increasingly appealing to foreign investors backed by positive macroeconomic trends and successive rounds of structural reforms realized in the past few years. General facts about Turkey Economy After a deep economic crisis in 2001, the Turkish economy entered into a rapid recovery period and grew 6. % annually on average and almost 50% cumulatively, from 2002 to 2007. Structural reforms, prudent macroeconomic policies, political stabilization and favourable conditions in international markets played an important role in this high growth performance. With the starting of the EU membership negotiation process on 3rd of October, the EU perspective has strengthened and this contributed a more positive economic and political environment in Turkey. This process also meant more harmonization with the EU laws and regulations that could boost further FDI flows to Turkey in the following years.

The growth was expected to continue as long as Turkey remained strictly tied to the IMF-backed economic program but after twenty-seven straight quarters of positive growth, the Turkish economy contracted in Q4 2008. In September 2009, the Turkish government revised down its economic growth forecast to a 6% contraction for 2009 and 3. 5% growth in 2010. As of 2008, GDP amounted to roughly US$800 billion, making Turkey the 17th largest economy in the world, according to World Bank rankings. The stock value of FDI stood at more than $180 billion at year-end 2009.

Privatization sales are currently approaching $39 billion. Oil began to flow through the Baku-Tblisi-Ceyhan pipeline in May 2006, marking a major milestone that will bring up to 1 million barrels per day from the Caspian to market. Several gas pipelines also are being planned to help move Central Asian gas to Europe via Turkey. Financial markets and banking system also weathered the 2009 global financial crisis and did not suffer significant declines due to banking and structural reforms implemented during the country’s own financial crisis in 2001.

Economic fundamentals are sound, but the Turkish economy has been facing more negative economic indicators in 2010 as the global economic slowdown continues to curb demand for Turkish exports. On the 1st of January 2005, 6 digits (zeros) were dropped from the Turkish Lira (TL) denominations. Together with the TL, Kurus (Kr), which is a hundredth of TL 1, has become in use again. Income Distribution of income is relatively skewed with more than half of all income earned by the richest 20% of Turkish households. This distribution is more uneven in urban areas than in rural areas.

One of the reasons for this inequality is the unemployment problem. As in many countries, creating jobs for a fast growing population is a major problem. Demography The population of Turkey is 72 million. Compared to other countries, Turkey’s population is relatively young where about 37 million people are under the age of 35 and 40% are under the age of fifteen. The household number is around 17 million and the local civilian work force is about 25 million. The birth rate and the rate of population increase are high compared to many European countries. These factors make Turkey a promising market for many product and service sectors.

Istanbul As Turkey’s major commercial center, Istanbul is home to half of Turkey’s top 500 companies and all of the country’s major media and advertising groups. It’s logistic and business links to the Black Sea and Central Asia, easy international access via air, sea, rail and road which make it easier to roll out a product from Istanbul to other parts of Turkey, are among the factors which make Istanbul one of the most promising cities in the world. Turkey Trade, Exports and Imports After experiencing an economic boom during 2002-2007, Turkey’s economy took a beating in 2008, following the global financial meltdown.

One of the major issues that the country is facing is the declining exports to European countries. Turkey’s trade, exports and imports were hit badly in the year 2008, when the trade deficit stood at -31%. Turkey has diversified its economy in the 2000s, following an active participation in exports to Europe and other Asian countries. The Turkish industry of late has started looking beyond the Middle East, but still lags behind its European counterparts. The industrial share of the Gross National Product (GNP) stood at 30% as of 2Q2009.

Turkey’s major export products include clothes, electronics, automobiles and agricultural products. Other major products exported from Turkey include iron and steel, mineral fuels and oil, precious stones and tobacco. On the other hand, the major import commodities for Turkey include electrical equipment, mechanical appliances, optical instruments, iron and steel, and pharmaceutical products. Turkey’s major import partners are the USA, Russia, Germany, Italy, France, Switzerland and the UK. Oil exports from Turkey in 2008 stood at 141,700 b/d, with oil imports at 783,800 b/d in the same period.

The total exports amounted to $111 billion in 2009, which fell from its 2008 estimates of $140. 7 billion. The total importsamounted to $134. 2 billion, according to the 2009 estimates, which again fell from the 2008 estimates of $193. 9 billion. Turkey Trade, Exports and Imports: Alternatives Turkey has started to explore alternative markets to counter the effects of the financial crisis. Exports to countries in Africa and Central Asia have increased tremendously. Trade with the Organization of Islamic Countries (OIC) has jumped by more than 50% in 2008. FDI from the Middle East countries increased to almost $2 billion in 2008.

Exports to Iraq increased by 75% in 1Q2009, and trade relations with Africa are expected to strengthen in 2010. Turkey (Turkish: Turkiye), known officially as the Republic of Turkey ( Turkiye Cumhuriyeti (help·info)), is a Eurasian country that stretches across the Anatolian peninsula in western Asia and Thrace in the Balkan region of southeastern Europe. Turkey is one of the six independent Turkic states. Turkey is bordered by eight countries: Bulgaria to the northwest; Greece to the west; Georgia to the northeast;Armenia, Azerbaijan (the exclave of Nakhchivan) and Iran to the east; and Iraq and Syria to the southeast.

The Mediterranean Sea andCyprus are to the south; the Aegean Sea to the west; and the Black Sea is to the north. The Sea of Marmara, the Bosphorus and theDardanelles (which together form the Turkish Straits) demarcate the boundary between Eastern Thrace and Anatolia; they also separateEurope and Asia. [6] Turkey’s location at the crossroads of Europe and Asia makes it a country of significant geostrategic importance. [7][8] The predominant religion by number of people is Islam–about 97% of the population, the second by number of people is Christianity–0,6%, according to the World Christian Encyclopedia. 9] The country’s official language is Turkish, whereas Kurdish and Zazaki languages are spoken by Kurds and Zazas, who comprise 18% of the population. [10] Turks began migrating into the area now called Turkey (“land of the Turks”) in the eleventh century. The process was greatly accelerated by the Seljuk victory over the Byzantine Empire at the Battle of Manzikert[11]. Several small beyliks and the Seljuk Sultanate of Rum ruled Anatolia until the Mongol Empire’s invasion. Starting from the thirteenth century, the Ottoman beylik united Anatolia and created an empire encompassing much of Southeastern Europe, Western Asia and North Africa.

After the Ottoman Empire collapsed following its defeat inWorld War I, parts of it were occupied by the victorious Allies. A cadre of young military officers, led by Mustafa Kemal Ataturk, organized a successful resistance to the Allies; in 1923, they would establish the modern Republic of Turkey with Ataturk as its first president. Turkey is a democratic, secular, unitary, constitutional republic, with an ancient cultural heritage. Turkey has become increasingly integrated with the West through membership in organizations such as the Council of Europe, NATO, OECD, OSCE and the G-20 major economies.

Turkey began full membership negotiations with the European Union in 2005, having been an associate member of theEuropean Economic Community since 1963 and having reached a customs union agreement in 1995. Turkey has also fostered close cultural, political, economic and industrial relations with the Middle East, the Turkic states of Central Asia and the African countries through membership in organizations such as the Organisation of the Islamic Conference and the Economic Cooperation Organization. Given its strategic location, large economy and army, Turkey is classified as a regional power. [12][13]

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