With recent exchange rates at 4.6 TL to one Euro, the USD at 3.9 TL, and Sterling at 5.2 TL according to www.xe.com, international buying power is at a record high for Turkish goods. The decline of the Turkish Lira against major global currencies over recent years has prompted many potential investors to ask Luxury Property Turkey, ”Is this a good time to buy property?”
The answer is quite detailed, and founder of Luxury Property Turkey Darren Edwards explains why:
Does a low Turkish Lira equal lower prices overall?
A simple – and not illogical – presumption is that a strong Euro, Sterling or US Dollar would mean more purchasing power against a dropping Turkish lira. However, this is not necessarily always the case. The highest costs involved in construction are that of cement, iron, steel and other raw products. As Turkey came into line with EU standards in many industries as it prepared for possible EU membership, many of these hard goods began to be imported and thus priced in foreign currency, in addition to being taxed as imports. This means that developers often actually need to pay more for raw goods when the Turkish lira drops against global markets. In turn, this can drive up prices of new constructions.
Let’s Talk Labor.
Thus, for those investors that prefer new constructions over second hand properties, there may not necessarily be a price advantage for investors bringing a strong Euro, Sterling or USD. However, one significant factor which must be taken into consideration is the relatively cheap cost of local labor. Thus, even with increased prices for raw materials, labor costs are and will continue to be a driving factor in keeping new real estate prices lower than those of neighboring EU countries.
Investing in Existing Properties
Where the weaker Turkish Lira will truly be an advantage to a potential investor in Turkish real estate, is for an existing, private property. Not only will the private owner already have made enough real gain in the purchase over the past few years, he or she as a seller will be far more open to negotiation than a developer can be. This will be true whether the list price is in Turkish lira or a foreign currency. In fact, offering Euro, Sterling or USD for a property listed in Turkish Lira can bring excellent negotiating opportunities for foreign investors.
Contact Luxury Property Turkey today to study excellent investment opportunities while purchase power remains high.