Turkish real estate companies expect the building and property sector to grow by more than 10 percent this year, while up to four property firms will list on the stock market, the business association head said.

Turkey's economy, which suffered a financial crisis in 2001, is now enjoying strong growth and is attracting foreign investors. Haluk Sur, who heads the Association of Real Estate Investment Companies (GYODER), reckons the real estate and construction sector will outpace overall economic growth this year to become a more important chunk of the economy.

Sur, who is also chief executive of İhlas, one of 10 listed real estate investment trusts (REIT), said three or four more REITs will list on the stock market this year as part of a wider boom in new share sales.

"[Growth] may not be 20 percent but not less than 10," Sur told Reuters in an interview.
In recent years the real estate and construction sectors have made up about 10 percent of Gross National Product, which has been seen growing to YTL 539.9 billion ($381 billion according to government calculations).

That would be slower than the construction sector's exceptional 19.7 percent growth in the first nine months last year, outpacing 5.5 percent for the whole economy, as interest rates fell and the market suddenly picked up after years in the doldrums due to the financial crisis. In some parts of Istanbul, Turkey's largest city with a population of 12 million and 3 million homes, real estate prices rose as much as 150 to 200 percent last year, Sur said.

"[From now on] the price increase in the real estate market will be more meaningful, and may be 9 to 10 or 12 percent."

One of the reasons behind the boom is an increase in home ownership rates in Turkey as economic growth translates into higher spending power.

"In my opinion it may go up to 70 to 75 percent in the coming 10 years," said Sur, who also sees opportunities in possible public-private partnerships to redevelop Turkey's shanty towns and areas where housing is not resilient to earthquakes.

Economists expect lower borrowing rates -- currently at 13.5 percent -- and lower inflation after years of double-digit levels.

Turkey's candidacy to joint the European Union also is likely to help fuel foreign interest in construction and property, following the example of the EU's new Eastern European members, they say.

"Turkey has underdeveloped construction as a percentage of Gross Domestic Product. If you look at offices [per capita], it's tiny compared to EU countries," said Mark Robinson, head of research at CA IB International Markets.

"It's sustainable, because we've seen this downturn for the last four or five years. There's a lot of catch-up in Turkey," he added.

A new law allowing mortgages is awaiting final approval in Parliament and is likely to further drive the real estate sector.

But Ihlas's Sur did not expect radical changes soon, because the country first needs to firmly establish a secondary market to make mortgages secure, which could take a couple of years.

ANKARA - Turkish Daily News

Turkey concluded its accession talks on the first of the 35 negotiating
chapters with the European Union yesterday, passing a critical
threshold in its membership process, but difficulties that surrounded
the event showed that many more Cyprus-related obstacles lie ahead.

The Greek Cypriots dropped their objection to the opening and
conclusion of the talks on the science and research chapter after the
EU agreed, following several hours of intense negotiations in
Luxembourg at the ministerial level, to mention Ankara's obligation to
open its ports and airports to traffic from Greek Cyprus and to refer
to a declaration issued in September calling on Turkey to recognize and
normalize its ties with the Greek Cypriot administration.

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Greek Cyprus is now set to work to toughen the tone of an EU statement that will be issued after a summit later this week.

The EU position paper for talks on science and research says the talks were closed only provisionally, a sign of the Cyprus row hovering like the sword of Democles over Ankara's head throughout the rest of its accession process.

Greek Cyprus has the right to veto Turkey's talks at the opening or closing of talks on each of the remaining 34 chapters.

"This process has its difficulties and its ups and downs. What is important is to live with them and reach the eventual goal of full membership," Foreign Minister Abdullah Gül told reporters before departing for Luxembourg together with State Minister Ali Babacan, Turkey's chief negotiator for EU talks.

A total of 1,206 pieces of property were sold to foreigners in the first quarter of this year. Showing that even the temporary withdrawal of the rights of foreigners to buy Turkish property did little to dampen enthusiasm in the market.

According to data provided by the Land Registry General Directorate and reported in Turkish Daily News, from Jan. 7, 2006 through to mid April, the total number of properties sold to foreigners was 1,206.

More and more different nationalities are purchasing in Turkey. The figures show citizens from 24 countries bought real estate there, though British buyers are still the most committed to Turkish property . During the period in question 588 British citizens, most preferring the south of Turkey, bought 420 pieces of real estate, followed by the Germans, Irish, Dutch, Norwegians, Belgians and Greeks.

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