So cheap big spenders need not apply

Profile: Turkey Turkey is an emerging market for property investors, and there's plenty of value to be had, reports Nicholas Birch

Fed up with those conversations about how you can't even buy a broom cupboard back home for less than €200,000? Put off by the prohibitively high cost of property in Spain? It might be time to have a look at Turkey, say the experts.

The advantages are many, says the manager of the newly-opened Dublin branch of the Turkish Property Centre, Aimee Pegler. Hundreds of miles of beautiful coastline, endless sun, so many historical sites you'll be tripping over them, and great night life. But it's the prices that will really do it.

"Even a parking space in central Dublin costs you between €80,000 to €90,000 nowadays," she says. "For the same money you can buy a couple of properties in Turkey."

In Altinkum, a new development on the southern end of Turkey's Aegean coast, two-bedroom apartments bought via the Turkish Property Centre are going for anywhere between €22,000 and €30,000. Further east in Alanya, a pretty Mediterranean town with a new airport and marina, plus a golf course on the way, property developers like Colin Twells of M&C Property.com are selling similar units, brand new, for between €40,000 and €50,000.

Even in more established resorts like Bodrum and Fethiye, long the haunt of foreign holiday-makers and wealthy Turks escaping the sultry summers in Istanbul and Ankara, prices are still considerably lower than in western Europe - €85,000 should still get you a two-bedroom apartment in central Bodrum.

The prices for three-bedroom villas are similarly reasonable, starting at around €60,000 in Altinkum, €90,000 in Alanya, €115,000 in Fethiye and €150,000 in central Antalya. Houses with a private pool cost around 30 per cent more.

For the big-spending client, there are of course properties to match. A newly refurbished six-bedroom stone house plus five independent guesthouses set in 18 acres of land near Bodrum is being sold by Acquavista Properties for £1,065,090 sterling (around €1,540,000).

Just down the road in the centre of upmarket Yalikavak, www.turkish-homes.com is offering a 450 sq m (4,844 sq ft) four-bedroom mansion set in a 1,385 sq m (14,908 sq ft) landscaped garden for £680,000 (around €985,000). Pool, marble floors and triumphal arch-style entrance included.

Generally, though, says Heidi Moore, a partner at Fethiye-based Windsor Property Management, big spenders need not apply.

"If you come along with £350,000 (around €507,000), you'll have no difficulty finding someone willing to let you pay it," she jokes. "But the maximum you can really hope to pay for a property around here is £250,000 (around € 362,000)."

Even in relatively pricey Fethiye, she notes, "a nice-sized house with 500-600 sq m (5,382-6,458 sq ft) of land and pool almost never costs more than € 220,000".

The main reason for the competitive prices, experts say, is that Turkey has only recently begun to fulfil its potential as a replacement for large-scale summer resorts further west in Europe.

Bodrum may be over 1,000 miles from Turkey's mountainous borders with Iraq and Iran, but the country has long suffered from the perception that it is too close to comfort to some of the world's danger zones. A spate of separatist Kurdish bomb attacks on tourist centres in the mid-1990s did little to calm apprehensive visitors.

But with the civil war in the east of the country now at an end, and Turkey's future made clearer by the European Union agreement last December to begin accession proceedings, such fears now appear a thing of the past.

The Turkish government has also done its bit to encourage outside interest, dropping a law that until five years ago prohibited foreigners from investing in Turkish property. Even the on-going requirement that foreign property purchases be checked by the Turkish military before closure is, in almost all cases, now little more than a formality.

"Buying a house in Turkey is very different from buying one in Ireland or Britain," says Dennis Phillips, head of emerging markets at John Howell & Co, a London-based solicitors firm specialising in international conveyancing. "But it's never been easier than today."

The result, he adds, is an exponential rise in interest in Turkish properties. Two years ago, his office helped 2,000 people buy houses in Turkey.

This year, that number should rise to 15,000. "We're snowed under," says Mr Phillips. With between 50 and 100 enquiries to deal with each week, it's a feeling the Turkish Property Centre's Aimee Pegler shares.

Not surprisingly, the recent boom in interest has had an effect on property prices in Turkey. Apartments and houses in central Bodrum have risen in value by on average 50 per cent in the past year. In and around Fethiye, local estate agents say, house prices have gone up by anything between 50 and 150 per cent over the past two years and show no signs of levelling out.

With Turkey touted by many as the new Spain, its property market is quite understandably attracting - not just people looking for a holiday home they can sublet - but buyers with their eyes on a medium to long-term investment.

But, say brokers, prospective buyers should not allow the allure of knock-down prices and almost certain future profit to go too much to their heads. Though Turkey is rapidly bringing its legal system up to date, it still trails some way behind western Europe.

One problem which continues to dog the property market here is the inadequacy of existing planning regulations. Even the biggest property developers sometimes build first and get planning permission afterwards, according to local estate agents.

Thanks to the often considerable local political influence they wield, that is not usually a problem. But prospective buyers are advised to use experienced solicitors to ensure they don't end up paying for a property that officially doesn't exist.

A second common pitfall is the widespread and illegal practice of under-declaring the purchase price to reduce the seller's tax liability and, in return, the buyer's stamp tax. It's a form of tax evasion that Turkey's increasingly wily tax authorities are beginning to follow up more ruthlessly. Even without them, though, it's a business that risks blowing up in your face when you come to resell a property.

Find a buyer willing to make a similar under-declaration, and you might get away with it. Otherwise, says John Howell & Co's Dennis Phillips, you "will be lumped with artificially high capital gains tax". That, he adds, "could be tax suicide".