With thousands of potential property buyers seduced by Turkey’s bargain property prices, the temptation is to think that making a solid return is a no-brainer! Searching the Internet, dozens of articles and property websites boast about the 100% capital growth that can be achieved on Turkish property investments in the space of 12 months. For first time investors with small budgets looking for a step onto the property ladder, this seems like an opportunity almost too good to be true! The result is that thousands of novice speculators and second homebuyers are flocking to Turkey to cash in on the investment opportunities it offers. But as the saying goes, if it sounds too good to be true, well then, it probably is too good to be true.

Firstly, the past two years have seen a decline in rental yields in many of Europe’s more established property markets. The UK, Ireland particularly are seeing rental yields drop to under three per cent. Combined with the over inflated cost of property in these countries, the Western Europe investment market is a tough one to work.

This has resulted in thousands of investors, turning to Europe’s emerging economies, seeking out markets that can work their funds more profitably. Close behind them follow hundreds of amateur investors and holiday homes buyers ready to buy up the new properties being built by professional developers.

Two or three decades ago, Spain was experiencing the type of interest that Turkey is receiving now. With the rise of the foreign holiday as a luxury the masses could afford, Brits began to flock to sun soaked Spain. Their interest promoted an influx of developers who took advantage of Spain’s popularity with tourists and built affordable holiday homes. This encouraged many of the tourists to invest in their own little piece of paradise, with the advantage of being able to extend their own stay and encourage others in by letting their property. The result over the years was a continuing rise in property prices but also a strengthening tourist economy, a well-developed infrastructure and growing opportunities and financial benefits for native Spaniards.

Property prices in Spain are now so high that buyers are forced to look for cheaper alternatives. In turning to Turkey, the cycle will begin again. In fifteen to twenty year’s time, the Turkish property market may well be over-priced for second homebuyers and once again the search will begin for new and cheap destinations.

So while Turkey is proving to be a wise investment option with some properties offering up to 80% capital appreciation in one year, it is still necessary to be very cautious when choosing where to invest. Property prices are rising significantly but largely in the more established and more desirable tourist hotspots. Buying a new apartment can cost as little as €40,000 and is likely to be solid investment, since they can be easily let to the increasing number of tourists coming to experience the delights of Turkey.

A quick trawl through the Turkish real estate portals and you’re likely to find 100’s of properties under €40,000. With prices like this, the temptation is to rush in and buy, sometimes without even seeing the property. But in Turkey, it is wise not to be carried away by the prospect of a property at this price doubling its value in one year. The problem with many of these properties is that they tend to be located in Turkey’s most isolated and rural areas. These areas are often weak on infrastructure and services and may lag behind the rest of Turkey for many years to come.

Investing in Turkey’s more established locations, such as Alanya, Konakli and Mahmutlar, may seem more expensive for the budget investor. But when you consider the headaches and additional expenses that come with renovating an old property in rural Turkey, as well as the language difficulties, your budget buy could prove not to have been such a bargain after all! Also, these properties could very well be difficult to rent. Although Turkey is growing in popularity with eco-tourists, this tourist sector has not taken off to the same extent as the more traditional sun or ski holiday destinations. Consequently, the likelihood of property prices rising as dramatically in isolated areas is very slim.

Again Spain makes a good example. Though Spain saw property prices increase by over 100% on joining the EU, it is still possible even now to find properties in the most isolated, inland areas for as little as €50,000. These areas are only now gaining the interest of property buyers priced out of Spain’s more desirable locations.

The situation will be similar in Turkey. Tourists will flock to Mediterranean coasts. Consequently, developers will continue to invest in these areas. New developments will attract more buyers and more tourists and the areas will see continued capital appreciation on investments. Isolated areas, lacking amenities and services will be overlooked and property prices in these areas will remain significantly lower than the rest of Turkey.

For intrepid investors willing to take a long-term view on their investment and wait 15 to 20 years to see significant returns, then cheap isolated properties may be worth considering. But the certainty of a return and the ability to approximate what that return will be is far more likely with properties in the more established Turkish destinations.