TURKEY, the traditional land bridge between Europe and Asia, has become one of the most popular markets for overseas property investors in recent years. But with miles of coastal developments, rising prices and access issues, potential buyers need to be careful that they are not buying into a speculative bubble.

According to the Turkish Government, the number of properties owned by UK citizens tripled between 2003 and 2005 to almost 8,000. The single biggest factor behind Turkey’s booming property market is affordability.

Cheaper by far than Spain and Croatia, Turkey offers a viable alternative to the bargain prices found in Bulgaria. A one-bed apartment in Altinkum can cost as little as £20,000, £60,000 buys an apartment in Bodrum and £130,000 a villa in Kalkan.

Simon Willets and John O’Donnell, two friends from Birmingham, teamed up to buy a two-bedroom apartment for £35,000 in Altinkum, near Izmir, after deciding that Bulgaria’s Black Sea was not for them.

“We went to Bulgaria a few months before and we thought the coast was overpriced,” Simon says. “We went to Turkey and we found you could get double the amount of square metres, the build quality was better and so was the climate. We went to Bulgaria in May and it was raining, We went to Altinkum in late October and it was in the eighties.”

For many people Turkey has other advantages too: a friendly, exotic culture, great shopping and some of the best-preserved archaeological sites in the world. The Government’s successful economic reforms have also encouraged investors, and new laws make it easier for UK citizens to buy Turkish property and tourist numbers are rising by 25 per cent a year.

Turkey’s accession to the EU is still a decade away, however. David Cox, director of Property Frontiers, a UK-based agent, says: “Turkey is an interesting market. It has the potential to be the ‘new Spain’ — it has the fundamentals, a great climate and is a place people want to go on holiday to and retire to, but some of the supporting factors, politically and economically, haven’t happened yet. That is the gamble — that is the risk for the investor.”

The property boom is concentrated on the coastal resorts along the Aegean and Mediterranean seas, namely the fashionable Bodrum peninsula, Dalaman and Fethiye as well as the traditional seaside towns of Kas, Kalkan and Altinkum. In some resorts, prices are said to have risen by 100 per cent in the past two years. A more realistic guide would be 20 per cent per annum. On some developments the spectacular price rises are being driven by speculators rather than genuine holiday-home buyers. “Flipping” — when investors sell on off-plan contracts before the development is finished — is also occurring. When the speculators move on to a new market, house prices may stagnate or even fall.

Dennis Phillips, of John Howell & Co, the international property lawyers, says: “In our view the trend of year-on-year appreciation will last one to two years before plateauing off.”

Plenty of new developments mean lots of choice for buyers but may also depress prices when it comes to selling or renting. Most visitors also come on package tours and access is still an issue. “Rental is still not that good in Turkey because the price of a flight is nearly as expensive as a package holiday,” Zena Ozguler, accounts manager at The Turkish Property Centre, says.

Investors are hoping the budget airlines will come to their aid, but they may have a long wait. EasyJet serves Istanbul, but not the coast and Mr Phillips says that most buyers will struggle to rent on a “decent commercial basis”. He advises: “Don’t expect to have a really strong market for a couple of years.”

In spite of this, Turkey deserves serious consideration, especially if you are looking for a property to use as a holiday home as well. If you have less than £40,000 look at Altinkum. Ms Ozguler says: “This is a great place to buy. It’s an up-and-coming, family-friendly beach resort that is attracting lots of new investment.”

The Turkish Property Centre recommends its own development, Miranda Gardens, just 500 metres from the beach, with apartments starting at £33,000. Property Republic, a London-based estate agent, is offering apartments from £58,000 in Yalikavak, a new upmarket holiday development zone about ten minutes’ drive from Bodrum.

• Property Republic 020-7812 0638, www.propertyrepublic.com; the Turkish Property Centre, 020-7716 5767, www.theturkishpropertycentre.com; Property Frontiers, 01865 202700, www.propertyfrontiers.com. Useful information: www.turkisheconomy.org

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