Emerging Capitals: All Quiet of the Western Front

By on February 6, 2013
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For budding property moguls and portfolio investors, emerging capitals are shaping up as attractive propositions. But where’s best to invest?

With over eight former Eastern bloc countries having joined the EU party since 2004, real estate ambition is simmering on every emerging capital street corner. But while lucrative returns can be made, they won’t come without a scrupulous assessment of a location’s risk-reward profile. “City investments require a hard-headed assessment of the local housing market,” says Chris Chadd of Property Frontiers, “even more so when it comes to undervalued markets.

“Location influences like transport links, amenities and quality of infrastructure all come into play, as does the perennial issue of weighing up local supply and demand. Emerging city regeneration zones where housing, employment transport and community are coming together in the right mix are a good starting point but always ask yourself-will a unit easily rent out with a satisfactory yield and can it be re-sold to an owner occupier? Look for a city that has the ‘X factor’ that little extra that lets you know that property ownership in the region really does make sound investment sense and a property gem could well be within your grasp.”

Istanbul

Turkey’s cultural capital delight, offers both a change and a rest, bringing a little faraway exoticism within easy weekend reach, while ticking the essential ‘tourist hit’ boxes for historical treats. “No-frills air lift has put the city firmly on the map,” says local agent Cindy Uriona, “with tourist numbers rising by around 20 per cent per annum.” Real estate is also proving an important economic development tool, with growing demand from the domestic market for new build, providing a ready-made exit strategy for overseas investors. “Buyers can enjoy high rental yields in an active market,” says Uriona. “Yields are up by 15-20 per cent per annum in recent years, while the introduction of new mortgage laws in 2008 and the prospect of lower interest rises will bring a further boost to the market.”

Turkey’s growing population of 14m also makes Istanbul the largest and busiest property market-with around 50 per cent of foreign investor purchases in the last four years made there. “’A’ class residential projects are more in evidence,” confirms Uriona, “with capital growth predictions in the next 3-5 years of 15-20 per cent.” Investors will need a budget of around £70,000 for a one-bed apartment, considerably more – upwards of £200,000 for a detached home, prime locations including the districts of Levant, Akatlar and Etiler, with Maslak, Besiktas and Ulus offering value-added views of the Bosphorus. “Rentals are buoyant,” adds Uriona, “a two-bed apartment netting around £700 per month.”

One of Istanbul’s most elegant districts, the former fishing bay of Bebek is a good choice for spacious family homes, with panoramic city views and plenty of greenery. Mondinion is marketing a stunning three-story villa over 2,700sqm with sea-views. The eight-bedroom property has a large mature garden, swimming pool, garage and comes with planning permission to build a second villa on adjacent land. The asking price is £12m.

 Photo credit: archer10 (Dennis) / Foter.com / CC BY-SA