Do you have a lump sum or capital to invest?
Have you ever been in the position where you have a lump sum or capital to invest? Perhaps you have a pension maturing or an inheritance… If you’re considering your options, you will probably have consulted a financial advisor for guidance before making any significant decisions.
One of the first questions they might ask is, on a scale of 1-10, how do you feel about risk? If one is extremely safe and 10 is a huge punt, where would you be?
A score of 1 might keep your money safe and sound but your lump sum would be much less likely to grow. A 10 could offer a huge reward but comes with the chance of losing quite a bit of your original investment too.
So where would an investment in property overseas be on the scale right now? If you chose to invest in a holiday home or perhaps a buy-to-let property, would your money still be as safe as houses? On the other hand, are global markets just too volatile at the moment thanks to the COVID19 pandemic?
An honest answer would be that location is a significant consideration. Even in Turkey on one side of the Mediterranean and Portugal on the other (the two markets where we do most of our business) each is shaped by different factors. Careful research and expert opinion is therefore just as important in 2022 as it’s always been.
Read on if you would like a few hints and tips:
Is COVID19 done with us yet?
The short answer is probably not.
Nonetheless, neither Portugal nor Turkey seem to be keen to move towards tougher restrictions. Both are currently relying instead on the vigorous promotion of vaccination programmes. That may mean movement to, from and within either country might be freer in 2022 than it has been for the past two years.
If you’re considering buying a holiday home, you might find it easier to visit – both for breaks and for maintenance. If you’re thinking about a foray into the buy-to-let market then, at the moment, there could be more opportunity in the tourism sector too.
Both nations have also witnessed significant increases in rental costs over the past two years. Both have also seen property prices rise, reflecting the global resilience of bricks and mortar to a challenging economic environment – and there seems no real reason to predict a change any time soon.
In other words, if current trends continue, we see no reason why a property sold in Portugal or Turkey today would lose substantial value as a result of changes to society wrought by COVID19.
There’s no denying Turkey could be on the cusp of considerable change over the next couple of years. The government, which has ruled the nation for 20 years, is currently struggling at the polls against an increasingly united opposition.
Although there’s little evidence of turmoil for those not engaged in the daily political cut and thrust in Ankara, some commentators have drawn parallels to the situation in the United States in the last days of the Trump administration. If there is a transfer of power, the current rhetoric suggests it may not be smooth.
There could therefore be an impact on the property market as both buyers and sellers await an outcome. There may be fewer properties coming onto the market but, if there were fewer buyers too, not much would change.
Short-term upheaval brought about by a change in government would therefore be unlikely to have a lasting impact on an investment. After all, recent trends have seen an increasingly mobile population investing in homes to protect, enhance or grow their income in an uncertain environment.
In Portugal, potential change is even more imminent. Elections are due at the end of the month (January 2022). However, ruling Socialists look more secure thanks to broad approval of how the country has coped with COVID19 and the nation’s healthy economy. Stability seems to be what most people want. A new party at the helm therefore seems less likely.
Portugal endured a bumpy ride in the early days of joining the Eurozone. Since then though, the insecurities brought about by the currency’s early wobbles have largely dissipated and the property market in particular has recovered strongly.
House prices in Portugal rose by 4.9% in 2015, another 5.7% in 2016 and by 7% in 2017. They went up another 9.7% in 2018, 11.7% in 2019 and 6% in 2020. Statistics for 2021 were up another 10% despite the onset of coronavirus, so there’s no reason to suspect 2022 will see much change.
Turkey is a little different, largely due to the nation’s leaders adopting a more unorthodox approach to economics of late. The country has pursued lower interest rates in an effort to drive exports and employment. Instead, the lira has struggled on the exchange markets, fuelling inflation and the cost of imports.
The government has raised the minimum wage by 50% in an effort to protect those on the lowest salaries from poverty. Nevertheless, with energy costs also rocketing, more and more households and small businesses have struggled.
So far, the government has stuck to its guns insisting its approach is the right one. Of course, whether it is remains to be seen.
But, despite the turmoil, one constant has been the Turkish property market. The sector has continued to thrive, with the number of homes sold in December 2021 up more than 100% on the previous year.
Asking prices have also continued to rise – driven partly by interest from overseas investors crowding in to cash in on a weak lira. Meanwhile, Turks have also been keen to escape the larger metropolitan areas inland where COVID infection rates have been higher.
So, returning to our original analogy, if you had a lump sum or capital to invest, where would property in Portugal or Turkey be on a risk scale of 1-10?
Guarantees are never easy; if they were, where would the risk be? But, from experience and after monitoring the markets in both nations for a few years now, we’d venture either nation would score around a 5 – Portugal possibly less.
There are some gains to be had out there – particularly if you’re looking for a relatively speedy return within five years. And, of course, in some circumstances, additional benefits might include Turkish citizenship or a Golden Visa for Portugal.
However, both nations are close to making decisions on who leads them into the future – and one looks a safer bet than the other. Nevertheless, a change of leader can also mean a change in policy and, as we’ve already suggested, it may be some time before it all shakes down.
How can we help?
If you’re considering buying property in Turkey or Portugal and you’d like more hints and tips, feel free to give us a call.
We’re also here if you’d like a heads-up on how to plan or even just a no-obligation chat about the pros and cons of investing in property abroad.
It’s not just about the buying and selling of homes. We can help with the logistics, paperwork and advice before, during and after your move so feel free to get in touch.
Alternatively, you can browse our blog for previous posts you may find useful. If you’d like to check out our full portfolio, you can find details of properties currently on our books right here. You can also keep up to date with our Facebook page here.