Should We Buy Real Estate in France or in Turkey?

The Covid-19 outbreak and the decline in GDP are a real challenge for all real estate markets. If you’re looking to invest, in which countries should you buy given the global economic context? Although we can’t answer with certainties, what we can already do is look at several factors which may point at one direction or another. In the end, it all depends on whether you’re in need of stability and security, or not. If you’re not afraid of risks, then we might want to look at some unique opportunities that might be happening right now, which may not reproduce anytime soon.

Massive Crisis, Massive Consequences ?

Naturally, the COVID-19 crisis is not over yet. Yet, we’ve already seen millions of jobs destroyed. More will come, as most governments decided to heavily support their economies during the first months of the pandemic.

So, does a massive crisis lead to massive consequences ? The answer can’t be global. Indeed, let’s take two examples, France and Turkey, to contrast and reveal how some real estate markets might be more impacted than others.

France – The Very Generous French Government

The French government generously paid people close to 100% of their salaries, while on furlough leave. Crisis? For many French employees, COVID-19 has meant staying at home, not spending much, while receiving as much money as usual. According to Bankin’,  the French saved 55 billion euros during the lockdown.

Surprising, right? Well, then wait to hear the next thing I have to tell you. Did you know that the French government supported many Airbnb homeowners, compensating up to 100% of losses related to COVID-19? Indeed, under certain conditions, France handed out 1,500€ cheques in March, April, and May, to property owners who were getting 0€ in short-term rental revenues. Typically, if you had made 1,500€ revenues in March, April, and May 2019, and 0€ each of these months in 2020, you could have gotten a nice 4,500€ cheque from the French government. Not bad right?

How do I know? Because in my case, I received €3,700 on my bank account, wired by the French government… and €3,000 of complementary subsidies, paid by Lyon’s metropolitan area. Total received: €6,700 for 3 months. Isn’t that generous? Almost seems too nice to be true, but it is true.

So, the French system is very protective. Do all countries protect homeowners and citizens this much? Of course not. Let’s cross the Mediterranean Sea and look at Turkey.

Turkey – The Not-So-Generous Turkish Government

In Turkey, “Workers who are placed on unpaid leave by their employers are given a monthly “cash wage support” of 1,168 liras ($158). İŞKUR reported that just over 1.7 million workers were on unpaid leave by their employers in the April-June period.” – Ahval.com

What would happen to you, if you got only $150 per month instead of your usual salary? How many months would you be able to live, before you had to sell assets to pay the bills?

So in short, we have France on the one hand, where most employees kept receiving 100% of their salaries, and where homeowners could, under certain conditions, receive also 100% of lost revenues for short-term rentals. And on the other hand we have Turkey, where many employees started receiving only a small cash wage support of $150 per month.

So, where do you think property prices may suffer the most: in France, or in Turkey?

Can these economic policies have a massive impact on real estate prices? Of course, they can. How can Turkish property prices not go down?

The Not-So-Strong Turkish Lira… And Massive Investor Opportunities It Brings!

Did you know that 1 euro was worth 2 Turkish Lira ten years ago, while 1 Euro is now worth close to 9 Turkish Lira? In other words, €100,000 can now get you close to 5 times more than it did 10 years ago. Interesting, right? If you could afford 20 square meters, you can now afford 100 square meters. If you could afford a 2 bedroom, you can now afford a villa with a swimming pool.

Just look at the graph below showing how much the Euro strengthened against the Turkish Lira in the past 10 years. The news are now that the “Turkish President Recep Tayyip Erdoğan called a meeting (…) as the lira hit a fresh record low against the dollar on Monday.” Ahval.com

Should We Invest in Turkey Now?

Nobody knows where the Turkish Lira is going. If Turkey is going the Venezuelan way (hyperinflation), we should steer clear. If you’re not familiar with the hyperinflation wilderness that struck Zimbabwe, Venezuela, and now Lebanon, check out this article on Reuters.com.

But doesn’t Turkey seem stronger than Venezuela or Lebanon? According to the worldbank, “Turkey’s economic and social development performance since 2000 has been impressive (…) However, in the past few years, growing economic vulnerabilities and a more challenging external environment have threatened to undermine those achievements.”

Turkey is definitely on my short-list. Of course, I’m still scared by the perspective of further devaluation of the Lira. Yet at the same time, I’m excited by how much the Euro can buy currently. So, what’s next? How do we make progress if we’re interested in investing in Turkish property?  

Buying Real Estate In Turkey – How To Make It A Reality?

Over the past 8 weeks, I’ve multiplied contacts with leading real estate agencies. What’s great about it, is that it helps recognize the high-quality real estate companies, from the poor ones. Thanks to these efforts, I’m now in touch with 1 great real estate professional, that I trust entirely. If you also want to buy in Turkey this year, reach out to me, and I’ll share the contact information. If you’re just curious, please don’t get in touch. Only do so if you have a serious intention of buying in Turkey.