Standard and Poor upgrades Turkey based on strong economic performance.

Standard & Poor’s Ratings Services has raised its long-term foreign currency and local currency sovereign credit ratings on Turkey to ‘BB’ and ‘BB+’, respectively, saying that the outlook is positive. This is great news for property buyers in Turkey.

“The upgrade reflects our view of the Turkish government’s improving economic policy flexibility as a result of its strong track record in steadily reducing the debt burden over the past decade,” said Standard & Poor’s credit analyst Frank Gill.

“It also reflects our opinion of the success of Turkey’s regulatory institutions in preserving the solidity of the financial sector, despite external adversity. Standard & Poor’s believes Turkey’s banking system to be one of the strongest and least-leveraged in Eastern Europe.”

“The positive outlook on Turkey reflects the likelihood of an upgrade over the next 12-24 months if we considered that a deeper financial and capital markets stabilization and the country’s success in weathering the global turmoil allowed it to return to its prior rates of growth with less dependence on external funding,” said Gill.

This has been a sign of confidence in Turkey’s economic policies compared to countries such as Spain which have been kept on a negative outlook. In contrast to Spain, Turkey has maintained a careful fiscal policy and maintained stability during the financial crisis while creating incentives to boost the property markets. Spain’s near-bankrupt construction sector and increasing unemployment has not helped the property markets in Spain recover.

Turkey is has shown itself to be a confident and solid financial sector, in spite of external pressures. Turkey is well-positioned to benefit greatly in real estate investments in the future. Short housing supply and growing tourism as well as expected capital growth and increased rental yields are all signs which will keep Turkey in good shape.

Buying property in Turkey is proving to be a savvy investment opportunity, as the economy goes from strength to strength. Cheap property in Turkey will only be available in the short-term as bargains start to dry up. Homes sales in Turkey increased by almost 25% in 2009 and this figure is expected to increase furthermore in 2010. As the property markets continue to improve, prices will subsequently start rising. Investing in an off-plan project in Turkey can often provide greater returns then a yearly rental yield as some property developers guarantee price increases through the phases of construction often leading to on average 15% capital growth by the time a property is delivered key ready.