Turkish economic impacts of Middle East conflict

The conflict in the Middle East and the Gulf has impacted various sectors of the Turkish economy, specifically real estate and tourism.

In the real estate sector, payments by Turkish residents for overseas property fell 26% between March and May 2024, reaching a 29-month low in May. This decline was driven by a slowdown in previously popular markets such as Dubai and Greece. Conversely, foreign investment in Turkish property rose 28.3% during the same period, fueled by interest from Russian buyers and streamlined bureaucracy. Bayram Tekçe, head of the Real Estate Services Exporters Association, noted that war-related attacks in Dubai “almost stopped purchases from that market.”

In the tourism sector, regional instability has led to price reductions in Turkish coastal destinations to attract travelers. Data from Lighthouse indicates that advertised accommodation prices for the August-October period have dropped by 5% in Antalya and 8% in Muğla, which includes Bodrum, Marmaris, and Dalaman. This contrasts with Istanbul, where prices rose by 5%. Similar downward trends are observed in Cyprus, where prices fell by 4%, and Egypt, which saw a 10% decrease. In contrast, seaside destinations in Greece, Italy, Spain, and Croatia have largely maintained or increased their rates.

Industry experts, including Jet2 CEO Steve Heapy, note that while some alternative destinations are geographically distant from the conflict, they are perceived as being closer to tension zones, which affects early reservations. This shift has led to reduced visibility for revenue forecasting among airlines and tour operators. Additionally, high inflation and currency policies have increased costs in euro and dollar terms, further impacting the competitive landscape for Turkish resorts.