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If you’re looking to sell overseas property in 2016 or 2017, you would be concerned about the recent spate of terrorist attacks in many countries around the world. The overseas property market is hugely dependent on tourist inflows. Any decrease in tourist inflows can have a damaging impact on property prices.
Three overseas property hotspots that have been affected by terrorism are Egypt, Tunisia and Turkey. The UK, for example, banned flights to Sharm-el-Sheikh, the popular Egyptian beach resort after the downing of a Russian jet by the ISIS which killed 220 passengers.
Egypt is an emerging nation heavily dependent on tourism and lost 40% of tourist traffic following that incident. Many European countries have issued travel bans to their citizens from visiting Egypt. Millions of people in Egypt employed in the hospitality sector have lost their jobs. The overseas property market in that country has suffered greatly.
Terror attacks hurt the tourism industry in any country badly, as foreign tourists are the ones targeted first and foremost by terrorists. They serve as high value targets and by attacking them, terrorists believe they can make the greatest impact. It’s the same for foreign investors who are interested in buying properties abroad.
Turkey is another country that has been hit by a number of terror strikes in 2015 and 2016. The explosion the Sultanahmet Square in Istanbul in January, was followed by a car bomb in March in south-east Turkey in March. Then there was an IED blast at a bus stop in Ankara followed by a series of explosions at the international terminal of the Ataturk Airport on 28 June.
Turkey has suffered greatly from such incidents. The tourist traffic in Turkey has declined by 28% over the last 12 months. The worsening of Russia-Turkey relations after the shooting down of a Russian fighter pilot by the Turkish military has affected the tourist inflow from Russia by 80%.
The recent attempted military coup in Turkey has caused many cash rich overseas investors to drop their plans of investing in property there. Many investors are adopting a wait and watch approach and waiting to see how the situation unfolds in Turkey.
There is, of course, the example of the United States. Property prices in New York were on the ascendency throughout the 1990s. It was only in the aftermath of the September 11, 2001 terror strike that property prices in New York suffered a dip. They did recover a few months later because of prompt action taken by the Federal Reserve Bank to reduce interest rates.
Similarly, property prices in Paris have recovered by and large following the terror attack of November 2015, during which 129 people were killed, including many foreign tourists.
Today prices have gone up even in the 11th district in Paris, where the Bataclan Theatre is situated. France has largely recovered from that brutal terror attack. Even the more recent terror attack in Nice on 14 July 2016 hasn’t had an impact on the property market in France, which is on the way up.