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First, it was a Greek city, Byzantium. Then from AD330 to 395, the city that links Europe with Asia Minor was the imperial capital of the Roman Empire and was renamed Constaninople.

Emperor Justinian commissioned the landmark huge church Aya Sofya 1,500 years ago, which has miraculously survived many wars and earthquakes.

For centuries it was a mosque - the mosaic icons plastered over and since revealed - and the minaretted icon is now a wonderful museum.

Topkapi Palace claims to house the cloak and sword of the prophet Muhammad; the Blue Mosque is the largest in Istanbul, dating to 1609; and the city's Grand Bazaar, with more than 2,000 stalls, regards itself as the oldest mall in the world.

But the city of 12.5 million people (though some say 15 million is a truer figure) is rapidly modernising. The iS.CAM and Istanbul Modern art galleries are every bit as fashionable as any found in other major European cities. And investment in a new metro - going under the Bosphorus - underlines the city's economic upturn.

The buoyancy is already being witnessed in the housing sector, where 250,000 new homes a year are required up to 2015.

An under-supply - only 70,000 homes were built last year - an opening up of mortgage finance to locals, and a Government mandate to replace poorly built existing homes with more robust ones is driving the market forward.

'Property prices in Istanbul are undervalued,' says David Richardson, of Tulip Turkuaz, a development company. 'There's an opportunity to make good money - up to 40 per cent profit - in the next two years for a well-chosen off-plan investment.

'But for most foreigners, I'd recommend a medium-term, five-year investment strategy as capital gains tax is nil after that period.'

Sue Sitek, from St Albans, Herts, has bought a one-bedroom apartment, priced £68,100, at Tulip Turkuaz, with just such a strategy in mind.

'I'm buying for the long-term, with my pension in mind. This is purely an investment purchase,' she says. 'I've undertaken a lot of research, and I think Istanbul has great potential.'

Tulip Turkuaz comprises 1,050 apartments for sale across 11 multi-storey towers in Bahcesehir, 25 minutes' drive from the city. A new metro stop is being built.

The project has been designed by Anglo-Malaysian architect Ken Yeang. This is a low-carbon, wateraware project, and green spaces predominate.

Up to 65 per cent of the plot will be landscaped and roof gardens are a Yeang green signature. With a scheduled completion date at the end of 2011, it is said the apartments, which are underwritten by the Turkish government, will appeal to Istanbul's growing middle class, many of whom rent before buying.

Executives from nearby Mercedes and logistics companies are also likely renters.

Prcies start from £48,000 for a one-bedroom, 70 sq m apartment. A guaranteed net rental yield of 6 per cent per annum for the first five years of ownership is optional.

Allow 3 per cent to 7 per cent for purchase fees and taxes. Those looking for a pied a terre closer to the historic town centre might consider Crystal Heights.

Experience International is selling a selection of one and two bedroom apartments and three bedroom duplexes, with prices from £45,000.

Amenities include a fitness club, sauna, steam room, Turkish bath and children's day care centre.