Erdogan will step down as leader of the AK when he is inaugurated next week, as required by the constitution, but has made clear that he wants the party he co-founded more than 10 years ago to remain loyal and unified.
Davutoglu, 55, an academic who has served as foreign minister for the past five years, rose to political prominence under Erdogan and is regarded as one of his closest allies.
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"Erdogan is pretty confident of Davutoglu's loyalty, and Davutoglu is a candidate whom Erdogan believes has strong popular communication skills," said Sinan Ulgen, head of the Center for Economics and Foreign Policy Studies inIstanbul.
Davutoglu's profile has risen sharply at home and abroad as foreign minister, initially on the back of his then-praised "zero problems with neighbours" policy and more recently as Erdogan's right-hand man at AK Party rallies.
He has overseen foreign policy at a turbulent time for the Middle East. Wars in neighbouring Iraq and Syria and the Arab Spring uprisings caused his "zero problems" policy to crumble, with ties to Egypt, Syria, Israel, Iraq and Iran all degraded.
Davutoglu is expected to appeal to a newer generation of Erdogan loyalists within the AK Party, which was founded in 2001 as a coalition of conservative religious Muslims, nationalists and centre-right elements.
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His ability to garner support among core AK voters will be pivotal if he is to lead the party to a stronger parliamentary majority in a general election next June, vital to Erdogan's chances of pushing through the constitutional change he needs to bolster the powers of the presidency.
"Davutoglu is not going to be a puppet, he's going to have his own personality," said Galip Dalay, a political researcher at the Ankara-based think-tank SETA. "But I cannot remember a single time when he and Erdogan have had a serious policy disagreement. Their vision for Turkey is very close."