Investment in Turkish Property Sustains its Increase

Investors of 21st century see the option to buy property abroad as a good and low-risk opportunity. However, the location of the real estate is of great importance for such great transactions. Therefore, investors all around the world wonder if it is a good idea to invest in Turkish property. At the turn of the century in Turkey, banks made mortgages a prominent factor of their portfolios, and the building sector embarked on a massive campaign to modernise and update housing.

Devaluation of Turkish Lira is Just Another Incentive

During the summer of 2018, Turkish Lira lost one third of its value very quickly. This circumstance created a very attractive market for foreign investors. Especially, Turkish property has become much cheaper to tourists and investors carrying almost any currency. For example, a grand coastal villa selling for 5.5 million lira would have cost a U.S. buyer roughly $1.146 million in July but only $859,000 in September off the exchange rate alone. Results of this period were no surprise for anyone.

Turkish Lira’s poor performance in the last couple of years has made Turkey a popular opportunity in the real estate market. Property prices in Turkey have remained low compared to other European countries despite the billions of dollars in foreign investment it has received throughout the year. The Turkish Lira has lost 40% of its value against the U.S. Dollar since the start of 2018, spurring an influx of foreign investment in the housing market. Also, with the recent regulations in the country’s citizenship by investment scheme, it is possible to invest 250.000 dollars in Turkish real estate and earn the right to work and live in Turkey.

Turkey’s Real Estate Market is Under the Radar of Foreign Buyers

Foreign investment opportunities in Turkey are much clearer now after the devaluation of the Turkish Lira. Therefore, foreign buyers rushed into Turkish real estate market and purchased more homes in the second half of 2018 than in all of 2017. In addition, Turkish government also needed the foreign investment. With a new upgrade, government eliminated the 18% value-added-tax on real estate purchased with foreign currency. So, apart from the advantages of the exchange rate, foreigners had another 18% discount.

Turkey’s Citizenship by Investment Program is Another Contributing Factor

Economic situation of Turkey is undoubtedly a big incentive for foreign investors. However, the boom in Arab and Middle Eastern buyers is also the result of Turkey’s Citizenship by Investment Program.In September, the government lowered the investment threshold of the program from US$1 million to only $250,000. About this, Mr. Walker, the director of Spot Blue International Property, said “I think there’s been a more significant reaction to that than the currency,”.

To be able to become a citizen of Republic of Turkey, there are several options investors might benefit from. They can make an investment of at least 250,000 $ in real estate. They can also found/buy a company with at least 500,000 $ capital. Finally, they can prefer depositing 500,000 $ in State investment instruments or state banks operating in Turkey provided that they do not withdraw such amount for three years. Also, employing 50 personnel is determined as a criterion for applying for Turkish citizenship with the new regulation. The process of Turkish citizenship by investment usually takes around 3 to 6 months.

The previous condition to have the second passport by real estate purchases was to own at least 1 million dollars’ worth of real estate for at least three consecutive years. Now, it is enough to own at least 250 thousand dollars’ worth of real estate for the same title. So, it is now a better idea than ever to pursue Turkey citizenship by investment.

Turkish Lira’s performance in the last year had been very disappointing for the Turkish government. However, it understandably attracted the attention of the investors from all around the world. Especially, investors from the Arabic region are rushed into the beautiful country with substantial investments. Foreign housing investment jumped 82 per cent in the first quarter of the year, according to government data, even as Turkey’s overall housing sales tumbled 24 per cent in January and 18 per cent in February as the economy settled into a recession.

Foreign Contribution into Turkey’s Real Estate Market

Foreigners purchased $4.6 billion worth of properties in Turkey last year, and that is expected to rise at least to $10 billion this year, according to the Association of Housing Developers and Investors. The number of properties sold to foreigners in Turkey has boomed, with an increase of 87 per cent at the start of the year compared to the same period last year, according to the Turkish Statistical Institute (TUIK).

“Turkey Market Analysis First Quarterly Report of 2019” published by the international real estate consultancy firm Cushman & Wakefield reveals important information about the latest situation of the office, retail, industry and logistic markets of the country. The report states that in the first quarter of the year, 151,980 m2 new office space entered the market and the total supply has reached 6.33 million m2. According to the report, renting transactions of the first quarter increased 22.39 per cent compared to the same period of the last year. In addition, when compared to the last period of 2018, the percentage of increase further grows to 30.15%. 

Foreign investment in Turkey continues to increase in the first quarter of 2019. At this period, it is documented that the foreign real estate investment in Turkey has gone over 2,4 million square meters. The EVA real estate value assessment licensed real estate appraiser Şeyma Şehirli who evaluates the data gathered from The Department of Foreign Affairs of Land Registry and Cadastre, says that; the foreign investment in the first quarter of 2019 has raised by 86,1 per cent when compared to the same period of the previous year. According to Şeyma Şehirli, in the first quarter of 2019, the investment made by foreigners into real estate has reached to 2.456.356 square meters.

The Upward Trend is Consistent in 2019

Turkey’s real estate market is currently having its best time ever in terms of foreign investment. The market has hit all-time high figures in sales to foreign buyers during each month since the beginning of the year.

Sales to foreign buyers jumped by 62.5 per cent last month to some 3,925 units, up from 2,415 units in May 2018. As for the January-May period, purchases by foreign residents surged significantly, from 9,756 to 17,263, posting an increase of 77 per cent, according to the Turkish Statistical Institute (TurkStat) Monday.

Earlier, foreigners acquired some 3,168 units in January, 3,321 units in February, 3,129 units in March and 3,720 units in April, with a year-on-year increase of 81.9 per cent, 92.1 per cent, 71.3 per cent and 82.1 per cent, respectively. All four months saw all-time high figures.