Buying a house in Turkey: the moment of foreign investors

Who does not dream of a house overlooking the Bosphorus? The fall of the lira, which has lost 40% of its value in one year, has turned the Turkish property market into a real bargain for many foreign buyers.

Data from the Statistical Institute of Turkey (TÜIK) show that 7,363 homes were sold to foreigners last November, the highest figure recorded by the agency and double the monthly average before the pandemic.

The fall in the lira has triggered not only sales to foreigners but also the buying eagerness of Turkish citizens in search of fixed values ​​in the face of inflation that already exceeds 20% year-on-year.

But the high figure for November is not only related to the collapse of the current currency, but reflects a sustained trend, says Burak Bekar, manager of Property Advisor Turkey, a real estate agency specializing in selling to foreigners.

Limited offer

“60% of foreign direct investment in Turkey is in the housing sector: although prices have risen 35% above inflation, the loss in value of the lira has made them worth a price in foreign currency. 40% less than a year before ”, adds the economist Hayri Kozanoglu.

On the other hand, “the housing stock in Turkey is running out, because in recent years the Government has reduced building licenses, so the value rises,” Bekar emphasizes.

In fact, if between 2014 and 2018 between 700,000 and one million homes were built annually, in the last three years less than half have been tendered, according to TÜIK figures.

For this reason, a foreign investor will easily find a buyer if he wants to get rid of his property, because the local demand for housing is growing and foreign investment barely represents 4% of the Turkish real estate market, says Bekar.

High appreciation

The three largest Turkish cities, Istanbul, Ankara and Izmir, lead the world ranking of value rise, with an annual revaluation of around 30% in the first quarter of 2021, compared to 12% in New York, 6% in Paris, the stagnation of Barcelona or the loss recorded in Dubai.

The Istanbul market is also very versatile: you can find properties with prices of a thousand dollars per square meter, but the value shoots up to 25,000 in the most elegant areas and a home easily doubles its price for having a terrace with views of the Bosphorus.

The TÜIK report shows that the main buyers are Iranians, with more than 1,400 homes purchased in November, followed by Iraqis, with about a thousand, Russians, with 800, and Germans in a distant fourth, with just over 300.

This mainly reflects the need for Iranians and Iraqis to find a safe place for their money in the face of instability in their own countries, while in the case of Germany these are often retirees looking for a pleasant place on the Mediterranean coast, they say. The experts.

Citizenship included

In addition, there is another incentive for some foreigners: buying for at least US $ 250,000 allows them to obtain Turkish citizenship and companies such as Property Advisor include this management in the service when closing a sale.

It is an attraction not only for Iranians or Iraqis, with obvious difficulties to travel, but also for Americans and British because it saves residency procedures, they say.

There are even Italians who sign up for this option for tax reasons, since it is profitable for them to pay taxes in Turkey, add industry sources.

Russians buy mainly on the Mediterranean coast, especially the province of Antalya, although in this region the sale to Germans and British, previously common, has stopped and there are even those who sell because they distrust the political future of the country, says a real estate agent of the area.

But it is the market dynamics itself that can ruin the business: the latest currency crash, 35% in a single month, no longer makes housing cheaper, but removes it from the market.

“Buyers abound in search of a flat, but we no longer have a supply; Now nobody wants to sell because, even if they charge two million lire, tomorrow that money will no longer have value ”, laments the real estate broker Serkan Pinarbasi, sitting in an empty office in Istanbul.

The views of the Bosphorus from this neighborhood are still a dream, but the “For Sale” signs, once common, have disappeared from all the facades.