Foreigners purchasing more Turkish property
Eager to lure foreign exchange, Ankara has slashed the financial criteria for foreigners to become Turkish citizens. But the increase in property sales to foreigners is already a worrying omen to many.
Scrambling to lure external funds to ease its currency woes, Ankara has sharply lowered the criteria for foreigners who win the right to Turkish citizenship by purchasing real estate in the country. According to a Sept. 18 presidential decree, the $1 million threshold for such purchases was lowered to $250,000.
The 75% “discount” came atop the dramatic slump of the Turkish lira, which has lost nearly 40% of its value this year. This means a double advantage for foreign property buyers who wish to obtain Turkish citizenship. Ankara’s move aims to increase the flow of foreign exchange into Turkey and prop up the housing sector, which is sagging after an unprecedented boom.
Government figures show that property sales to foreigners have become a significant source of foreign exchange since 2012, when Turkey amended laws to facilitate foreign buyers. In the six years from 2012 to 2017, foreign realty buys amounted to nearly $22.7 billion. Yet the increasing share of properties in foreign direct investments suggests that foreign interest in productive investments is on the decline. In 2017, property purchases by foreigners hit a record high of $4.6 billion, accounting for 42% of the $10.8 billion foreign investments.
A new record is expected this year, given the significantly cheapened lira and the added citizenship bonus. In the January-August period, home sales to foreigners increased 42.6% from the same period in 2017, according to official figures compiled by the state-run Anatolia news agency. Foreigners bought 18,540 homes in the first eight months, up from 13,005 in the same period last year. A 130% increase in August alone indicates that foreigners took advantage of the slump of the Turkish lira, which sank to record lows that month as simmering tensions with Washington led to unprecedented US sanctions against Turkey.
