Sales of Turkish property to foreign buyers reaches $4.3B in 2014

Foreign real estate purchases in Turkey have reached more than $16 billion over the past six years, hitting an all-time annual high last year.

al-monitor Holidaymakers rest at a beach in the resort town of Bodrum, July 14, 2014. Photo by REUTERS/Tuncay Dersinlioglu//KODA Collective.

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turkish real estate, turkey property, istanbul, foreign capital in turkey, foreign homeowners, black sea, antalya real estate

May 29, 2015

Foreign purchases of real estate in Turkey are increasing at a rapid pace. Last year, foreigners bought properties worth $4.32 billion, reaching an all-time annual high.

In the past six years, foreign real estate purchases amounted to $16.29 billion, including $1.78 billion in 2009, $2.49 billion in 2010, $2.01 billion in 2011, $2.64 billion in 2012, $3.05 billion in 2013 and $4.32 billion in 2014. In the first two months of 2015, the figure stood at $590 million.

An important factor behind the increase is the amendment of a law that set reciprocity rules between Turkey and other countries. Earlier, a foreigner interested in buying a home in Turkey was subject to the same restrictions that his or her country applied to Turkish citizens. This reciprocity condition was lifted in August 2012, opening the door for citizens of 183 countries to buy homes in Turkey. The amendment led to a boom in sales in 2013 and 2014. Last year, foreign real estate purchases accounted for 33% of the $12.1 billion foreign direct investments in Turkey.

According to figures obtained by Al-Monitor from the Environment and Urban Affairs Ministry, foreigners owned 118,784 properties in Turkey as of the end of 2014. The figure had stood at 111,579 in August 2014.

A decade ago, foreigners buying homes in Turkey were met with suspicion, and the issue sparked a heated public debate when the number of foreign buys climbed to about 50,000.

Reflecting the public sentiment at the time, Milliyet's popular columnist Can Dundar, for instance, wrote of the deputy chairwoman of the Democratic Left Party, “Rahsan Ecevit says that Greeks have bought the whole of Thrace, that Hatay is gone, that Jews have grabbed the lands of the Southeast Anatolian Project and that British companies have seized the environs of the Ani ruins. According to her, Turkey has been occupied by way of title deeds. Those claims have been raised for months, but no healthy data was available. A few days ago, I was meeting with a minister in his office when a map on the wall caught my attention. The number of foreign-owned properties in Turkey stands at 47,912 as of early 2005. Greeks own 12,535 properties, Germans 12,053, Britons 6,983, Syrians 4,607 and Dutch 1,833. Citizens of other countries own [almost 10,000 more properties.] Israel is not among the top five. Greeks are present mostly in the Thrace and Marmara regions, Germans in the Black Sea region, south Anatolia and the inner parts of the Aegean and Syrians in the southeast.”

The negative sentiment on foreign buys has since dissipated. Sales are on the rise. According to the Turkish Statistics Institute, 35,408 homes were sold to foreigners from January 2013 to March 2015. In 2013 alone, the figure stood at 12,181. The Mediterranean province of Antalya, Turkey’s leading holiday destination, topped the list with 5,548 homes, followed by Istanbul with 2,447, the Mediterranean province of Mersin with 545, the coastal Marmara province of Bursa with 375 and neighboring Yalova with 284.

In 2014, the number of homes sold to foreigners reached 18,959. Antalya was again the top favorite with 6,542 homes, followed by Istanbul with 5,580 and the Aegean provinces of Aydin and Mugla with 1,191 and 1,051 homes respectively.

In the first quarter of 2015, foreigners bought 4,268 homes. Another 1,847 purchases were registered in April, 584 of them in Istanbul.

Salim Tasci, former deputy head of the International Real Estate Federation, told Al-Monitor that the sales had slowed down a bit in early 2015 due to the upcoming general elections on June 7. “I believe the purchases will accelerate after the elections and finish the year with a new record,” he said.

Tasci said foreign companies were buying mostly business offices in big cities like Istanbul and Ankara, while individual buyers, overwhelmingly Europeans, preferred the coastal regions. Arab buyers from Gulf countries, meanwhile, have focused on the Marmara region, including Yalova and Sakarya, as well as the Black Sea, he added.

Tasci explained that foreigners bought properties both for direct use and as an investment, adding that part of the foreign-owned summer homes were being rented to others.

Hasan Rahvali, the CEO of the Agaoglu construction conglomerate, observed an increase in both domestic and foreign demand. “We expect a boom after May. In terms of foreign buys, demand has been on the rise not only from Gulf countries but also from Russia and eastern Asia,” he told Milliyet.

Turkey’s larger constructions companies have sought to attract foreign buyers to luxury residential projects, known as “brand” projects. According to a survey conducted jointly by the real estate information network Reidin.com and Turkey’s Real Estate Investment Partnerships Association, the share of foreign buyers in brand projects outstripped the local one in April, reaching 54%. Foreigners purchased mostly two-bedroom, 95-square-meter apartments.

Foreign investors, however, may be in for some unpleasant surprises. In remarks to Cumhuriyet in early May, Omer Faruk Celik, head of the Property Developers and Investors Association, issued the following warning: “Homes sold for $90,000 to locals have been sold for $100,000 to foreigners. And foreigners who may put their properties on sale shortly after buying will realize they have been deceived when they fail to get the price they paid. Last year, many Britons, Germans, Saudis and Kuwaitis bought such properties as an investment. There will be a real problem when they attempt to sell them in two years’ time. The dollar exchange rate in Turkey is very volatile, and the Turkish lira has been depreciating. Those homes will be put on sale as secondhand properties with price tags in Turkish lira, which means foreigners will be taking losses.”

Meanwhile, let’s see who are the top buyers and where.

According to a list the Environment and Urban Affairs Ministry provided to Al-Monitor, Britons made the largest group of foreign homeowners in Turkey as of the end of 2014, followed by nationals of Russia, Germany, Norway, Ireland, Denmark, the Netherlands, Sweden and Iraq.

The Britons are concentrated in popular vacation areas such as Didim, Kusadasi, Bodrum, Marmaris, Milas, Fethiye, Gocek, Dalyan, Oludeniz and Dalaman. Similarly, the Alanya, Belek, Kemer, Kas and Side districts in the holiday hub of Antalya are the favorites of nationals of cold-climate countries, especially Russia and Norway, as well as Germany, Britain, Denmark, the Netherlands and Sweden.

Arabs have also emerged as popular buyers in recent years. As of June 2013, Saudis owned 345 pieces of property totalling 306,063 square meters, while 121 UAE nationals had acquired 147 properties with a total of 90,709 square meters. In addition, 381 Kuwaitis, 20 Qataris, 38 Libyans and seven Palestinians bought real estate in Turkey after the reciprocity law was amended.

Israeli purchases are the darkest side of the picture, figuring in no official statement. This omission could be an attempt to avoid political controversy, given the ruling Justice and Development Party’s animosity toward Israel.

Yet, according to the financial news site paralimani.com, former Environment and Urban Affairs Minister Erdogan Bayraktar provided the following figures in December 2011 in response to a parliamentary question by an opposition deputy: Israelis have bought 63 homes in Istanbul, nine in Antalya, eight in Izmir, six in Yalova, three each in Mugla and Tekirdag, two in Canakkale, and one each in Aydin and Balikesir. According to the ministry’s land registry authority, however, as of June 2013, Israeli nationals have bought only 38 homes in Turkey since 1923.

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