The massive demand for Turkish property in recent years has come about as a result of the introduction of 3 major initiatives:
Introduction of Mortgage Credit for Foreigners.
The primary reason for this was to boost investment inflows from overseas and this has paid off handsomely, with these ’credit’ investors swarming to the market in their thousands.
As long as mortgage credit continues to be available, then the demand for property in Turkey will only increase. This will then possibly lead to an under-supply of property in those most sought after areas, resulting in further increases in prices in both the new and secondary markets.
Abolition of the Law of Reciprocity.
This law stated that foreign nationals could buy property in Turkey providing Turks were afforded the same privilege in that foreigner’s native country. Prior to its abolition, foreign nationals from 56 countries worldwide were able to buy in Turkey, freely and without restriction – the abolition of the law increased this number to 129, with a further 52 being allowed to buy subject to certain provisions.
This has opened the market to a whole host of nations whose citizens see Turkey as an ideal property investment destination. Many of these ‘new market’ buyers are buying primarily with citizenship in mind, whilst others are looking more at the investment angle, with an eye on rental income and capital appreciation.
Introduction of the Citizenship through (Property) Investment program
Turkey launched its citizenship by investment program in 2016. There are a number of investment options within this program, with the property investment option being the most cost-effective. Upon its launch, this option required a minimum total investment of US$ 1 million – this amount, however, was proven to be excessive, particularly as there were other passports out there that were more valuable. In September 2018, therefore, the government announced that the minimum investment amount would be reduced down to US$ 250,000.
This huge 75% reduction meant that the Turkish passport immediately became the hottest ticket in town. For evidence of this, let’s look at the numbers.
Since lowering the investment amount bar, Turkey has been issuing passports to primary foreign applicants at a rate of around 800 every month – include the numbers for spouses and dependent children and this adds up to more than 20,000 ‘new’ citizens in just 2 years!
When compared to other popular overseas destinations where foreign purchase is prevalent, property in Turkey makes a compelling case for investment. ‘Entry level’ prices remain favourable and on-going ownership and running costs are low – factor in the high capital appreciation and passive income opportunities and it is no wonder that the numbers of properties purchased by foreigners continues to increase year on year.