An Overview of the Turkish Real Estate Investment Climate    

The primary consideration for any property investor is that the investment prove profitable – these profits are generally realized through both a regular income stream and capital gains. Certainly, in respect of Turkish property, investors will have been more than happy with their return on investment, fuelled by a massive increase in demand for property in recent years. Rental yields compare most favourably, particularly in the  major cities and the tourist ‘hot-spots’ and capital appreciation has much higher than perhaps even the most seasoned of investors could have hoped for. Indeed, the Central Bank of Turkey have reported that property prices have increased by a staggering 82% in just the last 5 years (and by 112% in the last 10)!

Let us consider the current property investment climate.

Ever more overseas investors are looking to Turkish property as a viable and ‘investment-worthy’ alternative to property in those more established destinations such as Spain, Cyprus etc.

It is estimated that foreigners have purchased, to date, around 340,000 properties in Turkey with around 50% of these purchases having taken place in just the last 5 years. The majority of foreigners buy in either Istanbul or Antalya, the ‘tourism capital of Turkey’, with these 2 provinces combined accounting for around 65% of all purchases to date.

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.