Turkey Has lots of International Advantages in Investment
Turkey’s economic conditions still promise real earnings in investments and quicker return on investment compared to rival markets. It is not a dream to achieve 50.000 foreign sales in Turkey this year which is advantageous in terms of its geopolitical position, nature and cultural tourism.
With the solutions offered in digital environments during the pandemic process and the opening of the borders after a certain period of time, dynamism started to be experienced in housing sales to foreigners again. Besides, through 40 thousand units in 2020 it broke a record. However, it is not a very distant goal to rise the annual real estate sales above 50 thousand units with the new decisions taken in Turkey.
Turkey’s economic conditions, according to the data, still promises real earnings in investments. Turkey’s geopolitical location, the advantages it offers in terms of nature and cultural tourism and the promoted citizenship rights paves the way for foreigners to acquire real estate.
The regulations made one after another by the Ministry of Environment and Urbanization and the Ministry of Finance and Economy give us hope in this direction. We believe that starting from the second quarter of 2021, sales to foreigners will gain momentum again and reach a new record by reaching 50 thousand. The fact that China and India will have an increasing interest for Turkey and the prices are very low in foreign currencies reinforces our positive expectations.
The return on investment is fast, TL prices are attractive
Turkey with 45 thousand residential sales to foreigners in 2019 had revenues of approximately 6.85 billion dollars, while in 2020 this figure was 5-6 billion dollars. Last year, 284 thousand houses were sold to foreigners in the USA, which is the country that realizes the most house sales among OECD countries in the world, and revenue of 153 billion dollars has been obtained from this. In Spain, the number of houses sold to foreigners last year was 50 thousand. This means that one out of every 9 houses in the country was sold to foreigners.
If we look at the return on housing investment, we see that Turkey has an advantageous image. Return on investment in housing in Turkey is higher than the European Union member countries, and the return period of the investment is shorter. According to data from Eurostat, the European Statistics Institute, the payback period of investment in housing is 51 years in Austria, 42 years in Italy, 38 years in the UK, 36 years in France, 32 years in Norway and 28 years in Turkey. In addition to shorter return on investment period, due to the attractiveness of the prices in TL, there is a high expectation of an increase in the real estate value depending on the foreign currency and location.
We should promote our opportunities such as VAT exemption
In order to attract more real estate investors to our country, great strides should be made in international promotion. For example, last year, VAT exemptions were made for foreigners in the sales of houses and commercial real estate. With a national fund to be established, an intensive promotional activity should be carried out in the Gulf, Europe and Russia regions to explain this development and to announce the advantages to foreign investors. State support should be given to contractors in this regard. The sales office investment to be opened by the companies abroad should be included in the scope of Turquality and should be supported.
Especially the ability to carry out transactions such as power of attorney and title deeds at consulates, exemption of title deed fees in all sales to foreigners, facilitating citizenship transaction procedures, making payment instruments in TL other than foreign currency will accelerate the increase in foreign sales. In addition, classifying the housing and workplace sales made to foreigners within the scope of VAT exemption in “other foreign currency earning activities” and in this context, opening the way for Eximbank to lend to the sector will further increase the efforts of housing contractors.
However, many foreign sales consultancy companies were formed at the point of support for foreign sales. It would be appropriate to introduce some regulations in order to ensure that these companies approach foreign guests properly and services are professional and institutional. Just like the certification of companies that have provided real estate services in the past, foreign sales brokerage companies should also receive the necessary training to represent our country and provide quality service. On the other hand, our citizens living abroad and foreign real estate investors have some expectations from Turkey. The protection of the acquired rights of foreigners and the promotion of confidence-building elements are among the top issues we need to discuss.
Istanbul and Antalya are Our Windows to the World
Despite all the difficulties, 40,812 houses were sold to foreign buyers in 2020 with the active use of online platforms. Istanbul ranking first with 19 thousand 175 sales, Antalya ranking second with 7 thousand 735 sales, have shown us that these cities are our windows to the world.
Of course, low-interest sales campaigns have had an effect on the real estate sector to close 2020 with a record sale although we have had a difficult year due to the pandemic. But focusing only on the numbers can sometimes prevent us from seeing the big picture. That is, Turkey is a dynamic country with its young population, hardworking business people and a management approach that can take fast action. Even marriages that only reach 700 thousand per year bring a boom to many sectors of the economy. With this vibrant community structure and the high interest in Turkey from abroad, markets can find alternatives in every period. We see that the appetite for buying is somehow waiting for opportunities, even if demand is delayed. Even at the time when the pandemic is most effective, cash buyers have the opportunity to discount, while at the time when the currency is rising, we see that our expats are taking more action. The fact that Turkey has won the hearts of many from all over the world, from Asia to America has an important role in this.
Foreign investors who follow the Turkish market are also a rising headline. Despite the pandemic in 2020, when we look at its last quarter, we see an all-time high foreign sale. Despite all the difficulties, 40,812 houses were sold to foreign buyers in 2020 with the active use of online platforms. Istanbul ranking first with 19 thousand 175 sales, Antalya ranking second with 7 thousand 735 sales, have shown us that these cities are our windows to the world. Increasing sales to foreigners also prove that the real estate sector is now a sector that brings foreign currency substantially. With the start of the vaccine this year, we expect sales to gain steam and to outnumber 2020.
For Turkish people, real estate is in a tight race with gold
Looking at the data for December 2020; mortgage housing sales decreased by 70.9 percent compared to the same month of the previous year and became 14,631. The share of mortgage sales in total housing sales was 13.8 percent. We see that the reason for the loss has been the interest rates, gradually increasing as of September, which has continued since the beginning of August. As we have stated many times before, interest rates should be below 1, which is the psychological limit. Still, it is promising that sales return to their long-term averages.
When Turkish people are asked about investment, it seems that gold and housing are in a tight race. The real estate sector has gained more favour than dollar this year. As new and second hand, there was a serious housing stock. In these 3 years, especially in 2020, we have had a productive year in terms of serious melting of housing stocks in both new and second hand. We almost didn’t reflect the costs to the housing sales prices while selling. But the recent 6-month rise in commodity prices is pushing us hard. However, we may still see new projects announced towards the end of the spring months. We hope that 2021 will be a more vibrant year as the impact of the pandemic also decreases.
New markets are being explored, such as India and Pakistan
With the government’s 2021 reform timetable, we could see a movement in the European market in selling to foreigners. From Asia, there is a lot of interest from the Chinese. Besides, we have also started to see demand from new markets such as Pakistan and India. With this demand growing, 2021 will be a year with customer diversification in foreign sales and in which new markets will be discovered and we will operate.
Urban transformation needs to be talked about more
We are also aware that we are an earthquake country and we should give weight to urban transformation… Urban transformation projects contribute to the economy and sector all by itself. The private sector, property owners, public and local governments need to come together and talk about new solutions, especially while experiencing a process where experts agree on the big Istanbul earthquake.