Turkey in Real Estate Investments
Investment Oct 02, 2020
Turkey is the most valuable plot of the World. It is crucial to appreciate it and take the actions to increase the share of international investors.
When we think about the history of Turkey, we see that foreigners have different attitudes in terms of property acquisition. Foreigners sometimes are sceptical and cautious in doing so, and other times they get more encouraged by certain periods or conditions, infrastructure reforms for example. The real estate sector has taken its share from the increasing development and welfare state of the country especially after the turning point that is the 1980s. In this period, the main factor is the demand of European investors to purchase a summer house from holiday resorts on the Mediterranean and Aegean coasts. And we see a focus shift towards metropolises after the 2000s. Direct investors also started turning their gaze to Turkey in the same period alongside individual investors, putting İstanbul at the top of the list of cities attracting the most real estate investments.
Turkey’s investment value is increasing day by day
Looking at the factors that increase the competitive capacity and investment value of Turkey, its geography, culture and individual-social values stand out. Take Turkey’s strategic location for instance; the country is very close to the East Mediterranean, Gulf, North Africa and Central Asia markets. It offers easy transportation opportunities to over 1.5 billion people and more than half of the world trade with three or four hour-long flights. There is also the opportunity to get your share from USD 24 trillion worth of gross domestic product (GDP). Turkey offers a unique investment opportunity with its dynamic domestic market, young and increasing population, qualified labour force and growing middle class. The country’s dynamic and young population keeps the real estate sector going by getting married, buying property, renting houses or just moving from one place to another.
In the macro economically and politically stable environment especially after 2002, measures started to be taken to make large-scale, strategic and regional investments easier. Legal arrangements such as granting a full or partial exemption from the corporate tax were made for the real estate sector’s advantage. Bureaucratic obstacles were reduced. Foreign Direct Investment Law was introduced and the right to buy immovables without needing the condition of reciprocity was granted. The price required to acquire citizenship through real estate investment was reduced from $ 1 million to $ 250,000. Infrastructure investments gained speed to highlight the logistics network and advantages to access the global markets. These new arrangements almost doubled the rate of international investors acquiring real estate. This new demand in real estate was also caused by the interest in new and modern housings, affordable mortgages, urban transformation and mixed projects that combine prestigious housing areas with retail, offices and hotels.
Turkey is the most valuable plot of the world
Turkey receives the most investment from EU countries that it has signed customs union agreements with. However, the shares of Asia and the East Mediterranean have also been increasing in the past 16 years. According to Turkish Statistical Institute (TÜİK) data, many investors from Russia, the UK and Germany and the Gulf countries such as Iraq, Saudi Arabia, Kuwait and Qatar choose our country. Our healthcare tourism globally acclaimed during the pandemic, unique beauty of our coasts, our rich culture and history, tourism potential, visa-residence opportunities and inexpensive real estate play a huge role in attracting investors. Hence, even with a ring of fire in its surrounding territory, Turkey is an increasingly attractive opportunity for the Middle East, Gulf and Asia countries with its environment of trust and stability. Turkey’s “halal tourism” opportunities and integrated cultural mosaic with the Muslim world particularly attract Muslim investors. Some investors aim to acquire citizenship and some buy real estate for future opportunities. Energy is another critical point to consider in this regard. Turkey has been developing visions and projects to reduce energy dependency within the last 10 years. Natural gas reserves in the Black Sea should be seen as the fruits of long-term plans. For Turkey’s actions are now affecting the whole East Mediterranean zone especially on the “exclusive economic zone” and “continental shelf” issues and the country is turning to renewable energy resources, restructuring LNG and oil import, and constructing nuclear, thermal and hydroelectric power stations to increase its energy generation capacity. The purpose of doing all these is to meet the production capacity needs predicted to increase in the medium to long-term and export energy if possible. In this scenario, the real estate sector will inevitably benefit from direct international investors. And where does the sector stand in providing the right mechanisms to bring the investors together with these potentials with the right means? I have a slogan that I’d like to say whenever I have the chance: “Turkey is the most valuable plot of the World.” It is crucial to appreciate it and take the actions to increase the share of international
Unfortunately, Turkey is under-appreciated
Comparing the 10-year change in the housing prices between the EU countries and Turkey, we see that the value of houses in Turkey increased by 200%. This rate equals to the total value increase of the houses located in Germany, England, Belgium, Spain, and Portugal. Rising to the peak in exchange difference, tax rates, purchasing costs, medium-term appreciation, m² unit price and so, Turkey is still highly under-appreciated sadly. Ranking 14th among the most valuable real estate markets in the world as of 2020, Turkey has rather a low rate of foreign investors of 4 per cent in the total sales volume. Whereas this rate is 18.5% in the UAE, 13% in the UK, 12.5% in Spain and 8% in the USA. We also see that Turkey earned nearly USD 7 billion income from international real estate investments in 2019 with a 110 per cent increase compared to 2017. It is not impossible to reach up to around USD 20 billion with the right strategies.
General Manager Of Mars Investment Hakan Bucak