As you might know, the “Regulation on the Amendment of the Regulation on the Implementation of the Turkish Citizenship Law” was published in the Official Gazette and entered into force.
Foreigners who make a fixed capital investment of at least $ 2 million, or purchase at least $1 million of immovable property, not sold for 3 years, may be eligible to acquire Turkish citizenship with the decision of the Council of Ministers.
What will this decision showing the government’s approach bring to us in terms of foreign real estate sales?
Foreigners who buy real estate from Turkey are mostly middle income group. The average value of the properties sold in 2015 is 180.000 USD. This new arrangement targets a different audience. There is a big difference between 180,000 USD and 1 million USD.
We have touched on our previous writings on how foreigners look to invest in Turkey. In short, a large foreign investor either buys a block with a huge discount and sells it to his or her own citizen or becomes a partner in the project, or even buy a cheap property by his own standards in order to come and go only occasionally, making the main investment in markets such as England, where the amortization period is relatively lower.
This law was not aimed at investors, but if it were, it would not have to grant citizenship as markets with high return on investment already find their customers.
Will wealthy foreigners start to buy real estate from Turkey after this amendment?
If we think about the sale of about 23,000 properties to foreigners in 2015, it would be worth 1 billion dollars, even if only a small additional sale of 1,000 units per year is provided. This is not an understatement, given that we have sold about $4 billion a year. Citizenship is a very important factor. It will definitely be a very positive contribution.
Examples in other countries?
Real estate is a very important export item. It is relatively less dependent on outsourcing, has a high employment increase effect and both the foreign exchange and the product remain inside.
Currently, the same method applied in Europe is Southern Cyprus. Permanent residence permit with new real estate investment of 300,000 euros and direct EU citizenship with real estate investment of 2 million euros is being granted.
Spain, Portugal and Greece offer temporary residence permits (we do not have a lower limit for residence permits) in different amounts of 250,000 – 500,000 Euros, but they grant permanent residence rights and citizenship on condition of living 6 to 10 years.
Only Portugal is more flexible in this regard. Even if the investor doesn’t reside in the country, he can apply for citizenship after 6 years.
If we look at these figures, $ 1 million seems to be a reasonable figure. Even if we are not a member of the European Union, our country is much more attractive to Arabs especially in terms of nature, culture and opportunities for comfortable living. Considering the attitude towards foreigners in Europe over the last years, there will be a great demand especially from the Gulf countries.
Can we encourage persistent foreign investment in Turkey?
However, in the long run, we can provide the real foreign exchange inflow by creating the appropriate investment climate in Turkey.
Today, London is the number one choice for international real estate investors. Moreover, real estate investors are not given a residence permit, let alone citizenship. Foreigners investing in real estate in the UK are entering the market with expectations of high rental income and value increase. One of the most important reasons is investment security and stability.
The main investment incentive is the appropriate investment environment. For this, a reliable legal system, economic and political stability is essential in the country. Could the confidence in the justice system, where it has fallen below 30%, be a healthy investment climate? Would the foreign investor bring money to this climate?
These are the questions we have to ask in the long run.