In Turkey, home purchases by foreigners have fallen sharply to 2020 levels

Sales of houses to foreigners in August in Turkey decreased by 42.0% compared to the same month the previous year, falling to 3,058 properties (houses and apartments). In August 2022, 5,723 properties were sold, and in the same month of 2021 – 5,866, while in the pandemic August 2020, the number of properties acquired by foreigners is comparable to the current level – 3,893 units. In general, since the beginning of the year, sales of houses to foreigners in the country fell by 43.6% compared to January-August last year and amounted to 25,134. In 2022, during the same period, 44,595 properties were sold to foreigners, in 2021 – 30,849 This follows from data from the Turkish Institute of Statistics (TurkStat), which Vedomosti reviewed.

The leaders among buyers, as follows from statistics, were mainly citizens of Russia, who have occupied 1st place since November 2022. In August, they bought 733 residential properties in Turkey. For comparison: in July, Russians purchased 722, in June – 733, in May – 999, in April – 817, in March – 1157, in February – 1183, in January 2023 – 1557 objects. Russian citizens were traditionally followed in August by citizens of Iran (leaders in purchases until the fall of 2022) with 342 purchases, citizens of Iraq with 220 and citizens of Kazakhstan with 141 objects. Foreigners accounted for 2.5% of all residential property sales in Turkey in August 2023. Istanbul took 1st place with 1,066 residential properties sold to foreigners. Next in the top three places are Antalya with 919 and Mersin with 248 objects.

The main reasons for the decline in home purchases by foreigners in Turkey are restrictions on issuing residence permits (residence permits) and rising real estate prices, Astons foreign real estate and investment immigration expert Alexander Kosovsky explained to Vedomosti. He recalled that the Turkish authorities, as of the end of August 2023, had imposed a ban on obtaining a primary residence permit in 1,169 areas throughout the country, including areas in the most popular cities, due to the filling of quotas for foreigners living there. “That is, a foreigner can buy or rent real estate in these areas, but will not be able to apply for a Turkish residence permit. And one without the other is uninteresting,” Kosovsky noted, emphasizing that the situation with residence permits and delays in issuing investment citizenship is one of the main factors slowing down demand among foreign real estate buyers. When buying housing for himself and loved ones in Turkey, a foreign investor also wants to obtain legal status to stay in the country, which will allow him to have additional benefits that residents have – opening accounts in local banks, gaining access to medicine, education, the banking sector, explains the expert.

One of the Russian citizens, on condition of anonymity, told Vedomosti that he purchased property in May 2020 and submitted documents at the same time, but received citizenship only in September 2023. He suggests that the delay was related to the elections, “since local residents are very unhappy with the sharp rise in real estate prices and the influx of foreigners, so the candidates exploited this in the election campaign.”

The Turkish Migration Service told Vedomosti that there are no global restrictions or prohibitions on issuing residence permits and investment citizenship to foreigners. “Arriving foreigners have the right to apply for a residence permit, if they meet the conditions, within the period prescribed by law,” the department explained.

In addition, according to Kosovsky, the drop in demand was significantly influenced by the fall in the lira exchange rate, which by August 7 had fallen to the historical 27.01 lira per $1, and persistently high inflation. In August, consumer inflation in the country accelerated to 58.9% year-on-year, up from 47.8%. In June, the house price index rose by an average of 95.9% year-on-year across Turkey, and by 85.1% in Istanbul. In the country’s largest city, this is also influenced by the program announced by the authorities at the end of August to resettle 1.5 million people from earthquake-prone housing – such a large-scale renovation can increase the demand for housing and building materials and, accordingly, prices for them, this is already noticeable, Kosovsky believes. Citizens of Russia and Iran, despite some negative factors for purchasing a home, will still remain leaders among buyers in Turkey, the expert notes. Many of them hope to eventually obtain citizenship, for which there are no zonal restrictions, and the investment limit remains the same – from $400,000, despite rumors that appeared during the presidential elections about changing this level to $1 million, Kosovsky says.

“But there are no special alternatives for not the richest Russians seeking to settle abroad amid the conflict in Ukraine: obtaining a residence permit in the EU has now become extremely difficult, especially when purchasing real estate for such a small amount as Turkish $75,000. “Golden visa” programs in the EU – residence permits for the purchase of real estate – start from 300,000 euros, and at the same time, not everyone accepts applications from Russians; the transfer of funds is complicated by banking bans, of which there are much fewer in Turkey,” notes Kosovsky.

Arsen Ayupov, president of the Russian-Turkish Dialogue association, partner of the NSP law office, notes that August is often a month of low demand for real estate, which increases in September – November. According to him, some foreigners come to ask the price, in addition, there is a large proportion of installment transactions that are not included in the statistics of closed property transactions in August and are reflected in the fall.

“In general, now, comparing 2022 and 2023, we can say that the previous year was rather anomalous in terms of the rush, “emotional” demand among Russians against the backdrop of the beginning of the SVO and partial mobilization, and now the market is stabilizing to previous indicators, although Russians are still in leaders,” concludes Ayupov.