Over the past decade, Turkey’s real estate market has been a hotbed for foreign investors, with a particularly significant surge in interest from Russian and Ukrainian nationals. This uptrend in foreign investment can be attributed to a combination of strategic government policies, economic conditions, and geopolitical tensions. This article offers a comprehensive exploration of these factors and provides an in-depth analysis of this burgeoning trend.
According to Nordic Monitor, the number of foreigners residing in Turkey has seen a sevenfold increase since 2010, reaching its pinnacle in 2021. One of the key drivers behind this trend has been Turkey’s robust campaign to attract foreign investment through property sales, a strategy designed to bolster the economy amidst inflationary pressures and sluggish economic growth.
In 2017, the Turkish government implemented a policy granting a one-year residence permit to foreigners who purchase property within the country, irrespective of the property’s value. Additionally, any foreigner buying real estate priced at or above one million dollars could acquire Turkish citizenship. This threshold was lowered to $250,000 in 2019, before being adjusted to $400,000 in May of the same year, a move aimed at controlling the increasing demand from foreigners for Turkish real estate.
The geopolitical conflict in Ukraine has significantly impacted the Turkish real estate landscape, particularly with an increased interest from Russian and Ukrainian buyers. The depreciation of the Turkish lira in recent years, losing 44% against the dollar, has made Turkish real estate even more appealing to foreigners possessing strong currencies.
The potential of obtaining Turkish citizenship via property investments is a major driving factor for these investors, as indicated by the Association for the Promotion of Turkish Real Estate Abroad (GIGDER). Arab News reports have identified Russians as the third-largest real estate buyers in Turkey, behind Iranians and Iraqis, with 509 homes purchased by Russians since Russia’s invasion of Ukraine in February.
Investment expectations from Russian and Ukrainian investors differ considerably. While Russian investors have shown a willingness to invest heavily in Turkish property with a view to acquiring citizenship and expanding their financial activities, Ukrainian investors, on the other hand, are more inclined towards short-term deals, anticipating a return to Ukraine once the conflict subsides.
The surge in demand is evident from the significant increase in property searches from Russia and Ukraine registered by Turkish real estate website Turk.Estate since February 2021. Experts like Hakan Sabbagh, sales manager for Akzirve, anticipate this demand to grow in the upcoming months. The most attractive locations for Russian and Ukrainian investors include Antalya, Istanbul, Izmir, Ankara, and Bursa.
The Turkish government’s neutral stance amidst the Ukraine conflict, along with its refusal to impose sanctions on Russia, has played a significant role in attracting Russian investors to the Turkish market. The government’s provision of high-quality services at relatively lower prices, coupled with a mature banking system and favourable geographic location, have all contributed to making Turkey an attractive investment destination.
The influx of foreign investment has had profound effects on Turkish real estate prices, causing them to soar. However, this price surge has also been fueled by soaring inflation rates, officially at 79% in June, with some independent estimates exceeding double that figure.
Despite the high prices, wealthier Russian investors seem prepared to pay over the required threshold of $400,000 for Turkish citizenship, often investing in overpriced properties without any price negotiation.
The appeal of non-European destinations like Turkey and the United Arab Emirates has increased for Russian investors, given the hardened stance of European countries towards Russian billionaires. Turkey’s refusal to impose sanctions on Russia or close its airspace to Russian airlines, coupled with its attempts to maintain good relations with both Moscow and Kyiv, makes it an appealing alternative.
The increasing presence of Russian and Ukrainian investors in Turkey’s real estate sector is anticipated to stimulate growth in other sectors, including construction and new company formations. However, challenges remain, particularly for Russian investors, who often face difficulties with blocked banking accounts due to sanctions.
Notably, the popularity of cryptocurrencies as a means to transfer assets from Russia to Turkey is also on the rise, driven by the increasing complications around traditional financial transfers. This trend suggests that the cryptocurrency market in Turkey may see substantial growth, mirroring the burgeoning interest of Russian investors in the Turkish real estate market.
In conclusion, the Turkish real estate market has proven itself an attractive hub for foreign investors, particularly those from Russia and Ukraine. Despite the existing and potential challenges, the sector’s future looks promising as it continues to provide robust opportunities for investors while contributing to the economic growth of the nation. Visit Aegeaned.com for more insightful resources and guidance on the Turkish real estate market.