Turkey’s fast growing real estate sector is enjoying an influx of foreign buyers after a bill, which took effect in early May, eased property sales to non-Turkish citizens. The Turkish real estate sector has witnessed its largest influx of foreign buyers since the founding of the Turkish Republic. In May alone foreign real estate acquisitions in Turkey reached $1.1 billion, which is four times the total number of real estate purchases completed by foreigners in 2011. This number is even more incredulous given that real estate sales to foreigners were only $114 million in the January-April 2012 period. The number is expected to rise even more in the coming period.
According to the Central Bank Balance of Payments report, Austria trademark firms are behind the acquisitions. To date, the largest real estate purchases by foreigners were back in 2008 when total foreign purchases hit $337 million. In 2009, foreigners bought $209 million worth of local real estate, $314 million in 2010 and $310 million last year.
Nazmi Durbakayım, Istanbul Contractors Association (İNDER) President and Teknik Yapı Holding President, told daily Hürriyet that two large European investors had begun acquiring real estate in Turkey.
“They came to visit us recently and wanted to purchase 1,500 pieces of real estate. However, we didn’t look too favorably upon this proposal since we prefer to sell to the consumer and want to avoid speculation,” he said, adding that Turkey’s real estate reciprocity law created a big opportunity for European investors. Durbakayim believes investors who buy property in Turkey want to then turn around and market that property abroad.
İnanlar İnşaat Chair Serdar İnan said Turkey has an annual potential to sell $30 to 40 billion worth of property to foreigners and that he believes the $1.1 billion May figure is based on expectations regarding the reciprocity clause. Istanbul Realtors Chamber Co-President Nizamettin Aşa also believes the sales are due to expectations regarding the reciprocity clause and that there are currently close 300,000 potential Russian and Arab buyers.
“From here on out we can see a rise in the prices of luxury projects. Our fear is that the price rises in this sector could then trickle down and raise prices in the whole real estate market,” he said, stressing that luxury real estate only accounts for 20 percent of the market and that if prices go up for the remaining 80 percent, this could result in a bubble being formed.
A bill, which removes the condition of reciprocity and eased restrictions on the sale of land and real estate to foreign citizens and firms, was adopted on May 3. Main opposition Republican People’s Party (CHP) has appealed to the Constitutional Court to annul and suspend the bill arguing that some provisions in the bill are unconstitutional.