Istanbul is losing its industrial dominance to Anatolian firms, Chamber of Industry says
Foreigners are back in Turkey’s housing market after years of losses in residential investments because of the tanking lira. Now, houses sold on a lira basis offer much more affordable investments against the rising foreign exchange rates. Add to this the limited price increases in housing and the advantage for foreigners increases, not to mention that citizenship is now given to those who buy homes.
Foreigners are responding well to these advantages. There has been a rapid increase in sales according to the results of the New Housing Price Index by REIDIN and The Association of Real Estate Investment Companies. The REIDIN index, for instance, showed that 10 percent of branded housing projects were sold to foreign investors in June, three points above the average over the last 6 months. Sales to foreign investors were 6 percent in February, 8 percent in March and April, and 7 percent in May.
One bedroom flats dominated the foreign investor market, representing 42 percent of sales, suggesting foreigners bought primarily for investment reasons. The proportion of those who bought relatively large houses such as 2 or 3 bedrooms was 24 percent.
Mass ve sav ngs
Ibrahim Babacan, Chairman of Babacan Yapi, who sold a significant portion of housing projects to foreigners, said that the increase in the foreign exchange triggered the sales. “We still sell real estate in Turkish lira,” he said. “Our prices are cheap when compared with the increase in the currency. Although all input costs have increased, we could not add this to prices due to buyers in the domestic market. We have not been able to raise the price of real estate in the accumulating stock. Therefore, a price advantage has emerged.”
The market for foreigners has also been boosted by the summer season and the end of the elections in Turkey, Babacan added. “There is more than a 10-12 percent in- crease compared to last year. Now, it is possible to buy a very good house for $100,000 instead of paying $135,000 as it used to be. Foreigners who see this decide to buy.”
Canal Istanbul and the c t zensh p effect
According to Babacan, new projects such as Canal Istanbul have also contributed to the buying trend. “There is an increasing interest in the projects in the region,” he said. “People ask whether we have projects there.”
Another powerful element to attract foreign investors is Turkish citizenship. Currently, citizenship is given to those who buy a million dollar home in Turkey. The expectation is that the minimum will fall to $300,000 because only a small number of people can afford a million dollars and potential buyers can turn to European countries that offer citizenship for 300,000 euros. Lowering the cost of citizenship will likely add more momentum to the buying spree and thus contribute to Turkey’s foreign currency needs.