Foreign buyers in Turkey, a 10 billion dollar market

Foreign buyers in Turkey: a 10 billion dollar market

Foreign buyers are now very active in Turkey. Indeed, foreigners purchased $4.6 billion worth of properties in Turkey last year (2018), and that is expected to rise at least to $10 billion this year (2019), according to the Association of Housing Developers and Investors.

Foreigners purchased 40,000 homes in Turkey

Sales to foreign buyers have grown drastically in Turkey over the past 5 years. According to SpotBlue as well as TurkStat, here are the number of properties told to foreigners in the past year:

2013: 12,181
2014: 18,959
2015: 22,830
2016: 18,189
2017: 22,234
2018: 39,663 (+78%)

Notably, the yearly increase from 2017 to 2018 was 78%, showing a very rapid growth.

Yet this is nothing compared to what is being observed in 2019. Indeed, the number of properties sold to foreigners in Turkey has boomed in the first months of 2019, with an increase of 87 percent at the start of the year compared to the same period last year, according to the Turkish Statistical Institute (TUIK). In January and February 2018, 3,471 houses were sold to foreigners. In 2019, the number of house sold for the same two months had reached 6,489.

Average transaction: 115,000 dollars

Simply dividing the 4.6 billion dollar market that it’s said to be, by the number of properties sold to foreigners last year (39,663), this indicates an average transaction at 115,000 dollars.

Where do foreign buyers come from?

The results announced by TURK STAT (Turkish Statistical Institution) showed that a third of overseas sales were to Middle Eastern nationalities, with nationals from Germany and the UK also being within the top 10 foreign nationalities to buy property in Turkey.

Top nationalities foreign buyers in Turkey

According to TurkStat and Reuters, foreign buyers come from the following countries:

Iraq
Iran
Saudi Arabia
Russia
Kuwait
Afghanistan
Germany
United Kingdom

Currency, and citizenship

Why do foreigners buy so much real estate in Turkey? There are mostly 2 reasons: currency, and citizenship.

First of all, there was a 30 percent drop in the Turkish lira last year, which has made it cheaper for foreign buyers to invest in Turkey. Also, according to Reuters, Iranians, Iraqis and Saudis are taking advantage of Turkey’s decision last year to slash an investment threshold for gaining citizenship to $250,000 from $1 million previously.

“Faced last year with unsold housing stock of more than 1 million units, the government cut the citizenship threshold in September. By the end of 2018, housing investment by foreigners was up 80 percent, and sales climbed 82 percent in the first quarter of 2019.

Which Turkish cities attract more foreign buyers?

Istanbul has continued to be the top choice for foreign buyers. Indeed, residential property sales to foreigners skyrocketed to reach 1,734 in May 2019, an increase of 103% compared to last year.

While Istanbul was first, it was followed by Antalya, where foreigners purchased some 850 houses in May. In third position came Ankara with 216, then Bursa with 187, Yalova with 136 and Muğla with 109 units sold.

Istanbul
Antalya
Ankara
Bursa
Yalova
Mugla

Russian buyers in Turkey

According to Prian.ru, the popularity of Turkish real estate among Russians jumped from 4th to 2nd position. According to Anastasiya Faley, an analyst at Prian.ru, the currency volatility and the decreasing value of the Turkish lira partly explain the rising popularity of Turkish properties.

Turkey manager of Tranio.ru, Maria Jaraya, pointed out that there is a lot of demand for apartments priced between 80,000 to 100,000 euros ($90,000 to $113,000).

Is now a good time to buy in Turkey?

Naturally, these observations bring us to consider whether it’s a good timing to buy in Turkey. According to some analysts, Turkey is heading for economic collapse. Other articles, from today (10 July), are titled “Investors should sell Turkey and run, economics academic says“.

Therefore, we need a proper analysis. What seems to be certain is that Turkey has tons of unsold properties, two years of unsold housing stock according to certain sources.

Also, according to GlobalPropertyGuide’s analysis from May 2019, Turkey’s real estate prices are plunging. As Maria De Guzman describes it, Turkey now faces “high interest rates, a stalling economy, a plunging currency, and a debt buildup – all of which is not exactly a full-scale economic emergency but might be described as economic influenza.”

MarketWatch titled an article “Why real estate investors should stear clear of Turkey” a year ago. While this was a good advice, now might be the time to follow more closely the situation.

Indeed, crisis and difficult economic moments also bring along fantastic opportunities for those who stay alert, and accept to be counter-cyclical about their investments. Therefore, buying when everyone is fleeing, might as well be the best way to seize great opportunities.