The trend in real estate investment has reversed

The balance is gradually reversing in real estate purchases by non-residents in Turkey and by Turks in other countries. While the foreign exchange income obtained from sales to foreigners is rapidly decreasing, the volume of foreign currency taken abroad by Turks for purchases is gradually increasing.
Curb the foreign purchases, which have grown rapidly in the last decade and become an important income item in Turkey's current account balance, with the effect of granting citizenship in return; The tendency of Turks to step up in foreign real estate investments is becoming increasingly evident. In the first nine months of this year, the foreign currency taken abroad by Turks to acquire real estate approached the amount brought by foreigners for this purpose.

50 billion TL purchase in nine months
According to the latest balance of payments data announced by the Central Bank, foreign real estate investments of Turks in the January-September period increased by 14.7 percent in dollar terms compared to the same period of the previous year. The foreign currency paid by Turks for the purchase of real estate abroad, which was 1 billion 330 million dollars in the first nine months of 2023, when the increasing trend started, reached 1 billion 526 million dollars in the same period this year.
When converted to the Central Bank's average dollar buying rate, it was determined that the money transferred by Turks to purchase real estate in other countries approached 50 billion dollars.
Real estate investments of foreigners in Turkey decreased by 23.8 percent in the January-September period compared to the same period of the previous year, falling to 2 billion 188 million dollars. Accordingly, the foreign currency that went out for real estate purchases reached approximately 70 percent of the amount brought for this purpose. In the same period last year, this rate was 46 percent.
When the capital taken abroad by Turks for this purpose is deducted from the foreign currency brought by foreigners to Turkey for real estate purchases in the January-September period of 2023, the net inflow in this field, which was 1 billion 540 million dollars, remained at 662 million dollars, 57% less in the same period this year.
As of the end of September, foreigners purchased 2 billion 878 million dollars of real estate from Turkey in the last year, while Turks' purchases abroad reached 1 billion 978 million dollars. On an annual basis, the net inflow in mutual real estate investments was 900 million dollars.

The scissors are gradually closing
According to Central Bank data, the annual volume of real estate purchases by foreigners from Turkey, which exceeded 3 billion dollars for the first time in 2013, 4 billion dollars in 2014, and 5 billion dollars in 2018, will decline after reaching the highest level with 6.3 billion dollars in 2022. passed.
The amount in question, which was 2.9 billion dollars in the first nine months of 2023, reached 3.6 billion dollars for the whole year. Foreign purchases, which remained around 2.2 billion dollars in the first nine months of this year, are estimated to remain around 2.7-2.8 billion dollars throughout the year.
The annual volume of Turks' foreign real estate purchases, which were first recorded in statistics as 341 million dollars in 2017, has grown exponentially, especially with 628 million dollars in 2022 and 1 billion 782 million dollars in 2023. Turks' foreign purchases, which exceeded 1.5 billion dollars in the January-September period this year, are expected to exceed 2 billion dollars throughout the year.
Housing sales statistics announced by the Turkish Statistical Institute (TUIK) as of the end of October also revealed that the foreign share in purchases has decreased rapidly. While the number of houses sold across Turkey in October increased by 76.1 percent compared to the same month of the previous year, reaching 165 thousand 138 units, the number of houses sold to foreigners decreased by 16.3 percent to 2 thousand 122 units. While 1 million 112 thousand 374 houses were sold in the January-October period, 19 thousand 212 of them were bought by foreigners. While total sales increased by 11.9 percent over the ten-month period, the number of sales to foreigners decreased by 37.2 percent.
The share of sales to foreigners among the houses sold in Turkey, which reached 4.5 percent in 2022, decreased to 2.9 percent in the whole of 2023 and to 1.7 percent as of the first ten months of this year. "
Why do Turks buy houses abroad?
The majority of Turks who buy housing abroad are "investor" type buyers, among the newly wealthy segment that emerged with the effect of the deterioration in income distribution, and those who want to settle and live abroad in the long term for their children's education and career. This trend has increased further as real estate prices have fallen to relatively affordable levels due to the recent economic crisis in the USA and Europe.
The fact that rental income abroad increases much faster than the sales price of real estate is one of the factors that direct those with financial means to purchase in foreign countries. The advantage of earning rental income in dollars and spending it in Turkey makes buying a house abroad attractive. Meanwhile, the growing visa problem of Turkish citizens pushes them to purchase housing abroad, which offers opportunities such as residence permit and dual citizenship.
Why are foreign purchases falling?
The rapid increase in housing purchases by foreigners was influenced by the granting of citizenship in return. With the legal regulations made in 2016 and 2017, the way was opened for foreign investors to obtain Turkish citizenship on the condition of buying a house.
The minimum real estate purchase price required to obtain citizenship, which was 1 million dollars in the 2017 regulation, was reduced to 250 thousand dollars in 2018. With this regulation, in addition to the Russians and Europeans who were interested in Turkey's coastal cities in previous periods, an intense influx began to purchase housing from citizens of Middle Eastern countries where situations such as political, social instability and civil war were experienced. There was a condition that the houses purchased in exchange for citizenship should not be sold for 5 years.
With this period expiring in 2023, foreigners began to sell the houses they bought in return for citizenship. The majority of the buyers of the houses sold by these people were foreigners who wanted to obtain citizenship. However, developments such as the slowdown of demographic movements caused by the turmoil in the countries of the region, the decrease in the refugeeization rate, and the increase in the minimum house purchase price required to obtain Turkish citizenship to 400 thousand dollars were effective in reducing foreign purchases.

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