Canada Limited Apartment Sales to Foreigners, Will Turkey Follow Lead?

Presidential elections in Turkey are coming, and the candidates are about to start fighting for votes. Assisting voters with their housing issues is  an easy way for statesmen to score points in the political race about to happen. A number of experts believe that foreign investors are to blame for the soaring rents and real estate prices in Turkey. Following the suit of Canada and other states, limitations on property purchase for foreign buyers may be imposed in Turkey. The arguments about it became widespread and common. They may be heard in not just popular online nationalist groups already. So, if you plan to purchase real estate in Turkey and receive your residence permit or citizenship, now is the time.

Canada-inspired limitations on property purchase in Turkey

Foreign investors believed the real estate market of Canada to be a safe and appealing investment haven for property purchase. Houses and apartments in Canada enjoyed great popularity with foreign buyers. This resulted in a greater demand and rising prices. The Covid-19 pandemic brought along a strong pressure on prices and property purchase. Many development projects were put on hold, and the shortage of new properties became more pronounced.

The unhappy Canadians insisted on limitations for foreign investors, who contributed to the above growth in real estate prices and prevented the Canadians from putting their housing issues to the rest. Many of them were condemned to forever living in rented properties as a result of this dramatic price spike on the real estate market.

The governments of certain Canadian provinces took notice of these complaints and criticism. They introduced a high real estate purchase tax for foreign investors in order to prevent real estate prices from growing any further. In 2016, British Columbia imposed a corresponding 15% charge, and in March 2022 the Ontario Government increased the charge rate up to 20%. The latter was soon adopted in all the regions of the province. 

With as many as 500,000 immigrants annually, Canada won’t manage to solve this issue through taxation. That’s why in April 2022 the Canadian Government suggested imposing a  2-year moratorium on property purchase for foreigners. The above moratorium didn’t apply to the following groups:

• students
• holders of Canadian residence permits
• foreigners employed by Canadian companies.

The situation in Turkey is almost the same. The key factors below are likely to contribute to the growth of average real estate prices and rents in Turkey:

• Turkish investors: Lots of Turkish citizens are ready to invest in real estate and lease it out later on or hedge their inflation risks therewith (instead of deposits).
• Lack of new real estate: Rising prices for building supplies do not make the situation easier, as they result in the lack of new properties. The said deficit appeared as early as the spring of 2020, after the pandemic stroke. This was a consequence of blanket lockdowns preventing local developers from going on with already launched projects and commissioning them on time or proceeding with any new development projects.
• Foreign investors: Refugees and immigrants from neighborhood Middle Eastern states, with Syria, Iran, and Iraq among them, are actively purchasing real estate in Turkey. This results in higher asking prices and rents. Investors from Russia and Ukraine are extremely active on the market. Foreign investors often use their legal right to receive Citizenship of Turkey by investment by way of property purchase.

Local investors, their activities, and construction material prices on the world market are beyond control of the Turkish government. The latter may still introduce certain limitations for foreign investors.

The summer of 2023 will be marked by presidential elections in Turkey, and local politicians are eager to succumb to the demands of the public unwilling to put up with the sky-high rents and wishing to get their own properties.

It makes perfect sense for the Turkish government to introduce a real estate purchase tax for foreign investors or to limit access to the real estate market of Turkey for them.

Investors from Russia, Belarus, Ukraine and other foreign countries should hurry and grab the chance to invest in Turkish properties while they still can, or before it gets no longer financially feasible.

Investors do not live by Canada alone. Many other countries favored by immigrants experience the like problems. New Zealand, the USA, China, Germany, and Sweden try to cope with the rising real estate prices by limiting activities of foreign investors and their chances to purchase property.

Powerful support package for those in need – another reason not to postpone your property purchase

If the government of Turkey imposes the above limitations for foreigners, prerequisites for real estate prices in Turkey to go up further still exist. We shouldn’t forget about the lack of new real estate, rise in construction material prices, and investment appetites in Turkey itself. The above list is not complete and grows in size every day.

The government of Turkey considers the possibility to support the citizens in need of improving their housing conditions. These measures will contribute to further growth of real estate prices in Turkey. It may get more challenging for foreigners to purchase Turkish real estate in the future.

On May 10, 2022,  after the Cabinet meeting, President of Turkey Recep Tayyip Erdoğan introduced support measures for the population. The goal was to help citizens receive affordable loans to purchase their first property, and developers –  to ultimately commission objects under construction. The latter would make it possible to enhance the supply of real estate on the market. The government suggested the following measures:

• Turkish citizens who purchase their first property in Turkey will get access to real estate loans with a 10-year maturity and low (0.99%) interest rate, where the asset in question costs up to TRY 2,000,000. This offer applies, if you purchase new real estate.
• Turkish citizens who purchase their first property in Turkey at the price of up to TRY 2,000,000 will be authorized to get a real estate loan at the monthly interest rate of 0.89%. At least 50% of the total real estate cost shall be paid by the buyer with their own funds. They receive the said funds when closing foreign currency deposits or selling gold to the Central Bank of Turkey. This offer applies,  if you purchase both new and already existing homes and apartments.
• The government will allocate TRY 20,000,000,000 to support the construction industry and let it commission the development projects that are at least 40% ready. The only precondition is that 50% of all properties under construction are not sold yet. The companies that oblige to keep apartment prices unchanged within 12 months, will receive this opportunity.

Industry representatives expect that the market will grow even further, inspired by the government support measures and expecting  growth in real estate supply, customer activity and property purchase. When interest rates for real estate loans drop below 1%, this serves as a powerful psychologic stimulus, activating the market and promoting the sales.

It was enough to announce the above measures, and many sale offers were reviewed and amended. Erdoğan’s announcement resulted in a 5% to 20% rise in prices for apartments and cottages for sale on certain specialized sites.

Record-breaking real estate sales in Turkey and rise in the number of foreign investors

Since January till April 2022 nearly 1,000,000 properties changed ownership. Owners sold  995,595 commercial and residential real estate objects as well as land lots. Proceeds from the above deals amounted to TRY 10,475,887. Experts confirm these figures to be among the highest in recorded history.

Residential real estate accounted for most deals (442,375). It was followed by building land lots (168,925), agricultural land (264,746), commercial properties (47,704), and other real estate.

April was marked with 287,072 sale and purchase transactions. The income therefrom made up TRY 3,514,110,675. As many as 291,739 real estate deals were struck in March. The number of property purchase deals closed in April turned out to be 1.5% lower MoM.

What Turkish cities enjoy the greatest popularity in terms of property purchase? Here’s what the list of regions with the greatest number of deals closed at month-end since January till April 2022 looks like:

• Istanbul (134,764)
• Ankara (68,417)
• Izmir (56,796)
• Antalya (41,771)
• Bursa (38,253)
• Konya (28,514)
• Kocaeli (27,308)
• Balikesir (27,112).

The share of foreign investors in the total number of closed deals has been growing steadily since 2016. An insignificant drop occurred in 2020. The pandemic and lockdowns made it challenging for foreign buyers to visit the properties of interest and deal with the formalities.

The number of cottages and apartments in Turkey sold to foreigners in March 2022 increased by 31% YoY. Experts attribute it to the recent political developments in Ukraine that forced many Russians and Ukrainians to leave their countries and move to a safer Turkey  Official stats indicate that every 20-th real estate object in Turkey is sold to a foreigner.

Period	Total sales	Deals with foreign buyers	Share of deals with foreign buyers, %
2013	1,157,190	12,181	1.1
2014	1,165,381	18,959	1.6
2015	1,289,320	22,830	1.8
2016	1,341,453	18,189	1.4
2017	1,409,314	22,234	1.6
2018	1,375,398	39,663	2.9
2019	1,348,729	45,483	3.4
2020	1,499,316	40,812	2.7
2021	1,491,856	58,576	3.9
2022 (January-March)	320,063	14,344	4.5

The Central Bank of Turkey confirms that as of February 2022 prices for residential real estate grew up by 96.4% YoY in Turkey (unadjusted for inflation). Experts predict the upward price trend will at least accelerate in the midterm. 

Assistance with property purchase in Turkey, including investment immigration deals

Turkey is the destination favored by many followers of this site wishing to immigrate and start a new life in another country. A great many search requests as to investment immigration or property purchase in Turkey prove it beyond doubt.  With all this in mind, you shouldn’t keep purchasing your own apartment in Turkey on ice. International Wealth experts are here to help you with any needs you may have, be it purchasing any liquid assets or closing a good deal in the shortest time possible.