When the national currency was unstable, Turkish developers depended on foreign buyers. Also, it’s been more profitable for foreigners to buy housing in Turkey because the dollar and euro exchange rates are growing. Turkish developers are also building many residential complexes based on what foreign investors want.
But, first things first.
Content:
- 2021 dynamics
- Istanbul is the leader in foreign buyers
- Other popular cities with foreigners
- What do foreigners prefer?
- Nuances of foreigners’ preferences
- Year-end forecasts
- Resume
2021 dynamics
October was the most successful in the last 3 years for residential property sales to international buyers. There were 5,893 deals. In October 2020, there were 5258 sales and 4272 in 2019. In 2021, August was more successful than October with 6630 transactions.
Istanbul reached number 1 in October with 2,464 sales. Antalya was in second place (1385 transactions) and Ankara in third place (359 transactions).
Transactions with foreigners in January-October grew by 38.0% compared to the same period in 2020 and amounted to 43,372 units.
Home sales to foreign nationals in September rose by 25.8% compared to the same month in 2020 and amounted to 6,630 units. Transactions with foreign investors were 4.5% of total sales. The top 3 were the same: Istanbul had 2,995 deals, Antalya 1,358, and Ankara 408.
From January to September 2021, sales to foreigners increased by 43.2% compared to 2020.
If we look at where these buyers are from, Iranian citizens purchased the most housing almost every month. Iraq ranks second in the number of apartments and houses purchased and the Russian Federation ranks third. But, there are some changes in these ratings like a steady and gradual increase in US buyers.
Istanbul is the leader in foreign buyers
The biggest Turkish city is very important for real estate - most international investors are interested in real estate in or around Istanbul.
Turk.Estate covered the pros of investing in Istanbul a little earlier. But in short, prices in Istanbul grow by about 30% a year and the "Index of total housing profitability" (by a MINTLAB market report on the city) says the total income for rental income at the end of August 2021 was 4.8% a month and 37.07% year-on-year.
Compared to how profitable other financial instruments are, total housing investment profits reached their highest level in 2021, especially in Istanbul.
Istanbul’s housing prices at the end of August were 7,265 Turkish lire (TL) or $856.38 per sq. m. But, with the depreciation of the lire, it was about $100 less by early November.
Housing costs in TL increased by 26% compared to August 2020 and by 8% for the US dollar.
Again, in September 2021, foreigners bought 2,995 housing units in this megalopolis alone. 45% of the total number of apartments were sold to foreigners. Sales levels were 2,028 units higher than the average historical numbers (for the entire period).
Other popular cities with foreigners
The real estate sector suffered great losses last year because of the pandemic and residential real estate sales dropped. But in 2021, its turnover grew. Let’s look at which provinces and cities were in demand.
Antalya, the resort capital of the country, is the second most popular real estate investment area for foreigners after Istanbul and its surroundings. The Turkish Institute of Statistics TÜIK confirms that most foreign tourists who choose Turkey for a winter pastime move to Antalya. It’s also an area where foreign citizens who buy apartments or houses end up living the longest, for years or decades.
From January to October 2021, foreigners bought 43,372 homes in Turkey. Almost half were in Istanbul with 20,247 deals. But, Antalya, still in second place, grew by 30% compared to 2020. There were 8,640 transactions here.
These results also show that other provinces where foreign investors bought apartments or houses were Ankara, Mersin, Yalova, Bursa, Izmir, Sakarya, Samsun, and Trabzon.
October showed a positive trend with housing sales to foreigners in Antalya rising by 33% in 2020 to reach 1,385 units. About 5,893 housing units were sold in Turkey in October 2021 — 12.1% more than October 2020.
What do foreigners prefer?
Curiously, many developers in Antalya change their projects for foreign buyers’ preferences.
Selman Ozgyun, a member of the Association of Real Estate Investors and Istanbul Builders Association, said that after Istanbul, Antalya is the city with the most interest from foreigners who want to invest in residential real estate and become Turkish residents.
The sea, beaches, favorable climate, accessible transport (planes and buses), and natural and cultural values make Antalya one of the most important tourist centers. Also, it’s a great place for permanent residence.
And local contractors have been considering what foreign investors are looking for. They began adapting their projects to European citizens’ preferences.
Nuances of foreigners’ preferences
In Turkey, there are ready-made renovated apartments with a kitchen and all the needed household appliances.
But more "turnkey" housing is sold the further away. As Selman Ozgyun says, "... it’s enough for a new owner to take a suitcase with personal belongings and move in." Appliances and designs are chosen beforehand — the owner buys a fully fitted and cozy apartment, including a rug at the front door and sun loungers with umbrellas on the balcony.
It’s very convenient for foreigners to move with very little for a week and stay there for several months without worrying about not having everything they would usually have or need at home.
The expert also says that more attention is being given to intelligent systems in residential complexes. Smart homes are increasingly popular with automatic or specially set temperature, humidity, and lighting controls, IP communication, control of devices from a smartphone, improved security, and other achievements of technological progress. The most eco-friendly housing is also in demand. Turkey has been focusing a lot on "smart cities".
There’s a list of other priorities that were made based on numerous potential and actual appeals from foreign buyers.
For example, there’s interest in "branded housing" which is residential real estate from well-known developers "with a name".
The "REIDIN-GYODER New Housing Price Index" has results for residential buildings or "branded projects" by large developers, sometimes internationally.
And, according to the REIDIN-GYODER New Housing Price Index, in October 2021, foreigners bought 6.48% of branded residences (of total sales). And over the past 6 months, this figure was 7.04%.
They preferred 1+1 (1-bedroom) apartments in these complexes. 42.86% were foreign buyers.
Year-end forecasts
Saying that 2021 was better in housing sales to foreigners compared to the previous year, Mr. Ozgyun explained: "We (the construction sector) are seeing a significant increase in housing sales to foreigners in Antalya. This has become an important factor for the region's economy to recover. Considering November and December, we expect total home sales in this province to exceed 10,000 this year."
The Institute of Statistics TÜİK announced another goal forecast. It tracks the dynamics of residential real estate sales in recent months. In October 2021 alone, the number of transactions to foreign investors increased by 12.1% compared to the same month in 2020 (or 5,893 transactions).
Ömer Faruk Akbal, president of the Association for the Promotion of Real Estate Abroad (GIGDER), said: "Sales to foreigners in September 2021 increased by 25.8% compared to the same month in 2020 and by 43.2% in the first 9 months of 2021. The decision of the Ministry of Environment and Urbanization to change the Provision to appoint a firm from September for an independent assessment of housing sold to foreigners affected sales. But, it also prevented possible damage from actions like the housing shortage crisis in the market. If the Ministry had not proposed such a constructive solution to the problem, we wouldn’t have achieved the goal of 50,000 transactions with foreign investors in 2021, which is now a reality."
The goal for 2022, Ömer Faruk Akbal explained, will be $10 billion. This is expected to be earned for apartments and detached houses sold to foreigners in 2022.
Ömer Faruk Akbal said that according to a GIGDER study, the average cost of housing sold to foreigners exceeded $196,000.
The authorities have a solution to prevent fraudulent sales like real estate transactions where the housing price is inflated in documents when the seller and buyer work together for the latter to get instant citizenship. An independent commission checks the value of each transaction. If the parties of the transaction are found to be working together, the appraisal company will get fined or even be closed. If the transaction is fraudulent, the right to citizenship will also be revoked.
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Resume
Foreigners who have enough money to buy (or initially pay) in dollars or euros have an advantage when buying Turkish homes. They’ll be able to get new, green, and state-of-the-art residential complexes that take their preferences into account, including furnishings and decor. Turkey is convenient to rent out purchased housing or even permanently live there. Tourists or investors can get a temporary residence permit when they buy real estate and the refusal for this is low. But, when your buy housing for $ 250,000 or more, you can expect "instant citizenship".
But, we want to warn readers against the mistakes of unprofessional investors who raise the cost of housing to quickly get citizenship (which is possible after 5 years of owning real estate regardless of its value). It’s best to take your time and do it right by consulting with a realtor and lawyer. Then you can enjoy a new and risk-free property in a warm country, a metropolis, or on the seashore.