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With the Lira falling .. Is it time to buy real estate in Turkey?

Posted by G5 Real Estate on April 9, 2019
| 0

Location, location, location… Perhaps if the origin of the traditional triple
mantra wasn’t known location, Location, Location , when it’s first appeared
in the Washington newspaper in 1952, it would have been thought as it was
created specifically for the Turkish real estate sector for the period between
in 2012 and 2018, marked by an unprecedented real estate boom in
Turkish history. It was not in vain, but it’s planned for the Turkish real estate
sector to take the lead in economic growth and become a major source of
foreign currency by attracting foreign buyers, it seems to have been very
successful in its mission. The sector has accounted for nearly 8.4% of
Turkey’s GDP over the past decade.
As usual, Turkey was exposed to internal and external crises especially
during the Renaissance period, and it was the beginning of Ankara’s
assistant to what’s known as the “Arab Spring” which caused anger of
some countries in the region opposed to those waves of protest and
reform, through the attacks “successive” cities of Turkey, such as Istanbul
attacks in 2015, and then the failed coup attempt in 2016, the diplomatic
crisis with Moscow after the overthrow of Turkey by a Russian plane in the
south of the country, The assassination of the Russian ambassador in
Ankara, and probably not the end of the current trade crisis with the United
States, but a surprise came among all these crises, as things are required
of the collapse or at least negative fluctuation due to crises; the Turkish real
estate sector acquires the influx of foreign investment into the sector
amounted to almost half of the total FDI in Turkey last year. Of the 10.8
billion dollars represented by the total foreign direct investment flows, which
entered the country in 2017, the real estate and construction has acquired
$ 4.6 billion of them, which are levels not previously assigned by the
Turkish economy. Foreign buyers’ purchases of real estate doubled in 2017
from 2016 to $ 1.7 billion.
Coincided boom with the structural changes to the laws of property
ownership to foreigners. In 2012, the government abolish the law was
serving the requirement of “reciprocity” to attract more foreign buyers, in
the same year allowed the citizens of 183 countries to purchase property
Turkish home, and land foreign ownership wasn’t that easy, allowing the
ownership of land with an area of about 150 acres, without obtaining
special permission, after the legal area was limited to only 6 acres. The
effect of these measures was that foreigners took over Turkey to own real
estate, and Arabs accounted for the biggest share of purchases, with sales
rising fivefold between 2012 and 2015.
The crisis
The economy is now ranked 18th among the world’s economies, with a
domestic output exceeding $ 900 billion, with the real estate sector
accounting for one-fifth of the total. It is facing a new crisis and a significant
drop in its local currency. The lira has lost about 50% of its value in the last
12 months, Such as the current account deficit coupled with high levels of
debt in the private sector and large foreign financing for the banking sector.
The inflation rate was 15.9% in July of 2018, more than five times the
average for the rich countries. And government loan in foreign currency
increased significantly, and the thing that broke the economic wound was
the announcement by US President “Trump” to double the tariff of US
import on steel and Turkish aluminum In terms of 50% and 20%
respectively, as penalties for the continued detention of Turkey’s American
priest “Andrew Brunson” for “espionage and terrorism” following the
attempted coup in 2016.
This devaluation caused the lira to weaken against other currencies and to
give many advantages to foreigners. A person who had a dollar last year
would take 3.5 lira, the same person who can now get about 6.5 lira against
that dollar.
Do we buy now?
Under those rising purchasing power of foreigners because of the
fluctuation of the lira, with the rigidity real estate sector and not affected by
crises; some might wonder if it is the right time to go to Turkey and buy a
property, despite a crisis plaguing the Turkish economy, and can not
predict its outcome under any circumstances, so There are many reasons
that support the timing of entering the real estate market now , in
addition to the fact that the sector is not affected by the recurrent crises that
hit the economy from time to time, as has been mentioned recently,
investment in the real estate market, as usual, real estate investments in
general, is characterized by long-term investment, To benefit from the
purchase of the property for few years, while one who’s interested in the
crises experienced by the Turkish economy that it do not lengthen their
periods in most cases.
The rule of real estate owners is to strengthen the sector and prevent
its prices from falling even when the lira collapses . The Turkish
government appears to have absorbed this well. It maintains good relations
with the countries that top the list of foreign investors in purchasing Turkish
real estate such as Iraq, the Gulf states, Russia, Because the commitment
of these relations to care over the years, guarantees the government the
continuation of the survival of Turkish real estate in the hands of citizens of
these countries with the influx of usual new investors, fueled by the flow of
real estate growth on the demand side, due to the origin of the turmoil and
crises that are full of Middle Eastern and, paradoxically, all property is sold
to a foreign investor in Turkey, does not give the confidence of the regional
market close end in sight to the problems of the Middle East, therefore the
demand remains high by the Arabs, which contributes to the continuing
dynamism of the Turkish real estate sector, as soon as safe havens for
The paradox is precisely how real estate prices continue to rise, which
gives a possibility to be profitable. The house is bought by someone in
Antalya city center in 2013 and wants to sell now will inevitably earn a lot of
profits from the price difference between the date of purchase and the sale.
Official statistics support this. Government studies indicate that in June
2018, Turkey’s house price index rose by 0.55% compared to May 2018,
and compared to the same period last year, the rate of house prices in
Turkish, about 10%, compared to the last three years, the percentage
increased by about 38%, up to 82% compared to prices about 8 years ago.
Shopping Map
If a person decides to invest in Turkish real estate, he should study the best
places to buy them depending on the factors not noticed by ordinary
investors in general, especially the speed of turnover of capital , the level
of rising house prices, and opportunities for rent available, and in a large
country such as Turkey, The West, covering 81 provinces and 8
geographic regions, offers an enormous number of destinations for buyers,
from the leading cities to the small villages. One is likely to face many
choices when deciding which area to buy, but according to statistics,
Purchase Mediterranean Sea, Aegean Coast, and Istanbul .
Important procedures when purchasing
After determining the stability of the purchase, many measures should be
taken that will follow the success of the purchase of the property, thus
ensure that it achieves significant returns. Such measures include the need
to inquire with the Directorate of the Land Registry If there are any
restrictions on the property, it is forbidden to dispose of it, such as debt,
mortgage, jurisdiction and other rights that prevent the transfer of
ownership, and then caution against marketers. The increase in the
discount rate on the housing unit, even if it reaches 50%, does not mean
that it is a valuable opportunity. Or there is a scarcity of demand for such
units, and the owner is unable to dispose of them. The seller will often ask
the seller to complete the transaction and register at a lower price to reduce
the value of the 4% tax that is paid equally. Here, the registration should be
insisted on in real terms, but it protects the buyer’s right and avoids any
future problems or any misjudgment.
Majd Nsouli tells his experience about buying the property in Turkey on his
personal website and confirms some important points such as confirming
the price of the project before taking it to ensure that the seller does not
exaggerate the price. The price can be ascertained in several ways,
including using one of the most famous selling sites, and the purchase of
real estate ” ”, through which to review all the
properties presented in the same project, and tracking the movement of the
property over the previous months.
The previous step can be replaced by a procedure that is overlooked by
many property buyers, which is the evaluation of the property by a
specialized company or the bank if there is an agreement to take a loan,
and the prices of this service are provided by specialized companies at a
low price compared to the return, 2 to 7 lira per thousand pounds of the
purchase price, depending on the company’s fame and experience. The
evaluation gives important and vital signals to the project, and the investor
moves forward or backs down, signals such as the right price of the
property, the prices of other projects in the same area, the future of the
entire region in terms of services and facilities, and government interest.
With important information such as the integrity of the legal aspects of the
project, such as the existence of a building permit , and the absence of
subsequent violations.
Prior to termination of the contract, there are several costs to be paid in the
form of taxes and fees, either once or periodically, and must be absorbed
before the completion of the purchase. The payment process begins
immediately after the departure of the so-called TAPU or title deed . For
example, there are monthly services for the property, known as revenues,
ranging from 2 to 7 lira per square meter, depending on the level and
location of the project. It is worth mentioning that these monthly expenses
do not include the costs of electricity, water, and gas. As well as the
purchase tax of 4%, the profit tax of 20% of the net profit, the annual
municipal tax of 0.003% of the price per square meter, and other taxes .
Lira or Dollar?
When you make a real estate deal, a very important question arises: is it
better to buy the property in the turbulent Turkish lira, or in a foreign
currency such as the dollar or euro, etc.? To understand this, two friends
who bought an apartment at the same price, one chooses to pay the pound
and the other in dollars. They agreed to pay the installments. Assuming
that the price of the apartment was $ 100,000. The exchange rate in early
2015 was 2.3 lira per dollar. The price of the apartment was 230,000 liras.
The two paid the first payment of the apartment and equal 10% as the first
payment of the project, which means that the dollar buyer paid 10.000
dollars, while the buyer paid in lira 23.000 lira, and then came the second
installment beginning in 2016 and are scheduled to pay the two of them
40% of the value of the apartments , But the value of the lira fell to 3 lira per
dollar, the dollar buyer paid 40.000 dollars, while the lira buyer transferred
only 30.6 thousand dollars to pay the amount of the second installment
92.000 lira. Then came the last installment of the apartment and was 50%
at the beginning of last year 2017, which continued to lira to fall to 3.77 lira
per dollar, and here the dollar buyer paid $ 50.000 to fully own, while the
Lira converted only $ 30.5 thousand to 115 thousand lira the rest of the
apartment price.
As a result, the dollar buyer paid $ 100,000 for his apartment, while the
owner of the lira paid the same apartment for only $ 71.1 thousand, thus
saving about 30% of the value of the apartment. This does not mean that
buying lira along the line is the best; it is up to the lira expectations, and if
the expectations are for a gradual decline in value, we follow the previous
rules, and if they indicate gradual improvement;
The Lira can complete the savings in the price of the property if he decides
to buy in a project that is still in its infancy, where the developer is in dire
need of money to complete the project stages, and the person here can get
really valuable offers. The question of confidence in the developer or the
company is immediately mentioned. How can a person be assured of his
money in a project that is still in its infancy? Here, it is possible to verify
several things that reveal the degree of reliability of the developer, and free
of obstacles and legal problems. The TOKI partnership is proof that the
project will continue until delivery, as it ensures buyers complete the project
if the developer or contractor fails.
The Tabu is the last step to complete the purchase of real estate in Turkey .
Once all paper documents have been completed and both sides have
fulfilled their contractual obligations, the property will be registered in the
name of the new buyer and will receive the property title.
Although the collapse of the Turkish lira takes the levels of higher prices
above the current levels of more than 15%, thus affected the standard of
living of the Turkish people, but at the same time opens the prospects for
foreigners abroad, they can access to Turkey, and benefit from The
savings of exchange rate differences, both in consumer and productive
spending, are beneficial to the people themselves.

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