Turkey has become a hub of foreign investors seeking to buy property in Turkey such as an office for sale in Istanbul. The article aims to discover and bring evidence why Turkey has turned into a favorite real estate investment site for overseas investors.
Otherwise, is real estate investment in Turkey considered such an affordable investment?
What are the advantages and disadvantages of real estate investment in Turkey?
What dire situations may jeopardize your investment?
What are probably superb promotions in real estate investment in Turkey?
To be more considerate and cautious, keep reading and get information through an accurate source. The writer endeavors to clarify real estate investment from different aspects and keep you posted about negative circumstances in which you may be involved. Therefore you will be able to make decisions in real estate investment in Turkey discreetly with confidence.
Turkey’s appeal is evident between lower property prices and getting citizenship.
Property prices in major cities like Istanbul, Ankara, and Izmir are lower than other European and Asian famous cities. Investing in real estate property opens a path to citizenship property, and the Turkish passport ,considered one of the strongest passports in the world.
There are other impressive aspects of investment in Turkey, such as a special geographical position across Europe and Asia that makes it an ideal investment hub.
Moreover, Turkey’s government’s friendship investment plan provides a smooth investment path for foreign investments.
From now on, the writer tries to elaborate pros and cons of real estate investment in Turkey to expand your horizon in this field. The writer invites you to stick to reading.
Get a Free Passport by Investing in Property in Turkey
Against most Asian countries, Turkey allows foreigners to own all types of real estate property on their soil, based on a freehold basis policy. Besides, the Turkish government encourages overseas investors to buy property in Turkey through their citizenship investment program.
Undoubtedly, getting citizenship and a Turkish passport is one of the biggest draws to invest in real estate properties.
In 2018 Turkish government legislated that foreigners can get citizenship and a Turkish passport by buying at least 250000 dollars, but in 2022 it was changed to 400000 dollars.
Although, since the first year, the Turkish government had started to attract foreign investors to buy a property through citizenship investment, the lowest amount for investment to get citizenship had been around 1milion dollars.
When the required amount for citizenship investment had been cut down from 1 million dollars to 250000 in 2018, a flood of overseas investors found Turkey a place for a ripe investment.
Following rising the lowest amount of investment on real estate property from 250000 dollars to 400000 dollars, the tendency to citizenship investment met a slight slump among some nationalities, but due to fair price property compared to other European and Asia countries, citizenship investment got prosperous again.
It is worth clarifying there are other alternatives to obtaining citizenship and the Turkish passport. Achieving a Turkish passport and citizenship is possible through making a bank account and contributing capital to a business in turkey.
Note that the required investment for these options is 800000 dollars, two times more than the real estate investment that leads to obtaining a Turkish passport and citizenship. Therefore if your ultimate goal is getting a Turkish passport and citizenship, investment in real estate in Turkey seems more affordable with more beneficiaries.
How Much Is the Fee and Property Taxes in Turkey?
One of the crucial taxes in the real estate field in Turkey is purchasing tax or title deed tax, around 4% of the sale price, divided evenly between seller and buyer, then 2 %is on the buyer, and 2% is on seller.
The other tax in property real estate is VAT or value added-tax between1%to18% of the total value of the property . Commercial properties have the highest VAT estimated at around 18% of the value of property. Meanwhile, residential properties have the lowest VAT at the lowest end of the range.
Following the Turkish government’s investment friendship agenda, foreigners benefit from a golden low tax privilege. For instance, overseas investors can waive VAT tax if they agree not to sell the property in a year to another.
The other tax property owners must pay in Turkey is annual real estate taxes which is 0.1% to 0.6% of property value, lower than other European countries. However, the annual real estate tax is the most important property tax in Turkey that you need to consider before deciding on buying property in turkey.
How Much Does a Real Estate in Turkey Cost?
Before going through the property cost in Turkey, it could be better to answer these questions in your mind discreetly.
- What is your purpose for buying property in turkey?
( you want a holiday house, a place for permanent living, benefit from rental investment, for benefit from potential future appreciation)
- Is the property worth your investment? You need to check out the location, age of the structure, equipment, and material.
- Are you satisfied with rent yields? If your investment is to benefit from a rental increase, it is better to investigate.
- Will the property value decline or enhance in future?
To answer these vital questions, you do not need to have a magic crystal ball to predict the future. Some crucial factors bring you clear reasons to get a solid idea about Turkey’s future economy. Here the writer brings you some of these important factors.
- Comparing the Turkish lira with other currencies is a strong indicator of the future Turkish economy. In 12 years, the Turkish lira had fallen in value against the American dollar from 1.50 to 8.50, which shows around 500 % shrink. That led to a decline of the Turkish real estate property field for foreigners.
- The other indicator factor is reasonable property prices in Turkey, among other famous Asia and European countries, although Turkey is classified as a model-income nation. It means the Turkish economy lets citizens earn more than they need to spend, which leads to economic prosperity.
- Turkey is a country with modern city services and high-tech apartments. It means property buyers in Turkey can benefit from public convenience services and a modern lifestyle by spending at affordable prices compared to other countries. For instance, Istanbul is a large city consisting of 20% of Turkey’sTurkey’s population and the price of a renewed apartment in the city’s center is around 1000 US dollars per square. The price of an apartment in the same situation in Moscow is 600 US dollars per square and 3000 US dollars in Belgrad.
Note that the property’s location is an effective factor in property price. To illustrate, property on the European side of Istanbul is more expensive than those on the Asia side of the city. It is possible to find a cheap apartment in the suburbs of Istanbul, such as Esenyurt, the far western suburb of Istanbul. Vice versa Nisantasi and Besiktas are expensive neighborhoods in the center of Istanbul.
How Much Return on Property Investment in Turkey?
Up to now, you get information about the benefits of property investment in Turkey. The writer gives robust reasons to clarify why investment in real estate in Turkey is authentic and a return investment. But the question you may be involved in, is how much return on property in Turkey you will get.
What is ROI?
ROI or return on investment is addressed to the amount of money coming to your packet as a percentage of investment cost. In other words, it is profit on investment, estimated based on the percentage of the whole property cost.
Return investment on real estate property is reliable as it does not lose its validity due to trade decreasing or production corruption.
What Is the Good Return on Investment Property?
What is considered a good ROI depends on various factors, which vary from one investor’s idea to another. There are distinctive factors that affect ROI; in order to calculate ROI,the effective factors must be inspected. However, a good ROI is estimated through specialist finance methods.
Some investors like to buy a property in cash due to their financial power. These days with the help of the Turkish government’s friendship investment opportunity for foreigners, most overseas buyers prefer to benefit from mortgages to fund their income properties.
Therefore, to estimate the expected ROI, first of all, the financing approach should be evaluated. Different metrics are implemented to calculate the amount of return on investment depending on the financing approach.
Expected Return Investment in Turkey
The expected return investment offered by real estate sectors in Turkey as the best opportunity for foreigners is 150% ROI. There are different commercial and residential projects all over the cities in turkey.
Before buying a house in Turkey, you need to get information about the property price and the amount of money you want to pay in cash. It is highly important to choose a property with future price capability enhancing. The potential enticing of the property determines future value growth to buyers.
Finding a suitable property with a rental investment aim or resale purpose is not too complicated. The future growth of a property is affected by distinctive factors brought below.
- The location of the property
- Type(luxurious or ordinary type) and age of the property
- Kinds of amenities and conveniences
- Used material and quality of the material
One of the best advantages of buying property in Turkey is the guaranteed return on investment. Foreign buyers can get a guaranteed return on investment, which is 10% of property value annually.
Rental return investment is different between commercial and residential properties. Rental return investment of commercial properties is 8% to 11 % annually compared to residential property return investment, around 2%-4% during a year.
Here, the writer keeps you in the loop of the property investment situation in Turkey and its advantages. But each investment has risks and unpleasant aspects that you have better to know ,that help you to save your investment.
Risk of Investment in Turkey
Turkey is a wealthy country with hardworking and educated citizens. Citizens benefit from high-tech and decent civilization amenities. The country is far from the characteristics of third-world countries, but the Turkish economy is not in its prime as a result of the free fall of the lira. There is no sight of the currency falling depreciation.
As an investor, keep in mind when you buy a property in Turkey, you don’t invest in an apartment, house, or a plot of land, but also you bet on the future nation’s currency, and the lira is not fair currency to gambling on. The amount of well-known companies’ debt in Turkey is 70% of the country’s GDP. A large proportion of this debt is in US dollars not in lira.
Hence due to the lira depreciation value, the amount of needed lira to pay the debt is going up.
There is an unpleasant sign to investors in Turkey real estate ,as property values in Turkey are considered cheap, but the value of properties come down alongside the lira.
Is It Suggested to Buy Property in Turkey?
Buying a property in Turkey has unique advantages, such as obtaining a Turkish passport and citizenship. Besides, Turkey is a country with modern public amenities. Thus if you aim to have a second home in this country, let us not stop you.
On the other hand, if your purpose of investment is to benefit from return investment due to growth value and rental return investment, keep in mind that by buying a property in Turkey, you stop losing your money as a result of lira depreciation, but the return investment that you get will be in the lira.
On the other hand, you will not get tenants all-around a year unless with low return expectations.
More than this, the vacancy expenses in Turkey are high after deducting probable damages and repairs fees. Finally, if your goal is getting a return on investment, it is better not to expect an ambitious income.