Supported by foreign buyers, Turkish home sales jump more than 20% in March

Residential property sales in Turkey rose 20.6% year-on-year, official data showed on Friday, with sales to foreigners continuing.

Sales jumped to 134,170 units last month, the Turkish Statistical Institute (TurkStat) said, accelerating from the previous month but still less than December’s extremely high level.

The figure was up from 111,241 units in the same month a year ago. The reading followed year-on-year increases of 113.7%, 25.1% and 20% in December, January and February, respectively.

Sales in March were well below the 226,503 homes that changed hands in December.

The data also showed March mortgage sales rose 38.8% from a year earlier to 30,271, representing 22.6% of total sales for the period.

January-March sales jumped 21.7% year-on-year to 320,063 units, the institute said.

The Russians flock

Sales to foreigners rose 31% in March, according to TurkStat, with Iranian citizens topping the list after buying 784 properties last month.

Iraqis with 741 units purchased and Russians with 547 were the next biggest buyers of Turkish properties, he added.

Istanbul, Turkey’s largest city by population, took the lion’s share of sales to foreign buyers – 2,245 units.

The Mediterranean resort of Antalya followed with 1,434 properties and the capital Ankara came third with 347.

Overseas home sales in the first three months jumped 45.1% on an annual basis to 14,344, the data showed.

Wealthy Russians are pouring money into real estate in Turkey and the United Arab Emirates (UAE), seeking financial refuge in the wake of Moscow’s invasion of Ukraine and suffocating Western sanctions, according to many real estate companies.

Sanctions imposed since the Feb. 24 invasion include barring Russia from the SWIFT banking system and targeting individuals, primarily oligarchs seen as close to Russian President Vladimir Putin.

While Turkey and the United Arab Emirates have criticized the Russian offensive, Ankara opposes non-UN imposed sanctions against Russia and the two countries have relatively good relations with Moscow and still operate direct flights.

Ankara is trying to balance its close ties with Russia and Ukraine and positioning itself as a neutral party trying to mediate.

Citizenship threshold for households

The house sales data comes as foreigners looking to buy houses in Turkey to become Turkish citizens will now have to pay more.

The amount foreigners must pay for a property and pledge to keep it for at least three years to obtain a Turkish passport is set to be raised to $400,000, according to a decision discussed at the Cabinet meeting this week.

Ankara adopted the citizenship scheme for homes in 2017. A year later, it reduced the minimum price to $250,000 from $1 million to attract foreign buyers.

Some 7,000 foreigners obtained citizenship via home purchase between 2017 and 2020, the government announced last year.

In addition to real estate, those eligible for citizenship include foreigners who are determined to have made at least a $500,000 investment in the country.

It also includes foreigners who employ at least 50 people, those who have deposited at least $500,000 in Turkish banks and kept them there for at least three years, those who have bought and kept for three years at least $500,000 of public debt, or those who have made a venture capital or real estate fund purchase of at least $500,000.

Overseas home sales hit a record 58,576 units in 2021, a 43.5% year-over-year increase. The previous annual record was set in 2019 with 45,483 units sold to foreign buyers.

The real estate market has recently mobilized as Russians and Ukrainians fleeing the war flew to join their relatives residing in Turkey, while others opted to rent or buy real estate.

Sales had also accelerated as the depreciation of the Turkish lira made Turkish real estate more attractive to foreign buyers, with the authorities continuing the new economic policy of low interest rates to stimulate credit, exports and investments, claiming it would help the country fight inflation.

To support this momentum, the Turkish central bank had lowered the benchmark key rate by 500 points since September to 14%.

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Sallie R. Loera