Is Turkey's real estate boom over for good? Are there any plans to increase the investment threshold again? Is Alanya going to leave the province of Antalya? Insights on the current situation in the Turkish real estate market and its forecasts were shared with us by the Head of the Sales Department of Stay Property, Yuliya Lega.

“The government is now preparing a new visa system for foreigners to stay.”

Head of Sales at Stay Property Yuliya Lega— Recently, there was news about the fall of the Turkish lira to a historical minimum (on the international Forex market, the dollar was rising above 27 lira). In this regard, I would like to highlight the overall impact of the economy on the real estate market in Turkey: how has the country been dealing with inflation lately, and how is this reflected in the real estate market?

— As a consumer who has lived here for quite a long time, I can say that inflation in Turkey is quite high. But at the same time, if you compare prices in other countries, the cost of living here for foreigners is still lower.

Inflation, of course, affects the real estate market in the country and the desire of foreigners to buy housing here. I think we will see it for another 10 months, and then, probably, it will go down.

— Not so long ago, the Turkish Migration Service denied the news about the increase in the number of districts closed for issuing residence permits to foreigners. However, I would like to know your expert opinion: will the districts continue to be closed, or, on the contrary, is there a chance that they will be opened? And is a complete ban on foreigners buying real estate possible?

— In fact, only 4 neighborhoods remain closed in our Alanya region. They are Kargıcak, Mahmutlar, Kestel and Avsallar. These districts were closed last year because the percentage of foreigners living there exceeded 25% compared to the local population. Also, in December 2022, the Migration Service stopped issuing residence permits on the basis of a rental contract.

However, we have had talks with government services in Ankara, and it is likely that some of these areas may be opened before the end of this year. We can also say that the government is now preparing a new residence visa system for foreigners.

A complete ban on foreigners buying real estate is hardly possible. Moreover, I think that there is still a chance of opening closed areas because, after the elections, there is still a government in the country that did not plan to change course regarding foreigners buying real estate in Turkey. We should not forget about the infusion of finances into the Turkish economy (purchase of real estate by foreigners, spending by incoming tourists, or people who decide to move here for permanent residence).

Plus, the idea of opening these areas lobbies numerous developers and large real estate agencies. But the time frame of this event is difficult to predict. Also, now representatives of the National Party of Turkey are actively advocating the position that Alanya will soon become an independent province.

“The investment threshold is likely to rise again.”

— What do you think is the future of the immigration sector and the citizenship-by-investment program in Turkey?

— The future is certainly there. True, there have been some changes compared to the past years. Not so long ago, it was very easy to get a residence permit in Turkey compared to other countries, from Southeast Asia to Europe. But over the last year and a half, the conditions have been tightening up, and now it is not so easy to get a residence permit in Turkey: there are so many closed areas, and in open areas, certain parameters must be met; plus, now you can only get a residence permit if you own real estate (i.e., you can't rent anymore). But as I mentioned earlier, the government is now developing a new visa program for foreigners.

Now, there is a lot of talk about raising the threshold for obtaining Turkish citizenship for investment. In my opinion, the threshold will be raised, but not by more than 600–800 thousand dollars. And I do not think that the changes will come into force before April–May 2024.

— Another important topic that I would like to cover is: how did the earthquake that happened in February affect the market, and how is the country coping with this situation?

— The earthquake had a very strong impact, although not all of Turkey is located in the risk zone. For example, our Antalya coast is 660 km away from the center of the earthquake. In spite of this, we had quite a lull at that time because it was a national tragedy.

After the event, almost all developers who were in Alanya prepared and once again translated into all the languages of the world materials related to earthquake resistance in order to work out the objections of customers about the earthquake.

Today, the market has already been activated, and now it is not a factor that affects the real estate market. Issues such as the withdrawal of funds from their own countries have now come to the forefront of the discussion.

“In Turkey, as of July 1, almost all taxes have gone up.”

— I can speak with confidence about Alanya and its surrounding areas. An illustration of the price increase is given here: if apartments with a 2+1 layout cost about €100,000 a year ago, you can now only enter the transaction—that is, buy apartments in complexes that are literally still in the planning stages of construction—for the same amount of money. It is already difficult to find something for less than €100,000.

However, taking into account the fact that now the demand on the market has fallen, there is a probability that in the near future, prices will fall, albeit not by much (I think, no more than 7–10%). Again, this will affect small and medium-sized construction companies. Large real estate developers with a long-standing reputation do not see a drop in prices.

As for tax changes, in Turkey, since July 1, almost all taxes have increased, including the tax on the sale transaction. If earlier it was 4%, now it is already 6% of the cadastral value of the object.

“From 2024 on, the perception of housing will change again.”

— Now I want to talk about demand and sales in general. The Statistical Committee in Turkey recently reported that house sales in June this year decreased by 44.4% compared to the same month of the previous year. Moreover, the number of transactions decreased both in the primary market and in the secondary market. What is the reason for this?

— Yes, if we compare the previous year and the current situation, this is the case. Last year, in principle, the demand for Turkish real estate reached its peak.

The drop in sales observed now is caused by many factors:

  • The appreciation of the dollar and the euro is undoubtedly the most important factor in the fall in demand.
  • People have stopped being granted residency permits on rentals.
  • There are closed neighborhoods where you can't get a residence permit, even if you have an apartment there.
  • There was also an earthquake that happened.
  • Reflected the pre-election situation, when there was a lot of talk about the ban on foreigners buying real estate in Turkey.
  • Do not forget about the high inflation rate, which does not give many people the opportunity to buy real estate.

— How, in general, can you assess the prospects of the real estate market in Turkey based on the current situation? What can we expect on the market in the future?

— I asked the owner of our company (Mr. Khalil Ibrahim Daye) to share his thoughts and predictions:

“Governments around the world are now dealing with a monster called Inflation. But my predictions are that from March 2024 on, inflation rates around the world will be much lower.
And let's not forget the hegemony of the dollar. In this geopolitical situation, the biggest challenge for nation-states is the tightening of monetary policy that the Federal Reserve (Fed) is pursuing. I think this tightening will continue until December, and then easing should begin again.

That said, from 2024 on, the perception of housing will change again, with a new variety of housing types and projects coming before us. Because people's perception of their living space is changing because of inflation all over the world. I think very soon we will see new designs for apartments, living spaces, and even business housing. And I think real estate sales will accelerate again in March of the new year.”