Ankara: Turkey’s economic woes and collapsing currency is boosting interest in its real estate sector among Arab investors with Izmir proving a particular draw.
The country’s government last year eased restrictions on foreign buyers, exempting real estate purchases made with foreign currency from an 18 percent VAT charge, on condition that the purchased property is held for at least one year.
The exemption came a month after the government’s announcement that foreigners who buy real estate in the country worth $1 million or more (and which is subsequently held for at least three years) can get Turkish citizenship.
Real estate purchases by foreigners doubled last year, according to a report in March from local newspaper Daily Sabah, citing figures from the General Directorate of Land Registry and Cadastre.
Kate Everett-Allen, head of International Residential Research at Knight Frank, said key Gulf nationalities purchasing in Turkey include those from Iraq, Saudi Arabia and a smaller number from Kuwait and Iran.
“The majority of foreign buyers are purchasing small units in Istanbul, Antalya and coastal markets for investments, there is less foreign buyer activity at the prime end of the residential market,” Everett-Allen told Arab News.
The country’s third largest city of Izmir is proving especially popular with foreign buyers, including those from the Gulf.
The Western Anatolian city has emerged as the country’s hottest real sub-market.
Prices in the city increased by 18.5 percent during 2017 according to Knight Frank data, second only to Berlin in a survey of the world’s fastest growing real estate markets.
In March 2018, of 1849 houses sold to foreigners in Turkey, 181 of them were sold to Saudi investors, compared to 148 in March 2017.
Jameel Al-Hawamdeh, the CEO of Jordan-listed Emmar Real Estate Development and Investments, said: “(Buyers from) Gulf countries prefer big properties because of the number of children, income, lifestyle, while (customers from the) Levant choose apartments with a sea view, with one or two bedrooms, that are close to all services. Their decision is more related to budget and the usage of this apartment.”
The Turkish lira has sank about 13 percent against the dollar since the start of the year, with the US decision to pull out of the Iranian nuclear deal piling further pressure on the currency. Turkey is a major buyer of Iranian petroleum and gas.
The weak currency means that overseas investors, especially those from dollar-pegged economies in the Gulf, can buy more with their money.
With inflation running at almost 11 percent in the country, property is also a useful hedge against rising prices, which is drawing local investment into real estate.
Improving transport links between cities such as Izmir and the Gulf is also expected to boost property investment.
Saudia this week launched its first direct flight to Izmir. The daily service operates four-times-weekly from Jeddah and starting on June 10, Saudia will also be running flights three-times weekly from Riyadh. Izmir is the airliner’s third destination in Turkey after Istanbul and capital Ankara.
UAE-based low-cost carrier Air Arabia will also start a direct flight from June 27 with Izmir becoming the carrier’s fifth destination in the country after Istanbul, Antalya, Bodrum, and Trabzon.
Ibrahim Evduzen, a real estate investment consultant, said Arab tourists in Izmir and neighboring resort areas are becoming increasingly interested in the city as an investment opportunity as well as vacation spot.
“Arab tourists mainly prefer big-scale and private villas to use them as their summer vacation homes, while they also accord importance whether the house is guarded by a security detail,” Evduzen told Arab News.