ANKARA: Rising prices for foreigners seeking citizenship through real estate investment is the latest attempt by the Turkish government to ease the country’s financial problems.
It is estimated that this move will help Turkey overcome the current account deficit and change the image of foreign investors.
“Only until June 3, you can apply for Turkish citizenship by investing 250 thousand dollars. Obtaining passport and Turkish citizenship in the most prestigious projects in Istanbul,” reads a popular advertisement.
Amid widespread criticism of the country’s skyrocketing house prices, which has hit Turkish citizens the most, the government recently raised the amount foreigners must invest in real estate to become eligible for citizenship.
Accordingly, any foreign citizen who buys real estate worth at least 400 thousand dollars – collected from 250 thousand dollars in the previous legislation – can obtain Turkish citizenship. The money must be deposited in a Turkish bank and the house must not be sold for three years.
Foreign nationals who meet this requirement, as well as their spouses and children under the age of 18, are automatically given Turkish passports.
The purchase of housing by foreigners is expected to ease the widening current account deficit in Turkey and support the real estate sector, as well as construction companies.
Turkey’s budget deficit tripled in April compared to the previous year and the fiscal deficit reached 50.2 billion liras ($3.23 billion). The country also recorded a current account deficit of $5.5 billion.
Foreigners who join the private pension system with an amount of at least $500,000 or its foreign equivalent and stay within the system for three years are entitled to obtain Turkish citizenship.
Foreign businessmen who provide employment opportunities to 50 people in Turkey or those who deposit $500 thousand in Turkish banks without withdrawing it for three years, can also obtain Turkish citizenship, according to the amended law.
The legislative change will take effect from June 13.
At the moment, Russians, Ukrainians and Gulf countries are major clients of the Turkish real estate sector, buying real estate in the southern resort cities and Istanbul.
The Russians also established a record number of companies – 64 – in March, four times the number recorded in the previous month.
The number of homes sold in Turkey to foreign buyers increased by 58 percent annually, according to official data. Russians topped the list of foreign buyers with 1,152 homes. They were followed by Iranians and Iraqis, who bought 905 and 714 homes, respectively.
To facilitate sales, Turkish banks also began to open accounts in rubles.
From January to April, residential property sales to foreigners increased 49 percent, to 20,791 units.
As the amount of investment required to obtain citizenship has been reduced from 1 million US dollars to 250 thousand US dollars over the past four years, there is a growing demand for Turkish citizenship. “But increasing it to $400,000 will also improve the image of foreign investors in Turkey,” said Selin Kulan Emir, a lawyer who specializes in citizenship law.
However, experts note that the increased interest in the Turkish real estate market by foreigners risks raising housing prices to uncontrollable levels.
The depreciation of the Turkish lira has also made the Turkish real estate market more attractive to foreign investors.
“Instead of asking people to invest in real estate, there is a need to encourage foreigners to create jobs or open innovative start-ups to bring long-term benefits to the Turkish economy,” Kulan Emir told Arab News.
She added that with the increase in the number of foreign children as a result of Turkish citizenship investments, the country should also provide new educational and social facilities.
“Recently, there is a surge in the number of private international schools that have been opened for foreign children living in Turkey with their families or for those who have become new Turkish citizens.”
Bulut Bagci, head of the World Tourism Forum Institute, said offering citizenship by investment is common in Europe, and Turkey is choosing to follow a similar path.
Compared to similar cases in Europe, and especially in the UK, this amount is still low. However, it will support tourism in Turkey and increase tourism revenues, because people who buy a house will frequently visit the country and go to tourist destinations.
However, last month, some opposition MPs submitted a proposal to Parliament for a temporary ban on the sale of real estate to foreigners.
Bagci added that foreign nationals who obtain Turkish citizenship should be encouraged to participate in the tourism sector by purchasing hotels and other facilities.
After long struggles in its neighbourhood, Turkey needs tourism revenue to meet its foreign exchange needs. My only concern is that home buyers should not be subject to abuse as it needs to be closely monitored with strict regulations. I have heard many cases where people sell their homes after obtaining citizenship to take advantage of this sector.
After the government recently unveiled a new package to offer cheaper housing loans, President Recep Tayyip Erdogan said real estate prices in Turkey should be tightly monitored.