Property Made Easy

Turkey has made major changes to laws governing the sale of real estate to foreigners this year. The changes make it easier for foreigners to purchase property in Turkey, and are expected to attract a massive amount of investment to the country, despite concerns that a bubble is being created.

In 2011, property sales to foreigners were about $2 billion, a decline from the $2.5 billion the year before.

Sales are now expected to surge following the amendment of a reciprocity law that was limiting foreign investment in the sector.

"We anticipate that these new regulations, which facilitate property acquisition by foreign nationals in Turkey…will come into force in the second quarter of 2012," says Işık Gökkaya, chairman of the Istanbul-based Association of Real Estate Investment Companies (Gyoder).

Now the reciprocity law is amended, Turkey could attract as much as $5 billion in annual capital inflows to the real estate sector, he says.

Currently, most real estate purchases by foreigners are made by investors from Germany and the U.K., according to Erste Bank analyst Mehmet Emin Zumrut.

The changes mean, however, Turkish real estate will be open for direct investment from Russia, Central Asian countries, and the Gulf states.

Another recent change in legislation has made it possible for foreigners to purchase property in Istanbul's central Beyoglu district—considered a military area. Before that law was amended, foreigners who wanted to own property in Beyoglu were forced to skirt the law by having a Turkish citizen buy property on their behalf, or by establishing a local corporation.

"Now as a [foreigner] you can just go and buy an apartment," says Ibrahim Yilmaz, an independent real estate agent who helps foreigners purchase and rent property in Istanbul.

The Turkish government sees sales of real estate to foreigners as a way of gaining foreign direct investment and financing for the public budget, both in the form of taxes and property purchases.

Another recent amendment includes the ability to buy 4.1 million acres of deforested, or 2-B, land owned by the treasury department, which until recently had been off-limits to developers.

Opposition parties had opposed the sale of the land for city expansion, arguing that the infrastructure in many Turkish cities is already overstretched.

Source: http://online.wsj.com/article/SB10001424052702303459004577363683068236486.html?mod=googlenews_wsj