I recently encountered a five-year-old article about the real estate business booming in Turkey. Most interesting was the fact that these sales are quite often to foreigners.
Turkey (or its president, Erdogan) may have planned something nefarious by enabling this phenomenon through a 2012 change in its laws. What I suspect is not the outright theft that has been part of Turkish tradition for millennia. It won’t be like stealing Armenian, Assyrian and Greek properties during and after WWI, nor like Turkey’s current occupation in northern Syria. Rather, the model being followed might be what happened to Japanese real estate investors in the U.S. You might recall that in the 1980s, Japan’s then new-found wealth started flowing into U.S. real estate. But when that market crashed in the late ’80s-early ’90’s, huge losses accrued to the Japanese investors.
There might also have been a more mundane, practical, economic reason. Turkey’s GDP (gross domestic product, a standard measurement of countries’ economies) had been growing strongly since 2001, with a brief dip after the crash of 2008-09. It peaked in 2013. Economists probably foresaw this since no economy ever grows endlessly. There are always reversals of varying degrees. The 2012 change in the law that has encouraged this trend may have been enacted as a result of this calculus. The Turkish real estate market was opened to foreigners for the first time in 2002, but it had a number of limitations. One of those, reciprocity, was eliminated in 2012. That was a condition which allowed the purchase of Turkish real estate only by citizens of countries that allowed Turkish citizens to purchase property within their borders.
But there are other restrictions. Permission from the military is needed before a foreigner can buy property, and in a “military security zone” (whatever that means) they cannot buy at all. For countries neighboring Turkey (Bulgaria, Georgia, Iran and Iraq) property in provinces bordering those countries cannot be acquired. It’s worse for Greek citizens to whom property cannot be sold in 26 coastal provinces, including Constantinople and the border province of Edirne (Adrianople). However, property sales to Greeks are permitted in inland regions. But the worst off are citizens of Syria, North Korea and Armenia. They can no longer purchase real estate in Turkey after changes to the reciprocity law. It’s glaringly obvious why Armenia and Syria are taboo, but what earned North Korea such Turkish “distinction” is a mystery.
There are even more incentives. Foreign buyers are exempt from VAT (value added tax, similar to the sales tax many U.S. jurisdictions have) and stamp duty. At eight percent and one percent, respectively, they represent a hefty savings for the buyer. These exemptions are in place for the period November 2018 to November 2019.
Ankara’s gamble seems to have paid off. Bolis/Constantinople became the sixth most popular European city for foreigners to purchase property, after London, Paris, Moscow, Milan and Madrid. In 2018, five billion dollars worth of property was bought by foreigners, a 78.4 percent increase over 2017, which, at $4.6 billion, had in turn been a 22.2 percent increase over 2016. In the context of Turkey’s GDP of $851.1 billion in 2017, this seems very significant. Imagine, just a few thousand foreign buyers are generating 0.5 percent as much money as the work of close to 80 million people. These funds are an important crutch for Turkey’s economy which has been manipulated to its detriment by Erdoğan to suit his political needs.
Business is booming so much that down payments are now being taken on credit cards! Most of the foreign purchases are residential and often located in preferred touristic locations. Arabs and Russians are among those buying Turkish property in significant numbers. There are also reports of Israelis buying property in the country’s southeast, i.e. what is really Armenia and Kurdistan. If true, that’s a curious phenomenon.
Doesn’t this stick in your craw? Some of these properties were undoubtedly owned by Armenian families, pre-Genocide. Should we perhaps start buying back our country, then suing Turkey for the cost of the purchases we had to make to get back what was rightfully ours?Alternatively, we might start challenging the title to such properties in whatever legal arenas are open to such action. This kind of activity might even scare off foreign buyers who likely don’t want any such nuisances, reducing the flow of cash into Turkey and making it more pliable when it comes to our struggle to restore our rights in, on and to our homeland. Are you ready to act on the theme of “location, location, location”?