What are foreigners flocking to Turkey to buy property as the currency plunges nearly in half?

Source: the first finance and economics, the author | the first financial Qian Xiaoyan 2021 Turkish lira depreciated by 44% against the us dollar, become the worst performing currencies in emerging markets.The currency became less and less valuable, bringing untold misery to the local people.But Turkey’s property market is booming, especially among foreign buyers.According to data released by Turkey’s Statistical Institute in mid-January, purchases by foreigners in Turkey jumped 77 percent in December 2021 from a year earlier and rose 43.5 percent for the whole year, breaking a record.In fact, in November 2021, the number of foreign home purchases in Turkey passed the record 50,000.Despite high inflation, Turkish house prices have risen fast, but not as fast as the lira, so they are almost always discounted in foreign exchange terms.At the same time, the Turkish central bank’s policy of keeping interest rates low and negative in real terms makes it a good deal to borrow.Zou Zhiqiang, a researcher at the Middle East Studies Center of Fudan University, told China Business News that the Turkish lira’s depreciation trend is still difficult to reverse, but the Turkish government will strive to achieve a moderate devaluation and avoid severe devaluation that will cause great harm to the economy and society.According to official data, foreigners bought 58,576 homes in Turkey in 2021, with Iranians firmly at the top of the list when broken down by nationality, taking 10,056 homes, or 17 percent of the total.Why are Iranians so keen to buy in Turkey?Abuddin, an Iranian, told China Business News that there has been an industrial chain of Iranians buying houses in Turkey, both for real residence and investment.In general, to find a better way for people and money at a time of international sanctions.With the support of his family, Abuddin bought a house in Istanbul, Turkey, in February 2021.Abuddin told China Business News that typing Turkey into an Iranian search engine sometimes brings up ads for buying a house in Turkey.He was in Istanbul in February last year and saw several second-hand houses under the guidance of an agent. The first was in The European area, where prices were relatively expensive.Then there is Asia, he said, compared with Europe, Asia is more cost-effective, some lots can buy a three-bedroom one-living room ocean view room for $300,000.Istanbul straddles Europe and Asia, and the city’s focus is on the European side.In the end, due to budget constraints, Abuddin chose the new house in Asia.He told China Business News that buying directly from a property developer can save the usual 2 percent buyer’s commission, while the developer also bears relevant taxes, which is another advantage of buying a new home.He said that because a large number of Iranians to Turkey to buy a house, there is no lack of Iranian “black intermediary” in Istanbul, the use of language advantage to do the “hometown cheat the hometown”, such as the use of Iranians who are new to the country, not familiar with the local rules of buying a house, asking to take see by the hour, rather than the usual commission;Or signing deals with gimmicks, such as non-existent taxes or above-average commission rates.Middle class Iranians are buying houses in Turkey.First of all, Iran and Turkey are neighbors with similar religious and cultural practices, and holders of ordinary Iranian passports can enter Turkey within 90 days without a visa.Not many countries have visa-free access with an Iranian Passport, which is at the bottom of the list at 101st in the 2022 Henley Passport Index.In September 2018, the Turkish Parliament amended the Turkish Citizenship Act, stipulating that foreigners can obtain Turkish citizenship if they purchase property worth more than $250,000 in Turkey.The lowering of the $1 million threshold has encouraged middle-class Iranians to switch status and escape the shackles of international sanctions.In the past, wealthy Iranians were keen to emigrate to the United States, Canada and Europe, but due to sanctions and the pandemic, they are also considering Turkey, or using Turkey as a springboard.At the same time, buying Turkish property is a good investment for Iranians.With the Iranian economy crippled by sanctions, investing money at home is fraught with uncertainty.At the same time, Turkish identity and property is not bound, after three years of ownership can be sold freely, does not affect the Turkish identity.Turkey is so closely linked to international markets that iranians can use Turkey as a platform to move money to other countries.Groups of Iranians buying homes in neighboring countries have naturally attracted the attention of the Iranian government.In a speech to parliament last March, Iranian lawmakers said iranians had bought at least $7 billion in maternity properties in Turkey from 2018 to 2020, hurting the country’s economy.However, due to international sanctions, the money flow is not through formal bank remittances, and the exact amount may be difficult for the Iranian government to ascertain.Second only to Iranians, Iraqis were the second most likely buyers in Turkey, buying 8,661 homes in 2021, or 14.8 percent of the total.Like Iranians, wealthy Iraqis see Turkey as a safe haven from which to retreat in the event of unrest in Iraq.Istanbul, meanwhile, is the region’s largest international metropolis, and it is what they want.According to Turkey’s Statistical Institute, the three most popular cities for foreign homebuyers are Istanbul, the southern resort of Antalya and the capital Ankara.Of these, 26,469, or 45%, were sold in Istanbul.The third largest foreign buyer in Turkey was Russia, which bought 5,379 homes, or 9.2%.Russian buyers are less interested in big cities like Istanbul and Ankara than their Middle Eastern counterparts, and more interested in sun and beaches.So a lot of the property in Antalya was bought by Russians.Southern Turkey long summer, from May to November half a year can swim in the sea, many Russians in Turkey to buy a house as their summer vacation and winter shelter.”The climate is warm and pleasant, the food is delicious and there are fresh fruits and vegetables all year round,” said one Russian considering buying a house in Turkey.For now, the Turkish government still encourages foreigners to buy property in Turkey as a way to support the lira.On January 6th the government went further, requiring developers to sell the money they receive in foreign exchange for purchases to the central bank and to mark the value of the converted lira, rather than the dollar, on land deeds.According to the medium-term economic development plan released by the Turkish government, gross domestic product (GDP) is expected to grow by 5% in 2022.On January 27, Turkey’s central bank doubled its 2022 inflation forecast to 23.2 percent, though most analysts expect it to approach 50 percent in the coming months before easing to around 27 percent by the end of 2022.

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