Foreign Investment Laws and Restrictions in Turkey
As most foreign investors are aware, Turkey changed regulations in 2002 to allow foreign investors, more specifically foreign nationals, to purchase real estate. Unfortunately, not all of the important points were put into place to make foreign investment in Turkey a seamless process. As a result, bad feelings arose on behalf of local property owners and local real estate investment professionals.
An example of some of the issues brought on by these new regulations, areas of cultural and national importance were opened to foreign purchase, which could then be put to use in a manner that did not suit or further the interests of Turkish people as a whole. As a result, the regulations that just four years earlier were repealed were re-implemented in 2006.
In 2007, a revised law was introduced, which allowed the purchase of Turkish property by foreign investors, but with certain restrictions put in place. These restrictions include size restrictions of twenty-five thousand sqm or less. Obviously, this would be a non-issue for the average vacation home buyer but would cause problems for large-scale investors. This may be bypassed, however, if foreign national sets up a Turkish limited company and then purchases property through said company for commercial endeavors. Foreign investment was also restricted to certain areas of the country. For example, most farmland is not typically available for purchase. Another restriction involves which foreigners may purchase the property. Middle Eastern countries, the Turkic Republics of Russia, and other nationals whose laws in their home countries do not offer reciprocating laws allowing Turkish nationals to buy properties were not welcome or allowed to purchase Turkish property.
A newly revised law is now in the works to eradicate this reciprocity law. This will not affect most European and North American real estate investors but will have positive implications for the above-mentioned Middle Eastern nationals and other previously restricted would be foreign investors like Iranians, Kirghiz, Tajik, Azerbaijani, Belarussian, and Arabic country peoples.
The eradication of the reciprocity law could not come at a better time for affected real estate investors. Of about 600 top European real estate investment professionals polled through a PriceWaterhouseCoopers survey, Istanbul was recently awarded the spot of number one European city to invest in. London, one of the places where Middle Eastern investors would typically turn to, has slipped below the tenth place on this list. It is expected that when the law has officially been lifted, there will be a flood of interest in Istanbul and the coastal regions of Turkey like Antalya, Alanya, and Kemer.
Now is an excellent time for Europeans to invest in Istanbul, and it is also the perfect time for Middle Eastern investors to get all of their plans to invest in Istanbul into motion.