Turkish Real Estate Market under the Citizenship for Investment Program

Turkey is a beautiful country with a mild climate, a high standard of living, and developed infrastructure. The "Citizenship by Investment" program has been operating since 2017, but in recent months, there has been a significant increase in demand for Turkish passports. The Turkish market is fairly stable, not only for the citizenship program but also for resort cities, which continue to offer reliable ways for investors to obtain citizenship. Today, Andrey Boyko, founder and CEO of GARANT.IN, a licensed agency for investment immigration, talks about Turkey's real estate market and prospects.

– Andrey, why is Turkey attractive to investors?

That's a great question. In reality, the Turkish passport does not offer visa-free access to the European Union, the UK, or China, unlike Grenada, for example.

Turkey has its advantages:

It's a 100% straightforward program and investment. Turkey is "familiar" — everyone knows it well, and people fly there at least once a year.

The total investment is a real estate purchase (sufficiently liquid) that must be held for three years. Essentially, you just buy a house by the sea and, as a bonus, get a passport. A downside, which may be significant for some, is that previously citizenship required purchasing property worth $250,000. Now, the amount has increased to $400,000.

Investors are essentially granted access to business in Europe and other regions close to Russia. The applicant receives a passport, address, proof of residence, tax ID, and a bank account — everything that any European bank requires to open an account, and in some cases, to register a company.

– How long does it take to get a passport?

The process takes 4 to 6 months.

– Do clients often go beyond Turkey?

Earlier, this wasn’t common, but recently we have noticed a trend. About half of our "old" clients, previously obtained Turkish passports, are also interested in European programs like France or Portugal. With a Turkish passport, it's possible to get any European residency permit. Often clients mention upfront that after Turkey, they will apply for European residency. About 4-5% eventually apply for the U.S. E2 business visa.

– How many clients apply for Turkish citizenship?

Around 10-15 clients per month, on average.

– Let's talk more about real estate. How is the selection process handled?

We have realtors in every region. They meet clients, take them to locations, and show them everything. Clients can also explore options via WhatsApp. Many transactions are done remotely. Before the price hike, people were rushing to complete deals. Often, a client selects a property they like, and we visit the location and show it online. If we can take a video, we do — some find it even more convenient that way.

– Is buying real estate remotely safe?

We are based in Moscow, and we build trusted, friendly relationships with our clients, who often refer their friends and colleagues to us. This level of trust is valuable, so we carefully select properties. We only work with trusted developers and avoid cash transactions whenever possible. Honesty is always appreciated and pays off. In my opinion, it's always more rational to work with a Russian company than with a local one. Clients often think that working with a Turkish company will save them money, but that's not the case. Prices are the same, and resolving issues is harder if they arise. A personal example: a long-time client for whom we arranged residency in Portugal four years ago started working with a Turkish company for citizenship. When it came to gathering documents in Russia, the Turkish company just handed him a list and stopped responding to questions at some point. We had to assemble his case, and he incurred additional expenses.

– What is the rental yield across different regions?

In Turkey, it's about 5% on average.

– Who manages the rental property?

A management company handles it. Any brokerage office can manage a property for a 15-20% fee, depending on the type of rental.

– What are the taxes in Turkey?

We always mention 4% of the cadastral value, which is realistic and conservative. Additionally, there are registration fees of $50, $35, and $15. Previously, the buyer paid 2% and the seller 2%, and this is still common in some places. In Istanbul, sometimes it’s 3:1, where the developer pays 1% and the buyer 3%. It's better to plan for 4%.

– To get a passport, you need to buy real estate worth $400,000 in cadastral value. How does that work?

Yes, this is another Turkish feature. For example, a client wants to get a Turkish passport and decides to buy a villa in Alanya. Its market price is $571,000, but the cadastral value is $400,000. In resort cities, this happens. In Istanbul, the actual price matches the cadastral value 100%, but in Alanya, Antalya, Fethiye, and Mersin, a 70% match is considered good, but more often, it's 50%. We try to select properties with minimal discrepancies, but the market is the market. Sometimes we have to turn down certain options. The main thing is to meet the client’s needs. By region, cadastral values vary:

• Alanya — 30-60%
• Antalya — 40-70%
• Mersin — 30-50%
• Fethiye — 30-50%
• Istanbul — 90-100%

– What interesting developments are underway now?

For example, in Antalya, a massive project has been launched to demolish not just one building, but an entire old district. The scale is so large that the project is being reviewed at the highest levels, even involving President Erdoğan. Russians — very large investors — are involved, even at a political level. We expect order to be restored in about five years.

– Which cities are most preferred by Russians?

Real estate purchases can be divided into two directions. Istanbul is attractive by itself, with great potential for capitalizing on new developments — we have a successful experience here, and it’s worth a separate discussion. Istanbul’s cadastral values match 1:1. Property prices predictably increase, but Istanbul is purely an investment story. Usually, the client doesn't plan to use the property themselves but rents it out instead. Often, they aim to buy at the construction stage to earn extra margins once it's completed, which is still feasible in Turkey. Based on statistics, resort cities like Alanya and Antalya are more popular. Here, the client’s calculation is a passport plus a personal home by the sea. We sell much more of this type of real estate. It also rents well and appreciates, but often clients plan to visit it several times a year. The main segment is villas starting from $600,000.

– Where is the best ecology in Turkey?

Everyone has their preferences: some like pine forests, others prefer sand. Fethiye, Bodrum, and Alanya have clean mountain air, various forests, rich flora, and pristine beaches.

– How about opening a bank account?

There are no issues at all. After obtaining the passport, you can open an account within one business day.

– What’s the current situation with land plots in Turkey?

Demand and prices are indeed rising. After the earthquakes that shook the southeast of the country, there’s been a significant rush in areas far from the epicenter. Not only are those seeking Turkish citizenship interested but also locals are looking for alternatives in case the natural disaster strikes densely populated regions again.

For example, demand for plots in Thrace has increased by 200%! People are interested in small plots where they can place modular containers, trailers, or prefabricated homes in case of another earthquake. Previously, such plots were seen as investment assets, but now they are considered "backup airstrips." Some entrepreneurs are even ready to move production facilities to these areas to minimize damage from potential future disasters.

With heightened demand, scams have become more prevalent. Be cautious and work only with trusted agencies.

Turkish Citizenship by Investment – An Unexpected Breakthrough with an Ace Up Its Sleeve

The Turkish "Citizenship by Investment" (CIP) program has far exceeded expectations. Initially, expectations for the CIP, whose cost is comparable to existing CIPs but without visa-free access to the UK, Schengen, or the US, were modest, especially among experienced RCBI professionals. However, despite all the challenges, Turkey’s "underdog" program has become a favorite among enthusiasts and is likely to become the most profitable CIP in the world this year (and possibly in history).

What explains this unexpected success? Some attribute it to favorable deals in Turkey’s real estate market, thanks to the historically cheap lira. Others argue that the program is exceptionally simple and straightforward, with minimal required documentation. The fact that Turkish citizens can access the US E-2 visa due to a treaty is seen as another selling point, while others point to Turkey’s religious demographic as an attractive factor for applicants from the Middle East, one of the top three regions for investor migration.

But perhaps the most attractive aspect of Turkey's CIP is the one that has largely flown under the radar; its secret weapon – the European Community Association Agreement (ECAA) visas, also known as the Ankara Agreement visas.

This unique treaty signed decades ago, is of immense importance, transforming Turkey’s CIP from just another investment migration option without visa-free access into a leading program for business opportunities, relocation, and opening doors for future generations of investors.

What is the ECAA Visa?

The ECAA visa is especially notable for its Turkish business visa, a special visa offered by the UK and available only to Turks. It offers a path for investment migration to the UK through business establishment (self-employment). While many countries offer similar options, none match the simplicity and affordability of the Turkish Business Visa (TBV).

The UK Home Office outlines the following qualifying requirements for the TBV:

• You must be a Turkish citizen and demonstrate that:
  • You have a genuine intention to establish a viable business.
  • You can provide sufficient funds to set up your business.
  • You can cover your share of the business’s expenses.
  • Your share of the profits will be enough to support you and your family without needing other employment.

If you wish to join an existing partnership or company, you must prove that:

• You will take an active role in managing the business.
• There is a genuine need for your services and investment.

There is no minimum investment requirement.

Between 2011 and 2019, 5,661 applicants and 9,000 dependents were approved for the UK TBV. Remarkably, more than half of these approvals came in 2019 alone. The rapid 272% increase in approvals between 2018 and 2019 shows that this visa is finally gaining the attention it deserves.

Expect a Flood of TBV Applications

However, with Brexit finally settled, the future of TBV is uncertain, as the UK, no longer part of the European Community, is not bound by the ECAA. The UK has announced it will honor the agreement until 2021 when the transition period ends.

In other words, the TBV is hanging by a thread, which likely explains its growing popularity. Meanwhile, Turkey’s CIP has already approved more than 6,000 applications (with another 9,000 in the process), which, thanks to the unprecedentedly large average family size of applicants (3.82), has resulted in around 25,000 new citizens.

By the time the backlog of 9,000 pending applications is processed, we can expect Turkey to have naturalized up to 60,000 people under the CIP. The UK government, however, remains ambiguous about its plans for the TBV. It has stated that it will honor the ECAA agreement until the end of the transition period but has also indicated that the TBV could outlive the UK's separation from the EU. A statement on the UK government’s website reads:

"The government does not intend to replicate all agreements in full. This includes the EEA Agreement, the Agreement between the EU and Switzerland on the Free Movement of Persons, and the Turkey-European Economic Community Association Agreement."

Another section on the same website provides more detailed information:

"Turkish nationals enjoy special rights stemming from the Association Agreement between Turkey and the European Economic Community. After leaving the EU, the UK’s obligations under this agreement will cease in a no-deal situation. However, as a transitional measure, the UK will seek to replicate the effect of the ECAA arrangements for Turkey’s settled population. This will allow ECAA resident workers and businesspeople, as well as their family members, to apply for further leave with the same qualifying requirements they currently have, and to apply for settlement in the UK. No commitments have yet been made regarding Turkish nationals arriving after the UK’s departure in a no-deal scenario." (Source: GOV.UK)

Moreover, on February 7, 2020, the UK’s ambassador to Ankara, Sir Dominic Chilcott, stated during a meeting with the Diplomatic Correspondents Association that "after the end of the transition period, the end of this year, we will no longer be in the EU and no longer a participant in the Turkey-European Economic Community Association. The provisions of the agreement won’t apply to us. What we need to do is find the right provisions to have them in place."

The future of TBV after 2020 will depend on several factors, including the nature of the deal the UK ultimately strikes with the EU and whether the Turkey-European Economic Community Association Agreement itself is amended by a bilateral treaty. Whether the TBV will survive at all remains unclear. What is evident is that Turks wishing to relocate to the UK are not waiting to find out.