Ever since it was revealed that Turkey had drafted a bill to remove the reciprocity clause from Turkish property law reporters in the field have been buzzing like bees round a honey-pot, and analysts aplenty putting their predictions on just how much extra revenue would be brought to market by the incoming buyers from the 40+ countries banned from buying because of the reciprocity clause.
But few could have imagined just how big the first month under the new law could be. Foreigners purchased $1.1 billion worth of property in Turkey in May. To many of you that will mean nothing on its own so let me add a little context, $1.1 billion is almost 10 times the $114 million worth of property foreigners purchased in the 4 months previous, and 4 times the amount they purchased in all of 2011. The biggest year for foreign sales was 2008, but even then foreigners only purchased $337 million worth of properties.
The consensus of most predictions was that the removal of the reciprocity clause would bring in an additional $2 billlion in foreign sales per year, at this rate it will bust that target in 2 months – and experts are predicting even higher totals in the coming months as it is now high season.
Big Austrian firms are behind most of the money according to the Central Bank Balance of Payments report.
Ironically, Austrian firms or most Europeans have not benefited from the removal of the reciprocity clause, in fact as far as I know no one has, as the government is yet to put out its revised list of nationalities allowed to purchase under the new law (the removal of reciprocity is not to be a blanket allowing every nationality to buy). No, these investors are buying because the law was passed and they want to get in before the market is officially opened to the many banned countries, especially the wealthy Arab states where incredible demand reportedly exists for Turkish properties – most likely they plan to sell to the newly allowed nationals themselves.
That is certainly the belief of Nazmi Durbakayım, Istanbul Contractors Association (İNDER) President and Teknik Yapı Holding President, who was recently approached by two European investors looking to buy 1,500 pieces of real estate.
“However, we didn’t look too favourably upon this proposal since we prefer to sell to the consumer and want to avoid speculation,” he said, adding that Turkey’s real estate reciprocity law created a big opportunity for European investors.