Property prices and rental income are among the issues that investors watch particularly closely. At this time, we are seeing an uneven increase in prices for both real estate and rentals throughout Turkey, including those regions that which foreign investors do not give their primary preference. So what caused the sharp jump?
Here we can highlight two main reasons; Firstly, there is a heterogeneous population movement across Turkey. And secondly, the fact that the proposed housing is in demand mostly by investors rather than by potential residents.
Another reason for the increase in demand for real estate investment is the movement of capital, as Turkey is among the countries most affected by international population movements. The real estate sector is the most rational short-term investment vehicle, and regional instability has only increased the demand for housing. In addition, the accessibility of obtaining a residence permit and citizenship, which was relevant at that time, placed Turkey far from last in the international market.
Tourist preferences also played a direct role in this development, because most foreign settlements are located on the Mediterranean coast. On top of that, the Black Sea region has now become a popular investment area.
Unfortunately, incorrect statements and inaccuracies in inflation calculations have led to negative consequences in real life. The most serious consequence of the inability to obtain correct statistics is the incomplete display of indicators. In fact, since the rise in prices of building materials and land could not be controlled on time and locally, it led to an increase in housing prices. The problem has grown exponentially as a result of the decrease in purchasing power of citizens due to high inflation.
WHAT MEASURES HAS THE STATE TAKEN?
To date, some measures have been taken by the state. Their goal is to reduce rental costs, which have increased relative to purchasing power. As well as the introduction of a number of rules that include the requirements of workers and specialists in the real estate sector.
The Government of the Republic of Turkey, noting that citizens experience many difficulties when renting real estate and purchasing housing, made a number of the following decisions and amendments:
1- A 25% cap on annual rent increases for long-term rental housing has been set for two years, taking into account inflation.
2- Measures have been taken to reduce foreign demand for housing sales. For this reason, astronomical price increases, especially in large cities such as Istanbul and Antalya, have been prevented through indirect rather than direct restrictions on international home sales.
- The threshold for those wishing to acquire Turkish citizenship through the purchase of real estate has been raised; it is now $400,000; before that, the investment amount was only $250,000. There are suggestions that this limit will be raised again.
- Regional restrictions have been introduced on obtaining a residence permit for non-Turkish citizens through the purchase of real estate. Some of the most preferred areas have been closed to non-Turkish citizens since the threshold of 20% of resident foreigners of the total population has been reached.
- Dissuasive penalties have been increased for those who fail to comply with the relevant legislation in short-term rentals.
- Applications for a primary residence permit based on the right to rent housing, as well as applications to extend a residence permit based on the right to rent, are rejected by the Immigration Department of the Ministry of Internal Affairs, except in special cases.
- Action against those who hire illegal workers and receive unreported income is also an important factor in reducing rent increases. In this regard, inspections of such enterprises as baths, spa centers, and real estate companies have been intensified.
Unfortunately, the real estate sector in Turkey is experiencing increasing problems year after year due to the delay in the adoption of relevant regulatory laws. These problems arise due to gaps in legislation and insufficient control. These problems were solved with the help of the latest legislation, which became a response to the numerous demands of industry employees. In this context, some of the regulatory measures taken to regulate the sector are as follows:
To prevent the state from losing taxes, penalties have been increased for those who do not work according to registration.
Checks on advertisements for sale and rental posted on balconies, on advertising platforms on the Internet, or in the press have been strengthened, and penalties have been introduced for those who place illegal or fictitious advertisements. In this context, a person can either advertise directly on his own behalf or receive services only through authorized companies that have received legal permission from the state. Otherwise, all advertising will be punished as illegal.
Making some additions to the condominium law and regulating short-term rentals is a long journey, the results of which are still unknown. In our opinion, some amendments are needed in the law, and there may be more in the future. However, it cannot be denied that this is the right step towards industry regulation.
Conclusion; Due to the global pandemic restrictions we have faced in recent years, this has also led to disruptions in the supply sector, especially in the automotive and construction materials industries. With the rupture of this chain, speculative events took place. People tend to spend money kept in banks as investments and are interested in real estate.
Conflicts between Ukraine and Russia that arose after this period caused waves of mass migration.
The fact that the Turkish economy bears the greatest burden of global migration fluctuations, and policies designed accordingly have only increased its fragility, remains relevant to this day. Migration movements resulting from the ongoing conflicts in Syria also continue to be a major burden for Turkey. The decisions made at this stage are expected to be positive, but will also lead to industry breakthroughs due to market turnarounds.