Turkiye Real Estate Citizenship Investment & Price Risk Analysis

Whilst entry level pricing may be at a premium for a foreign buyer, exit pricing will not be, because resales are only permitted to local Turkish buyers. Thus it is important to avoid expectations that the resale price will be at the same higher level of prices that exist for foreign buyers in Turkiye’s two-tier real estate pricing dynamics.

In addition, investors should be aware that the best residential investment locations have now been excluded from CIP/ CBI application acceptance due to new regulations introduced mid- 2024

Investors now typically have a choice of investment returns characterized by three types of residential real estate.

... arguably described as affordable housing, the properties are typically built on lower cost green-field sites where constructors may maximize their profits. These properties are generally not considered desirable lifestyle locations by local Turks. Furthermore, the vast supply pipeline of projects completed and in development assures no or limited exit price increases due to supply and demand. The investment profile is typically 10-15% downside and 0-5% upside over a three years CIP / CBI holding period. Entry pricing is important in order not to shift this profile further into unprofitability. Over-priced for the location, and having resale exit price expectations at best of recouping the purchase entry price, perhaps with a slight uplift, but not a commensurate return on capital available in other real estate segments, nor asset classes. The key to protecting capital is to identify the property on offer that is the smallest premium to true market value, thereby minimizing exit price risk. The Market Price Reports available from MyTapu Associates are key to measuring the entry price’s premium to true market value, which is the key determinate of investment performance, since resale exit price upside is limited to non-existent over the CIP/CBI holding period. 

...these properties typically rely on misleading descriptions of various sorts, often related to their location, often referred to with a desirable upper tier location name, when in reality they are not in that location. The premium pricing they are offered at makes this segment the riskiest. The premium to true market value is usually in excess of 20%, and so the investment profile is the least favourable, simply because prices are highly unlikely to achieve that amount of uplift over the three year holding period. Instead, if the uplift is only 10%, the investor will suffer 10% loss of capital when selling at resale exit market prices.  For a longer holding period of 5-15 years, the uplift potential may typically be greater than the low-end segment, but the certainty of such an expectation is in doubt.  TheMarket Price Reports available from MyTapu Associates are key to quantifying the resale price risks.

As ever, investment performance also depends on factors specific to each property, and holding periods, rental yield.supply & demand, ongoing condominium management fees, etc  and our investment reports address such issues.