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The devaluation of the Turkish lira is making properties more attractive

A seaside home on the market in the town of Kas.
Foreign buyers swooped into Turkey’s property market in the wake of the historic lira crisis and purchased more homes in the last six months than in all of 2017.
Last August, Turkey’s currency lost one-third of its value in a single week, making goods (and homes) that much cheaper to hordes of tourists and prospective home buyers overseas carrying anything from British pounds to Iraqi dinars. The lira stabilized to an extent in the following months, but as of late last week was still about 30% weaker than a year ago. The exchange rate is about US$1 to 5.3 Turkish lira.
The buying opportunity has not been lost on foreigners, who bought double the number of homes in September than they did in the pre-crisis month of July, according to government statistics published last week.
"We definitely made sales off the back of the currency movement, though for some people, it was just fortuitous that it happened at that moment," said Julian Walker, director of Spot Blue International Property Ltd., a London-based Turkish real estate portal targeting foreigner buyers. "It was an extra bonus."
For example, a grand coastal villa selling for 5.5 million lira would have cost a U.S. buyer roughly $1.146 million in July but only $859,000 in September off the exchange rate alone.
It’s primarily been home buyers from the Middle East and North Africa driving the spike in foreign activity, with Iraqis—the biggest buyers of Turkish real estate—doubling in 2018 compared to the previous year, according to the new government data.
Foreign buyers have given Ankara, Turkey’s landlocked capital, the biggest boost, with sales to such buyers soaring 160% in 2018.
Pixabay
Sales to Iranian buyers more than quadrupled in that time, making them the second largest cohort of foreign buyers in 2018. Meanwhile, the number of sales to both Algerians and Jordanians tripled. Besides the discount foreigners are getting on the exchange rate, the Turkish government has also eliminated a pricey 18% value-added-tax on real estate purchased with foreign currency.
Turkey also saw an influx of buyers from the West. Germans more than doubled their activity in the Turkish housing market, as did Americans, who landed in Turkey’s top 20 for the first time in at least four years, according to the government data.
The financial incentives drove some sales, but the boom in Arab and Middle Eastern buyers is also the result of a so-called "golden visa" scheme that offers Turkish citizenship in exchange for real estate investment, Mr. Walker said. In September, the government lowered the investment threshold from US$1 million to only $250,000—which could also account for the surge in buyers that month.
"I think there’s been a more significant reaction to that than the currency," Mr. Walker added.
Foreign buyers have given Ankara, Turkey’s landlocked capital, the biggest boost, with sales to such buyers soaring 160% in 2018. Istanbul saw a 74% uptick in sales to foreigners, according to government data.
Away from the hustle and bustle, sales to foreigners jumped roughly 70% in the Mediterranean resort area of Antalya.
Sales to affluent foreigners have also increased in Bodrum, a peninsula on the Aegean Sea dotted with luxury villas, said Heike Tanbay, managing partner of the Bodrum office for agency Engel & Voelkers.
"With foreigner buyers, it’s not just that property is less expensive, it’s also been calm and stable in the country for the past two years," Ms. Tanbay said. In 2016, Turkey was hit was a spate of political and national security threats that included a failed coup and a terrorist attack at Ataturk Airport in Istanbul that killed more than 40 people.
"In 2016, there was really a drop in the market with only about 20% foreign buyers in Bodrum," compared to the typical 50/50 split, Ms. Tanbay said. The ratio is now moving back to normality, she said.
Sales to affluent foreigners have also increased in Bodrum, a peninsula on the Aegean Sea dotted with luxury villas.
Pixabay
The decline in the lira has made luxury home sellers resistant to lowering asking prices, Ms. Tanbay said.
Still, the boom in foreign buying has not alleviated a broad slowdown in the Turkish real estate market or filled the stockpiles of empty homes left from years of overzealous development. Home sales across the country slipped 2% nationwide in 2018 compared to 2017.