Real estate sales spike after Turkey removes obstacles, lays out welcome mat
Amending a law that opens doors to Arab investors, Turkey sees property sales soar and looks to attract investment elsewhere. If Israel takes steps toward reconciliation, its citizens could benefit, too.
Last week, dozens of Turkish ambassadors around the world received a surprising letter from their foreign ministry. Please encourage the citizens of the counties in which you serve to buy real estate in Turkey, it said. Well known Turkish artists and television actors were even recruited for the campaign in hopes of attracting investors from the Gulf, where they are extremely popular. Turkey has capitalized on its status as the new tourist hotpot of the Arab world following the collapse of former top destinations like Egypt, Lebanon and Tunisia. Now it’s well on its way to turning those tourists into investors.
In May the Turkish parliament approved an amendment to the reciprocity law, which stated that foreign nationals were able to purchase real estate in Turkey only as long as reciprocity existed between Turkey and their home country. The new amendment has effectively extracted the real estate sector from the limitations of the previous law. A large additional number of countries – particularly Arab ones –have now been added to the list of those whose citizens are eligible to buy property in Turkey.
The results have surprised Turkish authorities. In May alone, $1.1 billion in real estate was purchased in Turkey, four times the entire total for 2011. The estimate for the coming decade is that Turkey will be able to sell property worth a combined total of $300 billion to foreign nationals.
Turkish brokerage firms reported this month that around 300,000 potential buyers have already expressed interest in purchasing homes and land in Turkey. Many of them are Russians or citizens of Arab countries, who are hurrying to purchase properties at vacation sites from British citizens who bought them in the past and are now seeking to realize their profits.
Turkey is not worried – at least not at the moment – about a real estate bubble. Nor are they concerned about inflation on the prices of cheap apartments as expensive properties make up only about 20 percent of the total real estate market. The remaining 80 percent of cheap properties in rural areas are not considered attractive prospects for investors.
What’s good for Israel is even better for Turkey
However, the new law is not without its limitations. For example, citizens from Syria, Armenia and North Korea will not be able to purchase properties in Turkey. Greek citizens will be unable to purchase properties in 28 coastal provinces, including in Istanbul. Greek citizens who have inherited properties in these provinces will be required to sell them within a month of taking possession. Citizens of Iran, Iraq, Georgia and Bulgaria will not be able to purchase properties in provinces bordering their home countries, and Iranian citizens will be required to receive special permission from the Turkish interior ministry. Citizens from China, Palestine, and India will also need a special permit. Up until now, Israeli citizens have been able to purchase one home, but following the amendment to the law this restriction has been lifted and Israelis seeking refuge from an Iranian attack can now buy as many homes as they wish.
Until two years ago Turkey couldn’t even dream of such a source of income. Citizens of Arab countries preferred to visit places where they shared common customs and a common language rather than waste money in a nation where they would be liable to run into Israeli tourists. But after the Mavi Marmara affair and the diplomatic crisis between Israel and Turkey – accompanied by a boycott by Israeli tourists – Turkey became a desirable spot among citizens of the Middle East. Turkish hotels adapted themselves to the requirements of Arab and Muslim tourists and all-inclusive deals began targeting Arab speakers. When the Arab Spring began, Turkish infrastructure was already prepared to absorb Arab tourists.
But Turkey isn't satisfied with the anticipated boom in real estate alone. The Turkish health ministry intends to open unrestricted medical zones to allow foreign doctors to open clinics and treat patients, expanding the kind of health tourism gaining momentum in the country. Although Turkey suffers from a shortage of doctors and medical teams, it’s unwilling to give up on the important additional source of income from health tourists.
The Turkish land of opportunity does not rule out Israelis. There is no doubt that reconciliation between the two countries would open up a vast space for Israeli investors, and it could be a paradise for Israeli doctors. But for this to happen, an Israeli apology is required. And as we know, honor sometimes carries an unbearable price.