Turkey
Last Updated:
Jun 25, 2008
Real estate prices in Turkey rose strongly after the relaxation of foreign ownership restrictions in December 2005 under Law No. 5444. Double-digit annual price increases were reported in several key areas of Turkey from 2005 to 2007.
More than 73,000 foreigners, mostly Britons, Germans and Greeks, have bought properties in Turkey. They poured US$10.4 billion into the real estate market over five years (2002-2007).
On April 16, 2008, Turkey’s Constitutional Court invalidated sections of Law No. 5444 concerning purchase of rural properties by foreign companies. With that, the issuance of title deeds to all foreign buyers, individuals and companies alike, was suspended.
The title-issuance freeze was lifted in May 2008, and a new law was passed in June addressing the contentious portions regarding ownership. However, some damage has been done. Price falls were reported in several key areas, especially in the south. Foreign buyers were reported to have backed out from some investments. The uncertainty has dealt the market a blow.
Foreign individuals can freely buy up to 10% of property and land in officially zoned areas which includes cities, towns and resorts. Foreign individuals and corporations cannot buy property and land in rural areas. Since foreigners cannot buy a property in the immediate vicinity of a military zone, a clearance must be obtained from the military.
More than 73,000 foreigners, mostly Britons, Germans and Greeks, have bought properties in Turkey. They poured US$10.4 billion into the real estate market over five years (2002-2007).
On April 16, 2008, Turkey’s Constitutional Court invalidated sections of Law No. 5444 concerning purchase of rural properties by foreign companies. With that, the issuance of title deeds to all foreign buyers, individuals and companies alike, was suspended.
The title-issuance freeze was lifted in May 2008, and a new law was passed in June addressing the contentious portions regarding ownership. However, some damage has been done. Price falls were reported in several key areas, especially in the south. Foreign buyers were reported to have backed out from some investments. The uncertainty has dealt the market a blow.
Foreign individuals can freely buy up to 10% of property and land in officially zoned areas which includes cities, towns and resorts. Foreign individuals and corporations cannot buy property and land in rural areas. Since foreigners cannot buy a property in the immediate vicinity of a military zone, a clearance must be obtained from the military.
Analysis of Turkey Residential Property Market »
RENTAL YIELDS
Last Updated: Mar 29, 2010
Besiktas district are (of course) more expensive than elsewhere in Istanbul, at over €3,300 per square metre. Lucky are those that live in this area of palaces and large houses, looking out onto the Bosporus!Unfortunately for foreign buyers, the best rental yields on residential property in Istanbul are not to be had here, where a resale 120 square metre apartment yields a return of only around 4.4% on its price. That is, of course, typical of the general situation in the higher-end districts of any city.
Much better returns can be had in the noisier Beyoglu which, though it can still command very high sales prices, is a more ‘work-oriented’ district and can return rental yields on apartments of 6%-7.2%
Bakirkoy is a mixed district, and has a large range of houses and apartments and areas, woith higher-end apartments at around €2,700 per square metre, and smaller apartments average €1,700 per square metre. Gross rental yields are around 5.6% on 120 square metre apartments.
Kadikoy on the Anatolian side of the Bosporus is another very mixed district, buzzing with life and students, largely residential. As is to be expected, prices of residential apartments here have a wide range. The livelier and ‘earthier’ the district, the higher the gross rental yields, and 120 square metre apartments here can return 6.5%
The very beautiful and wealthy Sariyer district is very expensive in its upper reaches, with residential property prices reaching over €3,000 per square metre. Yields are correspondingly more modest, at around 4.9% on a 120 square metre apartment.
The varied Sisli district has apartments mostly over €2,000 per square metre, and yields of around 5.9% on 120 square metre apartments.
TAXES AND COSTS
Last Updated: Aug 20, 2010
Effective Tax Rate on Rental Income |
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| Monthly Income | €1,500 | €6,000 | €12,000 |
| Tax Rate | 14.6% | 21.7% | 24.8% |
| Click here to see a worked example | |||
Source:
Disclaimer |
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Rental Income: Net rental income is taxed at progressive rates, from 15% to 35%.
Capital Gains: Capital gains from sale of real estate are tax-exempt provided that the holding period is longer than five years (four years if the property was acquired before 01 January 2007). For properties held less than five years (four years if the property was acquired before 01 January 2008), normal income tax rates apply.
Inheritance: Inheritance tax is imposed on the value of the inheritance at progressive rates, from 1% to 10%.
Residents: Residents are taxed on their worldwide income at progressive rates, from 15% to 35%.
Capital Gains: Capital gains from sale of real estate are tax-exempt provided that the holding period is longer than five years (four years if the property was acquired before 01 January 2007). For properties held less than five years (four years if the property was acquired before 01 January 2008), normal income tax rates apply.
Inheritance: Inheritance tax is imposed on the value of the inheritance at progressive rates, from 1% to 10%.
Residents: Residents are taxed on their worldwide income at progressive rates, from 15% to 35%.
BUYING GUIDE
Last Updated: Apr 03, 2007
Closing costs are moderate in Turkey. Total roundtrip transaction costs amount to 9.85% -10.75%. Real estate agent’s commission (6%) and title deed charge (3%)are shared equally by both parties. Other costs include stamp duty (0.75%) and registration fees (max of around 1%)
LANDLORD AND TENANT
Last Updated: Jul 10, 2006
Turkish laws are pro-tenantRents: Rents may be freely agreed at the beginning of rental contracts. There is no other form of rent control in Turkey.
Tenant Security:The parties of the lease may specify any duration period they wish. The lease is automatically extended for one more year, unless the landlord informs the tenant in writing at least fifteen days before the expiration date of the lease that it cannot be renewed.
ECONOMIC GROWTH
Last Updated: Jun 25, 2008
Economic slowdown looms for Turkey
Turkey is literally at the crossroads of Europe and Asia. As the only predominantly Muslim country in Europe (almost all of the 69 million population), Turkey has a mixed flavor of Islamic culture and Europe’s ancient and medieval civilization. Turkey was home to the Ottoman Empire, which once ruled much of Europe and Asia. Modern Turkey arose from its ashes with a secular state, the product of the nationalistic fervor that swept the country in the wake of World War I.
The Islamist-based Justice and Development (AK) Party, which won a landslide victory in November 2002 and July 2007, has resolved many of Turkey’s long-standing economic problems. Led by Prime Minister Recep Tayyip Erdogan, the government has improved services and boosted economic growth. It has identified EU entry as a key priority.
The economy, expanding for the sixth consecutive year, grew by 4.5% in 2007. Average growth from 2002 to 2006 was 7.2%. GDP per capita rose from US$3,560 in 2002 to US$9,630 in 2007.
The unemployment rate improved to 9.6% in 2007 from 10.3% in 2002. The budget deficit was down to 1.6% of GDP in 2007, the lowest in 30 years.
For decades, Turkey has suffered annual inflation of 25% to 106% per annum. Runaway inflation was successfully brought down to manageable levels. Since 2004, inflation has been below 10%, a significant improvement from the 104% inflation rate registered in 1994. Inflation was 8.7% in 2007, the lowest in more than two decades (however, it still one of the highest in Europe).
Although things have already improved, much more has to be done. Total external debt stood at US$218 billion in 2007, around 44% of GDP. Economic growth is expected to slow to about 3% - 4% in 2008.
Inflation rose to 9.66% in April 2008 and is expected to exceed 10% once more due to rising oil and food prices. The budget deficit is seen to rise once more to 3% of GDP in 2008 and 2009.
