The Turkish government has made updates to its regulation that grants citizenship to foreigners in return for a certain amount of investment or acquisition of a real estate property, in the latest step in the authorities’ efforts to support the Turkish lira.
Foreigners can become citizens if they own property worth at least $250,000 for three years or if they make an investment of at least $500,000 or hold Turkish debt of an equivalent amount for three years.
The foreign currency obtained from the sale of the property to foreigners will now be sold to the central bank through a local bank and converted into the lira, according to the new regulation, published in the Official Gazette on Thursday.
The amount that foreigners keep in a local bank for investment will also be converted into the local currency, it said. The regulation mandates that the money be kept in the lira deposits or government debt instruments and must remain in the country for a minimum of three years.
Also, the minimum amount of investment required to acquire citizenship has been defined as the dollar equivalent of another foreign currency.
The update in the regulation comes after a slide in the lira after the central bank slashed its policy rate by 500 basis points to 14% from 19% since September.
The currency fell to a record low of 18.4 to the dollar last month, before seeing a massive rebound after President Recep Tayyip Erdoğan unveiled a deposit scheme that offers to compensate savers for losses incurred due to depreciation during the deposit term.
The latest application aims to prevent and reverse the dollarization trend in the country, said Ömer Faruk Akbal, the chairperson of the Real Estate International Promotion Association (GIGDER).
"It is the right decision in terms of strengthening the Turkish lira, Akbal told the business daily Dünya.
Yet, he said serious preparations need to be made regarding the application principles. "We expect that foreign investors who have Turkish lira in their hands will not have an obstacle to taking advantage of the relevant law and that the issue of how they should make their investments will be clarified with circulars or guidelines to be prepared by the relevant institutions."
"We export $19 million worth of real estate every day. Therefore, there should be no gaps in the process," he noted.
Those eligible for citizenship include foreigners who the Industry and Technology Ministry determines have made at least a $500,000 investment in the country or have spent at least $250,000 on the property and kept that property for at least three years.
It also includes foreigners determined by the Labor and Social Security Ministry to employ at least 50 people, those who have deposited at least $500,000 into Turkish banks and kept it there for at least three years, those who have purchased and kept for three years at least $500,000 in government debt, or those who have made a venture capital or property fund purchase of at least $500,000.
Ankara adopted the citizenship-for-homes scheme in 2017. A year later it cut the minimum price to $250,000, from $1 million, to attract foreign buyers.
Some 7,000 foreigners received citizenship via home purchases between 2017 and 2020, the government said last year.
Foreign home sales – mainly to Iranians, Iraqis, Russians and Afghans – reached an all-time monthly high in November, official data showed, also taking the 11-month sales to their highest level ever, as a depreciation in the lira made Turkish property more attractive to foreign buyers.
Sales to foreign buyers jumped 48.4% year-over-year in November and the 7,363 properties sold marked the highest monthly level since the data series began in 2013.
Sales to foreigners were strong throughout the year, rising 39.4% in the first 11 months to 50,735 units, exceeding the annual threshold of 50,000 for the first time ever.
The industry is estimated to have ended 2021 at a level of up to 57,000 units. The previous annual record was set in 2019 when 45,483 houses were sold to foreigners.
Last year net foreign investment in real estate was $5.7 billion, central bank data shows.
They had purchased around 40,812 houses throughout 2020, a 10.3% year-over-year decrease from 45,483 units in 2019. It still marked the second-highest annual figure ever.