New legislation to facilitate property sales to foreigners

The drafting of a bill which will facilitate the sale of land to foreigners has been completed. The construction and real estate Turkey sectors have high hopes for the bill, which will amend title deed laws and change the current reciprocity requirement. If the bill, which introduces new regulations concerning the sale of property to foreigners, is passed by Parliament, it will facilitate the acquisition of real estate by foreigners.
This week, the bill, which has been drafted at the request of the Environment and Urbanization Minister, Erdoğan Bayraktar, will be discussed in Parliament. The bill is one of a number which will receive preferential attention at Parliament. Speaking to Today's Zaman, Justice and Development Party (AK Party) Parliamentary Group Deputy Chairman Ahmet Aydın said that the bill created expectations among the public. When he was reminded that the agriculture sector has some concerns despite positive expectations from the construction and real estate Turkey sectors, Aydın underlined that during the drafting process of the bill they have considered all concerned parties.

Speaking to Today's Zaman, Chairman of the Construction Sector Assembly of the Turkish Union of Chambers and Commodities Exchanges (TOBB) Erdal Eren said that this bill is very important for the Turkish construction sector. Underlining that he disagrees with criticisms of the bill, Eren said: “Despite the claims, foreigners who buy a real estate in Turkey do not buy our national wealth. On the contrary, they make a contribution to the country's economy.” Commenting on criticisms that foreign investment in Turkey does not make any contribution to the economy but only benefits from subsequently increased exchange and interest rates, Eren said: “This bill is very important for attracting foreign investors. In order to boost the construction sector, we need this law.” The new law ends the existing reciprocity requirement concerning the sale of property to foreigners and increases the amount of land that the foreigners can buy from 2.5 hectares to 30 hectares. If a foreigner wants to buy land amounting to more than 30 hectares, they will be required to develop a specific project for the land. After the bill is passed by Parliament, foreigners will be able to acquire property anywhere in the country. The Ministry of Environment and Urbanization and the Ministry of Finance will coordinate which land can be sold to foreigners. According to representatives for the construction sector, lifting the reciprocity requirement would pave the way for the sale of one million houses, which would help us end the straggling current account deficit.

There is a significant demand from Russia, the Gulf countries and the Turkic states of Central Asia. Construction sector representatives noted that following the end of the reciprocity requirements they expect foreigners to show great interest in housing projects in Turkey large cities and on the coast. According to a company official, if the bill is passed, 20 percent housing projects will be sold to foreigners. According to the new regulations, citizens of certain countries determined by the cabinet will be allowed to acquire a maximum of 30 hectares of real estate. The purchase of any area of land exceeding 30 hectares will require a permit from the Turkish authorities.

The Ministry of Environment and Urbanization and the Ministry of Finance will announce over the Internet the list of countries whose citizens will be allowed to buy real estate in Turkey, after the Foreign Affairs Ministry has considered the proposals.

Military and strategic lands will be preserved

The bill also regulates real estate acquisition by foreigners through inheritance. According to the bill, the assets of citizens from countries that are not allowed to buy real estate in Turkey will be liquidated after their transfer transactions are performed. Corporate entities of foreign origin will be able to acquire real estate in Turkey, but foreign nationals and foreign commercial companies will not be allowed to buy property in Turkey ’s strategic military and security zone. According to law a list of forbidden military zones, military security zones and strategic zones will be identified and any changes to these areas will be determined within six months following the enactment of the law. After the Ministry of Defense has informed the Ministry of Internal Affairs and the Environment and Urbanization Ministry about the changes, all information about the these zone will be deemed to be finalized.

Currently, citizens of 89 countries do not have the right to own property in Turkey because Turkish nationals are not entitled to own property in those countries. These include Russia, the Gulf countries and the Turkic states of Central Asia. According to the report, 6,053 property transactions were made between Jan. 7, 2006 and July 24, 2006. During this time, 800,000 square meters of property were sold; 876 British, 801 Irish, 749 Germans, 357 Dutch, 296 Norwegians, 176 Belgians and 90 Greeks became owners of land in Turkey, Erkek indicated. Turkey has reciprocity agreements with 88 countries and the number of countries who only allow Turkish citizens to purchase buildings is 26. [see: www.ipi.ie/propertylaws.htm ]

The top 10 districts with numerous estates owned by foreigners are Iskenderun, Sariyer, Reyhanli, property in Alanya, Kumluca, Fethiye, Ceyhan, Yildirim, Bodrum and Ortaca. In Iskenderun, 67 percent was inherited, in Sariyer 89 percent was inherited, in Reyhanli 99 percent was inherited, in Alanya 98 percent was inherited, in Fethiye 95 percent was inherited, in Yildirim 93 percent was inherited, in Bodrum 93 percent was inherited and in Ortaca 98 percent was purchased. In Alanya, 12,684 square meters spread over 50 plots were purchased by 20 different people. Erkek lists the number of foreigners that invest in real estate in Turkey as 14,456 British, 14,382 German, and 13,905 Greeks.

To sell land is selling the national wealth

The bill that the construction and real estate sectors have such high hopes for has received harsh criticism from the agriculture sector and professional organizations. Turhan Tuncer, president of the Chamber of Agricultural Engineers (ZMO), underlined that the land is Turkey’s main production tool and argued that selling lands to foreigners is equal to selling off the national wealth.

Increasing the amount of land that foreigners can acquire to 30 hectares and allowing them to buy any piece of land exceeding 30 hectares with the cabinet’s permission was deemed by Tuncer to be unacceptable. He also called on officials to withdraw the amendments.

Şemsi Bayraktar, president of Turkish Union of Agricultural Chambers (TZOB), said. “When we consider the existence of foreign banks in Turkey, there is a risk of agricultural land being sold to foreigners. This situation poses a potential threat to our future. We want producers having financial difficulties to be able to restructure their outstanding debts to banks.”