August 6 will long be remembered as a big day for the Turkish property market; the day the reciprocity died.
When foreigners were first allowed to buy property in Turkey in 2002 it was restricted to nationals from countries where Turks could buy, in other words it was restricted by reciprocity; if we can buy in your country you can buy in ours. Unfortunately this excluded nationals from many countries, including the Arab states. This has become a bigger problem of late, as the Arab spring effect has led to a surge in Turkey’s popularity in the Arab world and a lull in the competition, meaning reciprocity was potentially costing Turkey billions in property investment.
A bill was drafted to remove reciprocity from property law, and it was successfully passed a few weeks ago. However, we learned that in fact, the bill was not to be a blanket end to reciprocity, but that in fact that government would simply use the new law to add previously banned countries to the list of nationalities allowed to buy. Worse, it meant a further wait before any new foreigners would be allowed to buy.
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The new list came into effect August 6 and there is already talk of the first sales going ahead. As far as I am aware the amended list has not yet been made public but it is widely expected to contain the gulf Arab states.
It is thought that the Arab states alone have the potential to add a further 2 billion USD to the Turkish property market. Now we will find out just how much pent up demand there is for Turkish property in the gulf and Arab states of the world.
If the recent data from the Central Bank is anything to go by we are in for a huge boom in foreign sales. The Central Bank recently revealed that foreigners had purchased $1.1 billion worth of Turkish property in May, about 4 times the amount purchased in the whole of 2011. This was European buyers who had always been allowed to buy, it is thought they were buying in the intention of selling on to the incoming hordes on the new list. Time to realise those plans now then.