Until January 6th, prospective participants in the Turkey Citizenship by Investment Program (CIP) had been at liberty to pay for their investments – whether in the form of real estate, bonds, funds, or bank deposits – using foreign currencies. Following the publication of a new regulation for the program this Thursday, however, program participants will have to use Turkish Lira (TRY) to invest.
Though minimum investment requirements will remain tied to US dollar amounts (US$250,000 for real estate and US$500,000 for other asset classes), investors must henceforth convert their foreign currencies to TRY before finalizing their investments.
For those buying real estate to qualify, which is the case for the vast majority of investors, the changes will have limited practical effects; CBI real estate investors have been converting their dollars to lira prior to finalizing the investment for some time already.
“All real estate transactions have been in lira for a while now,” explains Taymour Polding of CIP Turkey. “It’s just that the lira amount keeps fluctuating depending on the rate at the time. So, investors typically transfer the amount required to purchase their properties in USD or EUR, and then it is converted into lira just before the property transaction takes place.”
For those qualifying by acquiring US$500,000 in government bonds or by committing the same amount to a bank deposit, however, the practical effects will be consequential. Under the new regulations, bank deposits and bond investments may no longer be held in foreign currencies – only in TRY.
For example, a CBI investor that chooses to qualify through making a bank deposit would need to first purchase US$500,000 worth of lira from the bank, or roughly TRY 7 million, before depositing those TRY 7 million in a Turkish bank for three years. Though this would expose investors to Turkey’s notoriously high rates of inflation for three consecutive years, they would also receive similarly elevated interest payments on their deposits.
Initial reports suggested the policy change was motivated by a desire to bolster the Turkish central bank’s foreign currency reserves. Commercial banks will buy CBI investors’ foreign currency with TRY before the Central Bank, in turn, buys the same foreign currency from the commercial banks, also paying for it with TRY.
Turkey Citizenship by Investment Real Estate listed in IMI Real Estate:
Christian Henrik Nesheim is the founder and editor of Investment Migration Insider, the #1 magazine – online or offline – for residency and citizenship by investment. He is an internationally recognized expert, speaker, documentary producer, and writer on the subject of investment migration, whose work is cited in the Economist, Bloomberg, Fortune, Forbes, Newsweek, and Business Insider. Norwegian by birth, Christian has spent the last 16 years in the United States, China, Spain, and Portugal.