Today, the 14th of June 2022, marks the official increase in the minimum investment threshold in the real estate option under Turkey’s citizenship by investment (CIP) program from US$250,000 to US$400,000. The Turkish government announced the price hike a month ago, giving applicants a one-month grace period before it came into effect. Now, many are left pondering how this change will affect the program itself.
The Turkish CIP has proven to be the world’s most popular citizenship by investment program, naturalizing tens of thousands (precise data is not published) main applicants and their family members in a very short time frame since its inception in 2017. A change in the minimum investment requirement is unlikely to alter its status.
A reasonable price increase
Ironically, it was the first change in the minimum investment threshold for real estate, from US$1 million to US$250,000, back in 2018, that kickstarted the Turkish CIP’s popularity. But this most recent change is unlikely to have such an effect. This comes down to one main similarity between both price changes (the price cut in 2018 and the price hike today); they both make sense.
The drop in price in 2018 brought the Turkish CIP in line with the rest of the options throughout the globe, while the current price makes financial sense in terms of accounting for inflation, currency fluctuation, and the natural growth of the real estate market in Turkey in general, and in Istanbul in particular.
The US$150,000 increase perfectly aligns with inflation while it also proves logical in an environment where the local currency, the Turkish Lira (TL), is constantly in flux. To Turkish developers who do all their local and internal transactions in TL, the recent dip in their local currency must be addressed and mirrored in the CIP’s regulations, which price the program in USD rather than in TL.
This increase in price makes up for the currency oscillation as well as local and global inflation rates but, more crucially, it mirrors the growth of the Turkish real estate market.
The housing market in Turkey, and more specifically in Istanbul, which is the program’s most popular investment destination, continues its healthy, natural growth. The market is so dynamic, in fact, that getting an analytical read on it is challenging.
Housing market analysts give differing rates of year-on-year growth in Istanbul but the consensus is that the true rate is somewhere between 28%-33%, making the Turkish real estate environment one of the most rapidly growing in the world.
This growth is a sign of unyielding demand for real estate in Istanbul, a demand with which the market can barely keep up. This price increase only reflects the true value of the real estate in the market, and it makes sense within the parameters of the CIP, as Taymour Polding, one of CIP Turkey’s founding partners, expertly explains:
“Istanbul’s housing market is one of the most dynamic in the world, akin in its global gravitas to those of London and New York. The main difference is that we are just witnessing its explosive growth.”
Polding went on to discuss how the increase will positively affect Turkish CIP applicants, stating: “The Turkish CIP is exceptional in that applicants can actually make a profit through their real estate investment, especially when combining annual ROI and the eventual appreciation rates.”
Investors were spending up to several multiples of the minimum anyway
Polding points out that profitability only works if the investment itself makes sense, and that finding prime real estate in Istanbul for US$250,000 “simply isn’t realistic anymore.” Those looking for a solid investment in one of the most desirable housing markets in the world, he adds, understand that the previous minimum investment requirement was a means to an end rather than the smart thing to do.
“Most of our clients never stuck to the bare minimum, and instead bought top-tier real estate for twice, and sometimes even three times the minimum, because it was a good investment, not just a route to citizenship. We have also seen a flurry of clients go for luxury real estate options in Istanbul and Bodrum worth millions of euros, so the program is also highly popular amongst the world’s elite”.
Polding explained why he believes the increase will benefit potential investors, saying: “Investors want something tangible and resellable for a profit. You won’t find a good property in the heart of London, New York, or Hong Kong for US$400,000, but you can in Istanbul, which is rapidly becoming the world’s most important central economic hub. By raising the minimum investment, the Turkish government has aligned investors with the better property options available in Turkey and, once they see they are getting better value for their money, the popularity of the CIP will continue to grow.”
Citizenship by investment, with emphasis on “investment“
Speaking about his current crop of clients, Polding indicated the recent price change had had little to no effect:
“The clients we are currently sourcing properties for are looking for the best that the Turkish market has to offer in both Istanbul and Bodrum, and the price change hasn’t affected them because they have already been viewing properties worth more than the new limit. Their main goal is to get the citizenship through investments that will benefit them financially, and the recent change hasn’t altered their mindset the slightest.”
The new law has opened up the door for CIP applicants to tap into real estate options that were usually outside the scope under the US$250,000 valuation, and this can lead to even greater growth in the Turkish housing market and, in turn, even greater returns for those who buy in now.
Moreover, Turkey offers CIP applicants something unique, as the country itself is becoming its own regionalized superpower. It offers applicants an actual second home.
“Turkey is the only direct CIP without significant residence requirements to offer investors a chance to live within a global economic and political powerhouse. The rest of the CIPs in the world lead to countries with no more than 650,000 inhabitants. Istanbul alone houses more than 15 million residents. It has great infrastructure, an outstanding financial services sector, and is teeming with opportunities. You just ca’t compare it to other CIPs simply because the country itself is on another level, in every way possible.”
For those looking to obtain a unique citizenship through an investment that actually makes sense, contact CIP Turkey today, email us at firstname.lastname@example.org, or call us at +90 555305 32 93.