Turkey: the weak lira attracts foreign-currency buyers

The Turkish property market trades in lira, a currency that has depreciated sharply and whose inflation is high. For a buyer with hard currency, immediate purchasing power is therefore considerable.

This advantage is real on entry. It reverses on exit: the proceeds of a resale received in lira must be converted back, and the currency erosion in the meantime eats into the real return.

Rents received in local currency suffer the same erosion, which makes a high nominal rental yield of little significance once expressed in the investor’s currency.

For a foreigner, a Turkish property investment is therefore a bet on the exchange rate as much as on bricks and mortar — and the two bets do not necessarily offset each other.

We do not publish a Turkish property price index, exchange rate series or rental yields: we have not found an up-to-date official source to document them.

A partial safeguard exists and is used: indexing the lease to a hard currency, or denominating it directly in foreign currency where regulations allow. This option has, however, been restricted several times by the Turkish authorities, and it must be checked at the date of the contract.

Turkey grants citizenship to foreigners who acquire a property with a minimum value of from $400,000¹ and keep it for 3 years².

The threshold is denominated in dollars, the market in lira. The value used therefore depends on the exchange rate applied and the date of the valuation.

The authorities also require a report from an approved valuer, and it is the value in that report — not the price paid — that is measured against the threshold. A gap between the two is common and can cause an already financed application to fail.

An alternative route exists through fixed capital investment, from $500,000³, which avoids exposure to the property market but requires a genuine business project.

Finally, the 3 years² restriction on sale ties up the asset, in a resale market largely made up of other applicants to the same scheme.

The Turkish passport opens about 118⁴ destinations without a visa. For a French national, the gain in mobility is therefore nil.

On the tax side, citizenship does not move residency. The Turkish scale runs from 15%⁵ to 40%⁶ at its top marginal rate, and corporate tax stands at 25%⁷.

Inheritance taxes range from 1%⁸ to 30%⁹ depending on the nature of the transfer. Turkey is therefore not a low-tax jurisdiction.

The only specific reason for a French national lies in the access Turkish citizenship opens to the United States through the treaty investor visa, France not being in the same treaty position.

Finally, Turkey has high and persistent inflation, which affects the cost of living as much as the value of assets denominated in local currency. A budget set in hard currency remains comfortable there, but wealth built up locally is exposed.

1. Have the official valuation done before committing: it is this valuation that is measured against the threshold.
2. Check that the location is eligible, as restrictions exist in certain saturated neighbourhoods.
3. Cost out the exit: conversion back into foreign currency after a period during which the property cannot be sold.
4. Examine the secondary market for the targeted development, largely made up of applicants to the same scheme.
5. Deal separately with the question of your own tax residency, which citizenship does not move.

The threshold has also already been raised significantly once, and pressure on the property market in Turkey’s major cities fuels a recurring public debate about the presence of foreign buyers. A plan must allow for the possibility of a further increase, which would not affect existing holders but would change the pool of buyers on resale.