Real Estate

Foreigners turning back on Turkish real estate

June 16, 2024, 4:29 PM

Turkey foreign property sales — Foreign interest in the Turkish property market has been dropping for months with analysts predicting no upturn until next year … something the Upside Down House in Hatay hopes will never occur

Russian buyers down 64%
Wider market down 2.4%
‘No improvement until mid-2025’

Foreign buyers are increasingly shunning the Turkish property market, wary of high prices, the expensive cost of living and a less welcoming environment for overseas real estate investors.

There were only 2,064 residential units sold to foreign buyers in May, 35 percent down on the same month last year, data issued by the state statistics agency Turkstat on June 13 revealed.

Sales in May did post an increase on the April total of 1,272, reversing six months of declines. Despite the month-on-month improvement, overall house sales to foreigners in the first five months of the year came to 9,021, down 46 percent year on year.

Newsletter
Get the Best of AGBI delivered straight to your inbox every week

While Russian nationals remained the largest single group of buyers in the five-month term, with 2,091 units, this was 63.5 percent down year on year.

Last year just over 35,000 residential units were sold to foreign nationals, nearly half the amount sold in 2022 and the lowest total since 2018. On the performance of the first five months of 2024, it is unlikely last year’s figure will be eclipsed.

Indeed, foreigners may not return in increasing numbers to the market until the second half of next year, according to Hacı Ali Taylan, the president of the Turkish Real Estate Agents Consultants’ Federation.

“We do not see movement in prices that would create an opportunist environment,” he told AGBI.

“Prices are staying where they are. Overall, there has been a slowdown in sales domestically due to housing loan problems, but we expect things to improve, including sales to foreigners, by mid-2025.”

All of the top 12 countries for foreign national property buyers in Turkey posted declines, with sales to Iranians down 60.3 percent and Kuwaitis by 58.7 percent, at 914 and 154 deals closed respectively.

The wider Turkish real estate market also posted a decline in May, though not close to the drop in sales in the foreign segment. Sales fell 2.4 percent nationwide month on month, with 110,588 units turned over, while the five-month total of 465,761 was 3.4 percent down on the same period in 2023.

Turkey home sales hit nine-year low on rising interest rates

High prices are not the only reason for foreign sentiment towards Turkish property tapering off, according to Hakan Akdoğan, the head of the real estate committee for the Istanbul Chamber of Commerce.

The earthquake in southern Turkey in February 2023, which left more than 50,000 dead and caused massive destruction across 11 provinces, has made overseas buyers wary, he said.

“The earthquake has had a negative impact on foreigners, as has the continuous talk on the expectations of new ones,” Akdoğan said. “But there is also growing negativity towards foreigners gaining Turkish citizenship through buying assets.”

Combined with an inflation rate of 75 percent as of the beginning of June, and Central Bank interest rates of 50 percent, it may be some time before there is a significant turnaround in waning foreign interest in the Turkish property market.