House sales in Turkey have doubled as a result of a surge in foreigners’ acquisitions headed by Russians.
Residential property sales in Turkey more than quadrupled in May, according to official statistics released Wednesday, as foreigners’ purchases soared, with Russians taking the lead for the second month in a row.
Despite high borrowing rates and rising prices, home sales increased 107.5 percent year on year to 122,768 units last month, according to Turkish Statistical Institute (TurkStat) data.
In May of last year, sales dropped to 55,166 units because of measures to stop the spread of the coronavirus.
Mortgage sales increased by 177.8% year on year to 29,335 in May, accounting for 23.9 percent of total sales.
Despite dwindling supply and rising prices, people continue to view real estate as a good way to hedge against inflation, which is approaching a 24-year high of around 73.5 percent.
Last month, the government unveiled a slew of initiatives aimed at boosting property sales and addressing rising prices, which have risen by about 100 percent in the last year as citizens struggle to find affordable housing to rent or purchase.
Istanbul, Turkey’s most populous city, accounted for the lion’s share, with 22,148 units sold last month, a rise of 18%. The capital, Ankara, came in second with 11,497 sales, followed by the Aegean province of Izmir with 7,159 sales.
Sales were down 7.73 percent month over month in May, according to the figures.
From January through May, sales increased by 37.7% year over year to 575,889 homes.
Russians are the most active purchasers.
According to the institute, foreigner sales increased 235.7 percent year on year to 5,962 units, following a 58.1 percent increase in April as buyers sought to take advantage of a government program that grants Turkish citizenship to individuals who purchase property.
In recent years, the strategy has increased the appeal of Turkish real estate.
Foreigner sales jumped before a rule that raised the scheme’s minimum purchase value to $400,000 from $250,000 went into force this week, according to industry authorities.
According to Gül Gül, the founder of real estate sales business Golden Sign, foreigners flocked to the real estate market when the policy was revealed last month.
“Foreigners made intense purchases so as not to be affected by the price increase,” she said.
Russians led the list with 1,275 homes in May, up from 1,152 in April and 547 in March.
Iranians and Iraqis came in second and third, with 736 and 617 dwellings, respectively. According to the data, Russians and Ukrainians accounted for more than a quarter of all sales to foreigners.
Many real estate companies say that wealthy Russians are putting a lot of money into real estate in Turkey. This is because they want a safe place for their money after Moscow invaded Ukraine and the West put a lot of restrictions on them.
Many Ukrainians escaping the conflict have gone to Turkey to join their families, while others have rented or purchased real estate.
Makbule Yonel Maya, general manager of Industrial Development Bank of Turkey (TSKB) Real Estate Appraisal, says that sales to foreigners have gone up since the Ukraine war started, even though there are more restrictions on citizenship. This is because there is more demand from Russians.
While Turkey has condemned Russia’s attack, Ankara opposes non-UN sanctions on Russia, and the nation has relatively close ties with Moscow, with direct flights still operating.
Ankara is attempting to strike a balance between its tight connections with both Russia and Ukraine, positioning itself as a neutral party attempting to broker a peaceful resolution to the conflict.
According to the data, property sales to foreign nationals totaled 26,753 units from January to May, an increase of 70% over the same period the previous year.
Sales to foreigners also inject foreign money into Turkey’s economy, bolstering the lira’s strength as it continues to face selling pressure.
According to industry experts, house sales to foreigners will bring in $10 billion in 2021, after reaching a record 58,576 units in 2021, a 43.5 percent year-over-year increase. With 45,483 units, the previous yearly high was established in 2019.