Foreign interests spend $10 billion in 5 years for real estate purchases  
 
The political and economic stability resulting in foreign interest in the property market boosted the construction of new sites between 2002 and 2007. 
Recent political and economic stability as well as efforts by the Justice and Development Party (AK Party) to increasingly integrate the Turkish economy into global business have led foreign interests to invest their wealth in Turkey.
 
In the five-year period from 2003 through 2007 the value of real estate purchases by foreign interests was approximately $10 billion, recent Undersecretariat of the Treasury figures have shown.

The surging interest in real estate was accompanied by increasing amounts of foreign direct investment (FDI) in the given period, with capital inflow surpassing $18 billion per year. The amount of money brought in by foreign interests for real estate acquisition was $998 million in 2003 and has increased steadily since then, rising to $1.34 billion in 2004, $1.84 billion in 2005 and $2.9 billion in 2006. The amount increased slightly in 2007, too, by reaching $2.95 billion despite domestic and international economic uncertainty.

The main factors contributing to foreign interest in the Turkish real estate market are relatively low prices, increasing income levels and production, and positive expectations vis-à-vis real estate prices.

According to a report titled “Real Estate Acquisitions of Foreign Real Persons” released by the General Directorate of Land Registry and Cadastre, people from 70 nationalities purchased fixed property such as land and houses. Among them, the citizens of Germany, the US, Austria, Azerbaijan, Belgium, Denmark, the Netherlands and France predominate. They usually prefer İstanbul and Antalya, as half of the money is invested in these two cities. These cities are followed by Bursa, İzmir, Muğla, Hatay, Aydın and Mersin.

FDI and real estate acquisitions did not have a bright outlook in the year preceding AK Party governance, as they primarily stayed below $1 billion. Along with stability, efforts to join the European Union have rendered Turkish markets attractive investment areas. In the five years since 2003 the total amount of FDI has surpassed $46 billion. The annual amount of such capital inflow is expected to increase even further this year and the years to come.

Source:Todayszaman

Real Estate Acquisition of Foreign Real Persons in Turkey

Real estate acquisition of foreign real and legal persons has been regulated in the article 35 of the Land Registry Law numbered 2644 with law numbered 5444 and dated December 12, 2005 which was established in the Official Gazette of 26046 numbered and dated January 7, 2006.  New fundamental principles was regulate with this new law for acquisition real estate of foreign real persons and trade companies having legal personality and established in foreign countries according to the laws of these countries in Turkey.

New form of the article 35 of the Land registry Law is as follows:

¡§With the reservation of reciprocity and compliance with legal restrictions, foreign real person can acquire real estates for the purposes of using as residence or business aims in Turkey that are separated and registered for these purposes in the implemented development plans or localized development plans. The same conditions shall be stipulated in the establishment of limited real rights on real estates. The total area of the real estates and limited real rights on real estates that a real person of foreign nationality can acquire all over the country can not exceed 25.000 m2. Within the same conditions set out in this paragraph Council of Ministers is authorized to increase the area up to 30 hectares.      

Companies having legal personality established in foreign countries according to the laws of these countries can acquire real estates and limited real rights on real estates in Turkey according to the provisions of special laws.
 
In case of establishing mortgage in Turkey in favor of foreign real persons and trading companies having legal personality established in foreign countries according to the laws of these countries the conditions and restrictions set out in first and second paragraphs shall not be applied.

With the exception of foreign real persons and trading companies having legal personality established in foreign countries according to the laws of these countries, no one can acquire real estates and limited real rights on real estates in Turkey.

For the real estates acquired through legal inheritance by citizens of a country that have reciprocity with Republic of Turkey, the conditions and restrictions set out in the first paragraph shall not be applied. For the real estates acquisition by means of transactions depending on death apart from legal inheritance, the conditions and restrictions set out in the above paragraphs shall be applied. Real estates and limited real rights on real estates acquired through legal inheritance by citizens of countries that do not have reciprocity with Republic of Turkey shall be liquidated after their transfer transactions are performed.   

De jure and de facto circumstances shall be taken as basis in determination of reciprocity. In implementation of this principle for the citizens of countries that have not granted land ownership rights, it’s stipulated that the rights granted by a foreign country for real estate acquisition to its own citizens should also be granted to citizens of the Republic of Turkey.
 
The Council of Ministers is authorized to determine the places where foreign real persons and trading companies having legal personality established in foreign countries according to the laws of these countries can not acquire real estates and limited real rights on real estates within the areas in terms of  irrigation, energy, agriculture, mine, and protected areas,  and belief and cultural featured areas and special protection areas and touchy areas due to flora and fauna features, strategic areas due to public interests and country security by means of the proposals of relevant public institutions and organizations with registry based coordinated maps and plans, and the rate of the areas where foreign real persons can acquire real estates not more than 5 per thousand according to the provinces and provinces¡¦ areas. Proposals of the public institutions and organizations within these scope shall be examined, appreciated and submitted to the Council of Ministers by means of a commission that carries out studies within the authority set out in this paragraph and constitutes of relevant representatives of administration in the structure of the ministry that General Directorate of Land Registry and Cadastre is related to.

Map and coordinate values concerning the military forbidden zones, military and private security zones and strategic zones that are determined after the enforcement of this law and their alterations shall be given without any delay by the Ministry of National Defense to the ministry that General Directorate of Land Registry and Cadastre is related to.

The parcels needed to be expropriated or to be annotated on land register due to be in the areas determined in the above paragraphs shall be notified by relevant institutions to relevant Land Registry Offices.
 
The real estates and limited real rights on real estates acquired contrary to the provisions of this article or determination of misuse according to the purpose of acquisition without legal necessity shall be converted to value and paid to owner of unless the real estates liquidated by the owner within the period given by Ministry of Finance.¡¨      

Real Estate Acquisition of Foreign Trade Companies Having Legal Personality in Turkey

Companies having legal personality established in foreign countries according to the laws of these countries can acquire real estates and limited real rights on real estates in Turkey according to the provisions of special laws.

Relevant special laws:

- Law for Encouragement of Tourism numbered 2634
-  Petrolium Law numbered 6326
- Industry Regions Law numbered 4737

In case of establishing mortgage in Turkey in favor of foreign real persons and trading companies having legal personality established in foreign countries according to the laws of these countries the conditions and restrictions set out in first and second paragraphs shall not be applied.

With the exception of foreign real persons and trading companies having legal personality established in foreign countries according to the laws of these countries, no one can acquire real estates and limited real rights on real estates in Turkey.

Real Estate Acquisition of Foreign Capital Companies

The expression of “foreign capital companies” is usually confused with the expression of “foreign company”.

First of all, it should be stated that “foreign capital companies” are established according to the provisions of the Turkish Trade Law in Turkey and enrolled in Turkish Trade Register. In other words, these countries are subjected to the legal provisions of the Republic of Turkey. Only, the whole or part of their capital belongs to foreign real and legal persons. Availability of foreign shareholders within the company will not include it within the status of foreign legal personality; because nationality of the company and nationality of its shareholders are different matters.

The Law for Encouragement of Foreign Capital numbered 6224 and dated January 18, 1954 was repealed by Foreign Direct Investment Law numbered 4875 and dated June 5, 2003 that entered into effect being published in the Official Gazette numbered 25141 and dated June 17, 2003, new provisions were adopted to encourage and increase foreign direct investments, to protect rights of foreign investors, and to transform permission and ratification system to informative systems in realization of foreign investments.

With regard to the subject, a circular numbered 1363-100/841 and dated August 7, 2003 was announced to all our units through our regional directorates and it was stated that implementation would be carried out within the framework of the following statements.

By the Foreign Direct Investment Law numbered 4875, foreign investors are subjected to equal treatment with domestic investors; permissions and ratifications like investment permissions, company establishment permissions, were removed. Moreover, companies having legal personality that foreign investors participate in or establish, in our country, are allowed to acquire real estate or limited real rights in areas where acquisition of these rights is allowed for Turkish Citizens.
Companies established according to the repealed Law numbered 6224 or that will act according to the Law numbered 4875 which is about the activities of foreign capital companies in our country, are considered as companies of the Republic of Turkey, according to criteria of establishment place or administration center.

For this reason, real estate acquisition and other demands concerning land register of foreign capital companies that either obtained activity permission according to the repealed Law for Encouragement of Foreign Capital or will act according to the Foreign Direct Investment Law numbered 4875, are concluded by relevant Land Registry Offices implementing the same methods and rules as for companies established according to the Turkish Trade Law, after examining authorization documents given by the Trade Register Authorities that indicate the competent person and competence for real estate acquisition of the company.

For more information:

“X General Directorate of Land Registry and Cadastre http://www.tkgm.gov.tr/ana.php?Sayfa=icerikana&ID=2&DID=9