The value of the Turkish currency has plummeted to historic lows. While the currency will need to recover quickly in order to prevent long-term consequences, the one-of-a-kind circumstance presents foreign investors the opportunity to invest in Turkey’s real estate at a lower cost. Those whose income or savings are denominated in the Turkish Lira are hit hard with the currency decline. In contrast, for those owning assets that are not in lira, the scenario is in their favor.
Impact of the Fluctuation in Exchange Rates on Foreign Investments and Turkish Real Estate Market
Turkey’s depreciating lira is projected to spur an increase in real estate sales in the coming months. Foreign investors are stepping in to take advantage of the profitable currency exchange rate. In a nutshell, investors holding non-Turkish lira currency can purchase Turkish property at a discount. Investments sprang into action when news of the currency devaluation made headlines around the world, prompting investors to book flights to Turkey or call up real estate brokers to purchase properties in popular locations throughout the country. Faruk Akbal, Nevita’s Chairman of the Board, in his press release recently, already explained that cash sales increased due to the intense interest of foreign investors in Turkey. (Read our “The Destination of the Foreign Exchange Movement Will Be Luxury Housing” news for the details of the press release.)
Every decline in the Turkish lira is a massive benefit for investors because the foreign buyer owns the foreign currency. This is especially true if investors move quickly before real estate prices are updated to reflect the most recent exchange rate.
Due to the fact that the majority of construction supplies are imported, price modifications are likely to occur soon for currently ongoing or freshly initiated projects. However, as demand rises, prices will rise as well, and it won’t be long until the real estate markets eventually achieve a state of equilibrium.
The Turkish housing market will always be a solid investment option. When it comes to investing in Turkish property, international investors have a lot to gain from the rise in the currency exchange rate. As a result, people from the United Arab Emirates, Iran, Iraq, Russia, Ukraine, and Europe are moving to Turkey. Istanbul contributes 46% of total annual real estate sales, followed by Antalya with 20% of total yearly earnings in the purchase of property by foreign homeowners.
How to Benefit from the Turkish Lira’s Depreciation Through Property Purchase
You can benefit from making a property purchase now with cash or an installment payment arrangement because:
In the case of cash payment, in which the buyer receives the highest discount rate, you will earn the highest discount rate plus a high exchange rate of the foreign currency that you own against the Turkish lira, resulting in a double benefit for your investment.
Turkish lira installment payments are structured so that you pay the initial down payment in Turkish lira equal to a smaller amount of dollars than what you own after the exchange rate change, and then you pay the fixed Turkish lira installments over time. This means that, over time, every decline in the Turkish currency against the dollar is an additional gain for you, and a premium paid less when calculated in dollars.
Real Estate Investments and Economic Growth in Turkey
One of Turkey’s most important economic areas is the rapidly expanding real estate market. Global investors are increasingly interested in the industry, which is developing as a result of the epidemic and Turkish currency devaluation. It is not a coincidence that the Turkish real estate market has seen such rapid growth recently; several statistics reveal that the number of international investors in Turkish real estate has steadily increased in recent years. However, the Turkish economy is caught between the need to maintain macroeconomic stability and the need to obtain yearly growth, which results in a worsening economic recession. An upside of Turkey’s currency depreciation is that foreign investors will find Turkish companies more attractive, which could justify the clear upward trend in investment from abroad.
Real estate investments and economic growth go hand in hand, and this is universally acknowledged. The real estate sector, particularly in Turkey, has a significant impact on economic growth. Turkey’s economy is strengthened by foreigners purchasing property in the country. As a result, foreign investors’ assets will increase in value and return with large profits as the economy grows.
The Turkish lira has been declining for some time, but the Turkish economy continues to function. Real estate in Turkey is safeguarded by rules and regulations that have stood the test of time. For example, despite a coup attempt in Turkey, the investment promotion scheme continued. Those who favor real estate investment in Turkey consider it as a real opportunity for several elements relating to the good infrastructure in Turkey, a supportive legal system, and a sound economic system. The Turkish economy is not immune to global economic crises, but the political, economic, legal, and historical depth of the Turkish economy, geographical importance, and technical skills of its experts and manpower, and also being supported by various international economic companies, make it safe to say that in any instance, the outcome of a real estate purchase in Turkey is a secure investment.
Consult Nevita ® for a Profitable Investment in Turkey
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