Foreign Owned Property Does Not Qualify for Citizenship Investment Purposes...

Recently with changes to Citizenship Investment criteria to $250,000, there has been an increase of foreign buying from different parts of the world than Northern Europe, as was the case previously. Most of this buying is centred in Istanbul. And to qualify for citizenship, the property must be purchased from a Turkish owner: if you are non-Turkish and selling your property in Turkey, a citizenship investor can not buy it to qualify for a Turkish passport.  

Agents Rely on the Language Barrier to Protect the Illusion of their Way of Business...

The way the ‘foreign’ real estate sector in Turkey operates, is somewhat illusionary. Much of this illusion is fueled by agents and their promotional press, which dominates the English speaking internet search engines: not the Turkish language ones.  And the reasons these English speaking on-line agencies primarily serve only foreigners, is so that they can dictate a business process that is more advantageous for them (at the expense of the foreign buyer or seller). They can demand a deposit in advance from a foreign buyer (and get their commission in advance this way). And these agents can also demand a higher buying price from foreigners, to use as a hidden price 'mark-up' which the foreign seller will never see. At least in the past. 

Not so much now, because there simply are too few foreign buyers (citizenship buyers can not buy from another foreigner). But the agents wait patiently, protecting their ‘way of doing business’, with the English language websites for foreigners that don't speak Turkish. Hoping the foreigners will be 'none the wiser'. Hoping one day the foreign holiday home buyers will return in masses like the good old days.

The Market Has Changed: Buying & Selling isn't Done the Same Way as Before...

So after ten years, now days, when the foreign property owners walk back into their agents, or find an English speaking on-line agent, it is natural enough to expect ‘business as usual’. Problem is, those times in which they bought were anything but business as usual- they were an unusual times fuelled by easy lending banks in their home countries (remember Northern Rock?). Ten years ago, borrowing from their banks back home, they bought property in Turkey. 

Those very exceptional and unusual times are long passed. There is no longer a flood of foreign buyers, clicking on-line, or walking into agents whilst on holidays- its not so long ago that holiday visitors are even beginning to return back, after several years absence. So those buyers are not there, at those agents, in those sales channels. And this is why so many foreign sellers are exasperated at having to wait so long property un-sold, even after having slashed their prices to ‘more than reasonable’ levels.

To put it simply, selling this way is about effective as ' being in the wrong place at the wrong time  '. 

Meanwhile there is a whole other world, which the foreigners are completely unaware of- that’s’ the real estate business in Turkey, as it operates everywhere else in Turkey, outside of foreigners limited English language perceptions.

One big reason why foreigners are unaware of this other world, is because to access it, requires Turkish language skills. Typing search terms into a search engine in English wont open the door- using the Turkish language will.  

We Foreigners Still Think the Market Works the Way it Did Ten Years Ago......

In the past, more than ten years ago, many foreigners visiting Turkey on holiday, decided on impulse to buy a property, and walked into a local estate agent. And as the interest increased, some purchased as a result of visiting overseas property exhibitions. Many used the internet and found the websites of English speaking agents, and did a little research, searching for property, looking at the pictures, reading the write-ups, and comparing prices, etc. 

So today, when it comes time to sell, they naturally do the familiar thing, and walk back into a local estate agent, or look on the internet for English language on-line agencies: these are agencies that cater primarily for foreigners.

So coming and going, the foreigners have these experiences and understandings of how real estate business is done in Turkey.  

Which is a peculiar thing, because in reality, that is not how real estate business is done in Turkey. 

That’s the way that small part of the sector that deals with foreigners operates. Very few foreigners are even aware of this. Perhaps because in the little coastal towns they have bought in, many or most of the houses are built for and owned by foreigners. 

So perhaps foreigners think all real estate business in Turkey is done the way it is done for foreigners.

Over recent years the way property is bought and sold in Turkey has changed significantly. With changes in technology, the old ways, of using an agent, are a relic of the past for more than five years: local Turks no longer use agents. Proof of this widely recognized development, is the fact that more than 85% of real estate transactions now originate from on-line ‘for sale by owner’ portals, where buyers and sellers can meet discreetly with messaging, and conduct their transactions without agents. Agents are still there, lurking, but quite often when a buyer discovers a property is being listed and offered by an agent, the buyer just moves on to another property. In this respect the Turkish real estate market is more focused and progressed in moving toward a ‘peer-to-peer’ transaction environment than most developed markets in western countries.

Unfortunately, buyers and sellers from these western countries are not aware that the property market in Turkey has changed in this way. And coming from countries were similar changes are not as progressed, these foreign buyers and sellers have some difficulties in adapting to the changes. This can be seen in the size of the English speaking real estate sector in Turkey. Unlike the much larger domestic Turkish speaking market, the smaller English speaking segment is dominated by English speaking agents: a surprisingly vast number. When searching for real estate in the Turkish language, none of these English speaking agencies are shown; but when searching in English, none of the much larger and dominant real estate portals are shown. 

This is an interesting dichotomy and my blog offers a commentary on what goes on between these two ‘parallel universes’ operating in the same location. Enjoy…!