Having harbored many challenges globally, 2016 passed most of these problems on to the new year. While many sectors are still struggling with these issues, functioning of the real estate sector seems a little more stable.

2017 has started with the uncertainties passed on from the previous year. These obscurities, shaking Turkey as much as the whole world, affected overall Turkish economy and many sectors in Turkey. Real estate sector has become one of them. However, by the incentive and promotion campaigns led by the government and the sector delegates, this period is intended to be got through with the minimum damage. In the recent period, the incentives for the consumers are extended by new ones. These can be summarized as: the regulations for foreigners to acquire estate and citizenship, the allowance for the houses bigger than 150m2 to be sold with 8% the value added tax rate until September 30, 2017, and the cutback of the title deed fees down to 15% from 20% until September 30, 2017. 

Based on the figures, it can be concluded that these incentives and campaigns worked. According to the figures reported by TÜİK, real estate sector continues to grow without any slowdown. In the latest figures, sales in May 2017 have grown 1.5% from the same month of previous year. In May 116,558 houses were sold in total. According to the GYODER’s 2017 1st Quarter Report, by the means of these incentives, real estate sector passes the first quarter with a 7% growth from the previous year. In the same period, by the favor of the decrease on real estate loan interest rates, servient house sales grew 30%. Sector delegates are very contented with these incentives… Özyurtlar Holding Board Chairman Tamer Özyurt states: “We anticipate that the sector which has already gained pace with the government incentives via the interest rate discounts and the campaigns, will continue to grow even more”. Customers who, in a sense, constitute the backbone of the Turkish economy, are motivated by the discounts on the title deed fees and the stamp taxes. Another comment on this issue belongs to the 216 Construction Board Chairman

POINTS TO CONSIDER WHILE LURING FOREIGN INVESTORS IN REAL ESTATE SECTOR, ACCORDING TO GYODER'S REPORT

The interest of foreign investors is not only on the quality and the quantity of the houses but also on the city that they will reside in, whereas it was clearly observed in the demand of foreigners to İstanbul. • Other important points for foreign investors are the regulations that ease acquiring visa, citizenship, residence permit and of all bureaucratic processes, the ongoing geopolitical advantage of Turkey, and being relatively the most peaceful region in the territory. • The attraction of İstanbul from all over the world as a destination brand by being a hub both in terms of transportation and commerce. • The realization and progress of the initiatives on making İstanbul a financial hub. • The demand on all over Turkey by the investors who follow the price changes closely and starting to buy from the regions where the housing prices are relatively lower.

Bilent Dündar: “The support and incentives provided by the government contributed a lot to the real estate sector to reach its position today. Figures declared by TÜİK once again showed us that the real estate sector is a safe harbor. The measures taken in the last year for real estate sector played a key role in the sector’s growth. Discounts on the added-value taxes and on the title deed fees, the regulations made to clear the way for the foreign investors and many other actions carried away the sector until today”. İnsay Yapı Board Chairman İhsan Çulhalık also comments that the real estate is a prominent investment option for Turkish people and emphasizes that the sales will continue despite occasional fluctuations. Çulhalık also underlines: “The sector, boosted by the campaigns promoting the purchases, helps both the investors’ and the customers’ to derive profits. SALES TO FOREIGNERS SHOULD BE EASED FURTHER! This year also brought opportunities for foreign investors. With the regulation allowing foreign investors to acquire citizenship after purchasing a house worth $1 million or more and keeping it as long as 3 years was an important step in this manner. Özyurtlar Holding Board Chairman Tamer Özyurt reflects his opinions on this: “Citizenship allowance for foreign customers influenced the increase of the sales. We can say that the foreign investors swarmed to Turkey after the referendum. Because, the foreign investors are tracking Turkey better than us. Recovery in the economy mobilized both the domestic and the foreign investors.” However, according to the GYODER’s report, there has been no increase in the first quarter in terms of foreign purchases. In comparison to the last year’s same period, a 42% decrease is evident. Nevertheless, the report underlines the relatively limited share of this portion in the total volume of the real estate market and its marginal detrimental effect… Based on the figures the most preferred region by the foreigners was Adana in the first quarter… After a total of 898m2 investment in 2016’s first quarter, Adana received investment for 303,778m2 in the first quarter of 2017 and took the first place from Muğla. THE EFFECT OF HOUSING LOANS IN REAL ESTATE An indicator of the upturn of the real estate market is the increasing number of housing loans, for sure… At beginning of 2016, depending on the higher interest rates, the housing loan interest rates were also high. Decreasing gradually in the following months, the interest rates closed the year on 0.91% monthly level. Concerning the interest rates the promotions offered by the banks, primarily by the public banks, was an important influence factor in supporting the real estate market. These interest rate discounts provided for the housing projects contributed significantly to the increase of the house purchases. By the end of 2017’s first quarter, the housing loan interest rates fell down to as low as 0.87%. THE SECTOR AFTER THE REFERENDUM There has been a serious stagnancy in the real estate sector as much as in any other industry in Turkey during the pre-referendum period. Commenting on the effects of this situation, Akfen Consultancy and Project Development General Manager spoke: “Each clarified uncertainty helps customers’ decision making. We observed altogether how the stability after the referendum enabled mobilization in the sector. Nevertheless, this high sensitivity of the consumers on political state of affairs with so many negative anticipation makes our job extremely challenging. In terms of economic decisions, I regard it incorrect to attribute so much attention on any national elections, whatever the concept of it. We have a strong economic infrastructure and the effect of the referendum or election results would be limited.”