There were records in 2017 in the real estate market following pretty hard times in 2016. The Turkish Statistical Institute announced that the total number of houses sold in 2017 exceeded 1million 409 thousand thanks to the measures taken. According to the Association of Real Estate and Real Estate Investment Companies some further steps need to be taken in the next period to attain new records.

THE TURKISH ECONOMY

went through some difficult times in 2016 and in the first half of 2017. The players of the real estate sector managed to break records thanks to the special promotion campaigns to attract customers. Given the real estate sector data provided by the Turkish Statistical Institute in the last five years, the sector broke a new record each year in that particular period. The number of houses sold in 2017 increased 5.1% compared to 2016 and exceeded 1 million 409 thousand. Although there is a supply surplus in some regions, the sector players target to break new records in 2018 as well.

WHAT HELPED TO BREAK THE RECORD?

What helped the sector to break the records? Undoubtedly, the promotional campaigns organized collaboratively by the sector players played an important role. Yet it is crucial to have a look at the assessment report prepared by the Association of Real Estate and Real Estate Investment Companies. Here are the steps described in the report that helped the sector to break records:

• The regulation stating that Turkish citizenship shall be granted to foreign nationals who buy at least $1 million in property on condition that it is not sold for three years.

• Application of 0% stamp tax for the real estate preliminary sales contracts and prepaid real estate sales contracts

• Decrease of the rate of the mortgage deposit to 20% from the previous 25% as consumers have difficulty in obtaining it

•Precautions by the government aiming to encourage real estate sale and savings incentives and their effect on the economy.

WHAT TO DO NEXT?

These are positive steps in the sector. Yet the players are underlying the fact that there needs to be new regulations to ensure “the real estate sector is to grow sustainably”. According to the report by the Association of Real Estate and Real Estate Investment Companies, these steps include the following:

• To grant some privileges to the first time buyers through a permanent tax regulation

• To re-evaluate the amount of the investment required for the Turkish citizenship through real estate ownership

• To grant some special exemptions to the sector in the real estate and income tax

• To make some simple and up-to-date regulations regarding the value appreciation and real estate tax (value-based tax),

• To make some regulations in the building bylaws in terms of population density, state of infrastructure, earthquakes and other disasters and urbanization plans,

• To make a one-time-only regulation on closing the gap between “official value” and “actual value” which brings about some problems in the financial markets, tax and buy/sell operations, on using this particular resource for the urban transformation projects through Provincial Bank and for Land Bank which will be revitalized,

• To establish a bank which is predominantly publicly-owned, focuses its operations on providing long-term mortgages to the people and to the companies and engages in securitization,

• To make real estate-based rights easier to be securitized and to make regulations for noninterest-bearing notes, rent and real estate certificates and hybrid vehicles,

• To form a market related to real estate rights and their securitization within Borsa Istanbul,

• To continue with the tax exemption of the Real Estate Investment Funds and Real Estate Investment Partnerships and to solve the problems stemming from VAT.