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Crucial Development For Foreigners on Real Estate Investments for Citizenship Purposes

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Real Estate
Real Estate

The Regulation Amending the Regulation on the Implementation of the Turkish Citizenship Law entered into force by being published in the Official Gazette dated 6 January 2022 and numbered 31711 (“Regulation“). The Regulation introduced important changes in the procedures to acquire Turkish citizenship by way of investment.

What does the Regulation say?

  • For obtaining citizenship through capital or real estate investments, the Regulation on the Implementation of the Turkish Citizenship Law sets out certain limits in US dollars. While other foreign currencies within these limits are accepted, the phrase “or the corresponding Turkish lira” has been removed. Thus, foreigners must now invest in a foreign currency to qualify for citizenship under capital or real estate investments.
  • In order to meet the investment requirement, foreign nationals are now obliged to exchange the invested foreign currency through a bank operating in Turkey prior to the transaction and, thus, convert the amount to Turkish liras.
  • Subsequently, the relevant bank is obliged to exchange the foreign currency through the Central Bank of the Republic of Turkey (“CBRT“).
  • The CBRT will keep the relevant investment in Turkish lira for a period of three years. The CBRT will keep the relevant investment within deposit accounts in Turkey for transactions in relation to the investments by way of Turkish deposit accounts, and within governmental debt instruments in Turkey for transactions in relation to investments by way of Turkish debt instruments. The procedures and principles regarding this matter will be determined by the CBRT.
  • In addition, the relevant ministries and public institutions, which are responsible for identifying the investment condition determined according to the Regulation, will determine their own procedures and principles regarding these obligations.

Conclusion:

According to the Turkish Statistical Institute, there were over 45,000 residence sales to foreigners in 2019 and over 40,000 in 2020. With the reduction in the effects of the COVID-19 pandemic in 2021, this number has exceeded 50,000 as of November. With the recent changes, taking the exchange rate fluctuations experienced in Turkey in the last few months into account, the goal may be to benefit more efficiently from the increasing demand by increasing the demand for the Turkish lira and supporting the CBRT’s foreign exchange reserves. In this context, the upcoming regulations on the matter should be carefully monitored.