ISTANBUL- Turkey's slumping housing market is getting some support from foreign property investors, especially from the Gulf region, who are drawn by the weak lira and a government effort to ease the path to Turkish citizenship.
Foreign housing investment jumped 82 percent in the first quarter of the year, according to government data, even as Turkey's overall housing sales tumbled 24 percent in January and 18 percent in February as the economy settled into a recession.
Iranians, Iraqis and Saudis led those taking advantage of Turkey's decision last year to slash an investment threshold for gaining citizenship to $250,000 from $1 million previously. The measure was aimed at keeping money flowing into an economy that was driven for years by a construction boom.
A 30 percent drop in the Turkish lira last year, and another 10 percent decline against the dollar so far in 2019, has also made it cheaper for foreign buyers.
"The Turkish government has made it very easy to come and invest in Turkey. But getting a Turkish passport is more important for me, especially when travelling abroad and doing business," said an Iranian named Hossein who was considering buying an apartment in Esenyurt district on Istanbul's outskirts.
Hossein did not disclose his surname due to Iran's capital-transfer restrictions, but added that he was also drawn by Turkey's "close distance, food and similar culture as a Muslim country."
Government statistics show construction declined 8.7 percent in the last quarter of 2018, when the overall economy contracted at its fastest rate in nearly a decade.
Faced last year with unsold housing stock of more than 1 million units, the government cut the citizenship threshold in September. By the end of 2018, housing investment by foreigners was up 80 percent, and sales climbed 82 percent in the first quarter of 2019.
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The Turkish Statistics Office said the foreign investors are primarily from Iraq, Iran, Saudi Arabia, Russia, Afghanistan and Kuwait. Palestinians bought 297 housing units in the first quarter, a surge of nearly 300 percent from a year earlier.
"Many Palestinians have no passport. They travel with a travel document and face difficulties," said Ismail Altin, chairman of the Arabic Turkish Businessmen and Investors Association.
"Now they can get a Turkish passport in a cheaper and easier way. That's why we see a boost in demand from Palestinians," he said.
Salma Alsultan Alghori, a Syrian refugee working at an Istanbul real estate company in Istanbul, said almost all sales offices are employing people who can speak fluent Arabic or Farsi. "Buyers from the Gulf region are the initial target for Turkish real estate companies nowadays," she said.
Foreigners purchased $4.6 billion worth of properties in Turkey last year, and that is expected to rise at least to $10 billion this year, according to the Association of Housing Developers and Investors.
For Babacan Holding, nearly 30 percent of all sales last year were to non-Turkish citizens, and the Turkish real estate and construction company expects that to rise to as high as 40 percent this year.
"Not only the Gulf region but we also see an increasing demand from people of Turkish origin in European countries, after the lira's depreciation," said Ibrahim Babacan, the company's chairman.
"We've already started advertising our projects in Gulf media and set up cooperations with some tourism agencies to arrange road shows for our projects" he added. "Real estate in Turkey has become an attractive investment instrument for many."
(Reporting by Ceyda Caglayan; Editing by Jonathan Spicer) ((Ceyda.Caglayan@thomsonreuters.com; +90-212-350 7061; Reuters Messaging: ceyda.caglayan.thomsonreuters.com@reuters.net))
