Significant Development in Real Estate Investments for Citizenship Purposes for Foreigners


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 brought important regulations regarding the procedures to be applied for those who want to acquire citizenship by investment.

What does the regulation say?

The Regulation on the Implementation of the Turkish Citizenship Law set certain limits in US Dollars for obtaining citizenship through capital or real estate investment. While other foreign currencies corresponding to these limits are still accepted, the phrase "Turkish Lira with equivalent" has been removed. Thus, it was determined that foreigners should invest in foreign currency in order to qualify for citizenship within the scope of capital or real estate investment.

Foreign nationals were obliged to sell the foreign currency amount to a bank operating in Turkey before the transaction and convert it to Turkish Lira in order to meet the investment requirement.

Subsequently, the relevant bank, where the foreign exchange was sold, was obliged to sell the foreign currency amount to the Central Bank of the Republic of Turkey (“CBRT”).

The CBRT will keep the relevant investment in Turkish Lira deposit account for transactions made for the condition of keeping deposit in Turkey, and in government debt instruments for transactions made through debt instruments in Turkey, for a period of three years. The procedures and principles regarding the subject will be determined by the CBRT in the upcoming period.

The relevant ministries and public institutions, which are responsible for determining the investment condition determined according to the Regulation, will determine their own procedures and principles regarding these obligations.

Conclusion:

According to TUIK statistics, house sales to foreigners were 45 thousand in 2019 and over 40 thousand in 2020. With the decrease in the effects of the Covid pandemic in 2021, this statistic has exceeded 50 thousand as of November. With the new regulation, it is aimed to evaluate the increasing demand more effectively, to increase the demand for Turkish Lira considering the exchange rate fluctuations experienced in Turkey in recent months, and to support the CBRT's foreign exchange reserves. In this context, the CBRT practices and the effects of the regulation on practice should be followed carefully.

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