Ankara has decided to slash investment amounts required for its investment migration program after a disappointing inaugural year. Turkey’s new CBI program went into effect last January, offering foreign nationals Turkish citizenship in exchange for purchasing property worth $1 million USD or more.
Before the referendum to consolidate presidential power in the country, the government had passed legislation to strengthen the declining economy. Among other measures such as tax cuts and cheap, Treasury-backed loans, the APK-controlled Parliament also enacted the new CBI program to encourage foreign investment.
However, the promise of Turkish citizenship has failed to bring in anything close to the ambitious target of $10 billion USD within the first year. According to Central Bank data, real estate investment from foreign sources saw only a modest increase of $750 million USD, totaling $4.64 billion USD as of January 2018.
The government plans to overhaul the program as part of a larger legislative package in May with hopes of a better return going forward. Many in the construction and housing sectors – which have contributed to the lion’s share of limited economic growth under the Justice and Development Party (AKP) – are voicing support for a measure that would extend the citizenship incentive to properties worth $300,000 USD or more.
The amendment to the program would align more appropriately with foreign buying habits in Turkey’s real estate market and is expected to pass. Feyzullah Yetgin, head of the Association of Real Estate and Real Estate Investment Companies (GYODER), voiced his optimism on the proposed decrease:
“The move would help significantly both the Turkish economy and the real estate sector. Homes worth $1 million and more account for only 2-3% of the market. Our surveys indicate foreigners opt [mostly] for homes in the range of $100,000-$300,000.”
A decrease on the required investment amount would also make Turkey’s program more competitive with other investment migration programs nearby in Europe. While cheaper than Cyprus’s $2 million USD real estate investment scheme, it will be hard for Turkey to compete with programs like Greece’s €250,000 scheme. Investors only obtain permanent residency in return, but freedom of movement throughout the EU and a greater level of political stability relative to Turkey are big incentives.
In addition to the real estate investment option passed last January, the Turkish government provides two other avenues for investment in exchange for citizenship. Foreign nationals can also obtain citizenship by making a fixed capital investment of $2 million USD, keeping a bank balance of $3 million USD in the country for 3 years, or through investment that creates 100 jobs in Turkey.
It has not yet been determined if these options will also be amended alongside the real estate investment program in May.