The cost of Turkish citizenship by investment rose to 400,000 USD: How will it affect the program
7 minutes read
There was an official increase of the minimum investment threshold for Turkish citizenship from 250,000 USD to 400,000 USD on June 14, 2022. The Turkish government had announced the changes a month before they took effect, giving applicants a grace period. It is still up in the air as to what effect the increase in the threshold will have on the investment program.
Turkish citizenship by investment program (CIP) has proven to be the world's most popular of its kind. Since its launch in 2017, thousands of principal applicants and their families have been able to become citizens of Turkey in a short period of time.
Reasonable price increase
The first change in the minimum investment amount was made in 2018 - from USD 1 million to USD 250,000 - making the program begin to gain popularity. However, the increase in 2022 is unlikely to have a similar effect. Both changes make sense for a number of reasons.
The decrease in cost in 2018 brought the CIP in line with the rest of the world's similar programs. The current increase in the threshold makes sense because of inflation, currency fluctuations, and the growth of the real estate market in Turkey in general and in Istanbul in particular.
The increase of 150,000 USD is in line with inflation and the constant fluctuation of the local currency, the Turkish lira. For Turkish real estate developers conducting all local and domestic transactions in lira, the recent fall of the local currency should be taken into account and reflected in the CIP regulations, which sets the terms in USD instead of Turkish lira.
The housing market in Turkey and, in particular, in Istanbul, which is the most popular city among investors, continues its natural growth. At the same time, the market is so dynamic that its analysis is not an easy task. Analysts provide different data on the annual growth rate, but agree that the true figure is in the range of 28-33%. Thus, the Turkish real estate market is one of the fastest growing in the world.
This growth is a sign of the ongoing demand for housing, which the market can barely keep up with. Therefore, the increase in the minimum investment threshold in the Turkish investment program reflects the real value of real estate in the country. As one of CIP's founding partners Taimur Paulding explains, Istanbul's housing market is one of the most dynamic in the world, with the city similar to London and New York.
Polding also said the change in the program's terms would have a positive impact on applicants. In his opinion, CIP is unique in that foreigners will actually be able to profit from their investment because of the annual profitability and the possible growth rate of the market.
Expense of investors is several times higher than the minimum threshold
Taimur Paulding notes that it is no longer possible to find a first-class property in Istanbul for $250,000. In his opinion, those who are considering a reliable investment in one of the most attractive housing markets understand that the program's previous requirements were more of a means to an end rather than a reasonable condition. Most investors never adhered to the cap, but rather bought luxury properties at two to three times the required price because it was a worthwhile investment, not just a path to citizenship. There was also a flood of applicants who chose homes in Istanbul and Bodrum worth millions of euros, indicating the popularity of the program among the global elite as well.
According to Paulding, an increase in the minimum threshold will benefit investors because they want to know where to put their money and carefully select objects that will allow them to receive income from resale in the future. They will not be able to find a good deal for 400,000 USD in central London, New York or Hong Kong, but they can do it in Istanbul, which is rapidly becoming the world's economic center. By increasing the minimum investment, the country's government is redirecting investors' resources to the best Turkish properties. Once foreigners see better value for money, CIP's popularity will accelerate.
Citizenship by investment with a focus on capital investment
Speaking about the current applicants for Turkish citizenship by purchasing real estate, Paulding noted that the change in conditions had almost no effect: «Foreigners for whom we select objects, looking for the best deals in the market in Istanbul or Bodrum. Raising the threshold of the program did not affect them, because investors have been set to acquire real estate, the cost of which exceeds USD 400 000. Buyers' main goal is to get citizenship through investments that will benefit them financially, and the change did not affect their priorities.»
The new law is pushing CIP applicants to look at properties that wouldn't normally fit into the $250,000 USD range. This could lead to an even bigger real estate market and even bigger profits in the future for those who buy homes now. Moreover, Turkey offers applicants something unique as it becomes a regional superpower, and investors are finding a true second home there.
According to Taymur Paulding, Turkey's CIP program is the only one that does not have significant residency requirements and at the same time offers investors the opportunity to live in an economically and politically stable country. Similar programs in the world offer states with a population of no more than 650,000 people, while in Istanbul alone there are more than 15 million. Turkey has an excellent infrastructure, a developed financial services sector and a lot of opportunities. The investment program is simply incomparable with similar programs in the world, because the country itself is at a different level in every respect.
Source: Investment Migration Insider
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