Can a foreigner own land in Turkey?
Our offices field a great deal of enquiries from people asking about buying and investing in land. On paper, buying land in Turkey is very possible, says Property Turkey director Cameron Deggin. Aside from a few restrictions that curb the buying of agricultural land, or buying too high a proportion of a municipality's land area, it's entirely possible for foreigners to buy land in Turkey.
But when you dig a little deeper, how viable is investing in land in Turkey?
There are two types of land investors, Deggin explains.
Land bankers and developers
Land bankers buy land and hold onto it for a few years with a view to selling it and reaping significant capital gains, Deggin says.
"For that to happen, there needs to be something happening in the area, so when zoning comes through that area and it becomes buildable, the investor will parcel it off and sell it. If you get land like that, you could be looking at good capital growth."
Developers buy land specifically to develop. This type of land lies within zoned areas and is ready for development. Once a project is approved, development can begin.
How to invest in land in Turkey
"You need to have very good networks within the municipalities, and you need to be connected to people who dedicate themselves to land sourcing, and those people need to know what's happening in what area."
Investors target two types of land, he explains.
Arsa: This is zoned land. "You will find arsas within city boundaries or within town municipalities," Deggin explains. "Arsa is land that already has planning permission,. You can buy it and build on it, although your project will need approval. Developers target land like this: this is premium land."
Tarla: Unzoned land, generally farmland found outside municipalities, or undeveloped land within a municipality.
The potential lies in tarla land, Deggin says.
But sitting on this unzoned land for decades is unfeasible for most investors. "Most people aren't looking to hold land for such a long time. Most of our investors want a medium term investment."
That means, knowing when tarla land is set to change classification is key to investment success.
"You need to be in the right place at the right time. And for that, you need to know people."
the process to turn land into arsa, or zoned land, can take as many as five years, Deggin says. For most foreign investors, by the time they get wind of the potential opportunity it will e too late.
"If you come into this process when it's started, you can bet your bottom dollar that Turkish investors will have known about it well before you."
Istanbul Airport was a good example of this, Deggin says.
"The new airport of Istanbul, opened last year, and construction started five years ago. However, we knew 10 years ago there would be an airport built there. The plans probably started 12 years ago. A lot of investors land banked there 15 years ago. But foreign investors only started asking about the area two or three years ago. By that time, all the prime areas were already snapped up."
Is it possible to invest in Turkish land?
"Yes - you can take a chance, but it's very hard," Deggin says.
"If you're looking to invest a couple of hundred thousand dollars, and think you're going to make money, you're dreaming."
But if you're an investor with US$20-30m in their pocket, it's a different story.
"If you're looking to invest in land you need to come in with a big amount so you can have influence over local municipalities. They would welcome a sizeable investment and would certainly help.
"You're going to contribute to the community so they might help you out. That's how things work in Turkey."
Don't invest in hearsay
You might hear that there's a new road tipped for this area, or a new development planned for the outskirts of town. You might pick up on a rumour that an airport will be constructed nearby.
"Don't go investing in hearsay. If you're a foreign investor and you're hearing these rumours, experienced Turkish investors who dedicate themselves to land banking will have heard the truth long before you."
For more information on investing in land in Turkey, email [email protected]
Read more: Straight Talk with Cameron Deggin
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