BREAKING NEWS: On Wednesday, April 13, 2022 the Turkish government announced its intentions to raise the investment requirement to acquire Turkish Citizenship from $250,000, up to $400,000. This is the amount that foreigners have had to pay for real estate, while also committing to hold it for at least three years, in order to obtain a Turkish passport. It is important to note that this move has not yet been made officially binding and the announcement is a signal to move in the coming days.
Over the course of the last couple years, Turkey's Citizenship by Investment program has proven to be very successful. Popular among foreign investors, and profitable for the Turkish government. Currently, Turkey's citizenship proposition is the most attractive, simple, and affordable such package in all of the world. There are many countries that offer similar type investment products, but none comes close to Turkey's full citizenship access at the price tag of $250,000. That being the case, demand for entry into this program has steadily risen, especially over the pandemic months.
As that demand has risen, the speculation of a hike in price has followed. Here at Property Turkey, we had forecasted a rise to $500,000 by the start of 2022. We did not account for the global inflation and other unforeseen factors that have affected markets over the last 18 months. So our instant perspective to this announcement, is one of optimism for both the Turkish Government and Foreign Investors. This price raise, should do very little to curb demand as, even at $400,000, Turkey's Citizenship by Investment Program retains all of its previously held titles among globally comparable packages. This should also do well to boost the Turkish economy in the real estate sector, contributing to the overall healthy growth of the emerging market. A benefit to the government and investors alike.
From the outside, it may seem that this price raise is primarily driven by inflation. In line with many other price hikes, rate hikes, etc. that we have seen over the first quarter of 2022. However, if we dig a bit deeper into the Turkish government's rationale, this decision has been one in the making for quite some time. One of the initial analytic points we should highlight is the market positioning of Turkey, and the Turkish CBI, in the global market. There is actually high competition for foreign investment, i.e. direct foreign capital injection, for the benefit of many economies worldwide. Among other such programs, there are many restrictions and caveats attached to your investment. Citizenship is either given in a lesser form, or there are additional steps to be taken over the course of time, that costs more money, in order to be considered a full-fledged citizen. That is not the case for the Turkish CBI. There are no caveats, or trap doors. What you see is what you get.
Even with that advantage set aside, Turkey's CBI was also preferable in raw dollar value. The $250,000 price tag was well below the costs of other nations. Even the $400,000 price tag is superior to the majority of developed, and emerging market equivalents. That basically equates to $65,000 per head of a family of four. And let's take into account that the $250,000 price was introduced back in 2018. Adjusted for inflation, that is equivalent to around $350,000 in today's terms.
So this move makes sense from a market dynamics perspective, and it is not detrimental to the value of the product overall. There are also political motivations at hand domestically, along with economical and social aspects that we won't get into here. And in the end, it is a nominal, expected, and even generous increase for investors.
FREQUENT QUESTIONS & CONCERNS
In a general sense we, at Property Turkey, cannot say for sure how this change will effect, for sure, each individual case. We do have the capability to offer our experience and knowledge, however, to gage what those effects could look like in the coming weeks. As we stated before, back in 2017 the government set the level at $250,000 from $1 million. So there is precedent with the current administration for this kind of move.
How Does This Effect Current Clients?
It is our view, that within the next couple of weeks the government will introduce new legislation that will replace the current CBI. That legislation will almost definitely hold some qualifications, grace periods, and other guidelines for those currently in pending situations. Per our legal team, the chances are, that will look similar to this structure:
"If you can provide receipt of payment for funds delivered by 'x date,' you will be covered under the prior $250,000 legislation."
This is the precedent from 2017 and subsequent, smaller amendments to the CBI. The Turkish government prefers to draw a line in the sand via a date on the calendar, as it pertains to the arrival of funds into Turkey.
I Have Current Reservations, But Have Not Yet Transferred Applicable Funds
This is our most populated case study currently at Property Turkey. As stated above, the reservation will most likely be less valuable than the arrival of funds. In simple terms, we speculate that the "line in the sand," applicable date will be set within the next 30-50 days. That is most likely, sometime in May. This is our best guess at the current timeline and be sure to get in touch with us as soon as possible, and we will update you as information arises. But once the government announces that date, we will have a clear picture as to when funds need to be delivered to remain eligible for citizenship at the $250,000 level.
I Have Purchased a Property with Installments
It is our opinion that clients who purchased properties with an installment structure should complete those installments before the applicable cut-off date to remain eligible for citizenship at the $250,000 level.
I Have Current Reservations and Have Transferred Applicable Funds, But Have Not Yet Applied for Citizenship
Clients who have yet to begin the citizenship process, but have purchased property, or transferred applicable funds will be able to remain eligible for citizenship under the $250,000 legislation. If you can provide proof of transactions prior to the applicable date, the eligibility and timeline for obtaining citizenship should not be inhibited.
I Have Pending Applications and Transactions Under the Current CBI
This group will be able to complete their process under the $250,000 legislation. If you are currently within the process, you will be allowed to finish the process and obtain citizenship, per the $250,000 legislation.
CLOSING OPINIONS & BOTTOMLINE
If you are considering purchasing property with the intention of obtaining citizenship for the price level of $250,000, but have not initiated your search, you should move with action now. The level will be raised within the coming days and weeks, not months and years.
The key for clients is the date in which your funds arrive in your account within Turkey. That is irrespective of the location within the CBI application process or property purchasing completion.
With concerns about eligibility for citizenship due to the raise in entry level price, we recommend you:
1. Make sure to transfer the applicable funds you will use to purchase property as soon as possible, and within the next 15-45 days.
2. Make sure you have time-dated proof of the transfer of those funds or purchase of the property.
3. Stay calm and stay tuned for more information, including the official policies and procedures to be handed down in the coming days.
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