Real estate laws in Turkey to protect the foreign investor
The regulatory environment in Turkey is very business-friendly. You can establish a company in Turkey regardless of nationality or place of residence. It is possible to set up a company in just one day by applying to the relevant commercial registry office with the required documents and tax register. According to the UNCTAD Global Investment Prospects Survey, Turkey ranks 15th among the most attractive destinations for foreign direct investment in the world due to its booming economy. As of the end of 2016, the number of companies with international capital in Turkey exceeded 50 thousand and the net investment amounted to 12 billion US dollars in the same year. The first sector among foreign companies operating in Turkey is wholesale and retail trade, which includes 32 percent of foreign companies. The real estate sector, with 16 percent, comes in second place. Half of these companies are based in the European Union, and half are in Istanbul. Investment legislation in Turkey is simple and complies with international standards. Recent amendments to the current law have improved the investment environment in Turkey and encouraged foreigners to invest in the country.
Foreign Direct Investment Law
Date of enactment: June 17, 2003
The text of the law stated:
The objective of this law is to encourage foreign direct investment to protect the rights of foreign investors; To define the investment and the investor in line with international standards; To create a notification-based system for FDI instead of screening and approval; Thus regulate the principles of increasing foreign direct investment through the applicable policies. This law defines the treatment to be applied to foreign direct investments. This law includes real persons holding foreign citizenship, Turkish citizens residing abroad, as well as foreign legal entities established under the laws of foreign countries and international institutions, which make foreign direct investments in Turkey.
The new amendment to the real estate appraisal law:
The new amendment is to make the Tabu Directorate the main reference for the foreign resident to submit a real estate appraisal request so that the Real Estate Registry Directorate assigns real estate appraisal companies to prepare real estate appraisal reports for foreigners in Turkey, to protect investors from some weak-minded people who manipulate real estate prices and target the foreign investor, who does not know the real value of the property.
What is an investment in the eyes of the Turkish government?
There are many forms of investment in Turkey. There are many investors today who bring big money to Turkey. The best of these sources are the Gulf countries, Iran and Britain. All of them come under several unified clauses set by the Turkish Investment Law, including:
- Establishing a new company or branch of a foreign company
- Shares ownership, where the foreign investor owns 10 percent or more of the shares or has the right to vote on them. For example, but not limited to, the following economic assets: Assets acquired by the foreign investor from abroad:
- Cash capital in the form of convertible currency purchased and sold by the Central Bank of Turkey,
- Stocks and bonds of foreign companies (excluding government bonds)
- Machines and equipment
- Industrial and intellectual property rights.
- In addition to the assets acquired from Turkey such as profits, revenues reinvested financial claims or any other investment-related rights of financial value, and commercial rights to explore and extract natural resources.
The real estate market in Turkey is characterized by an annual increase in purchasing value. It is characterized by high profitability returns. On the other hand, many construction companies are now offering investors long-term lease guarantees. Istanbul occupies the first place among investors looking for apartments for sale in Istanbul, with its Asian and European sides. Therefore, the Turkish government had to take measures to facilitate the investor's affairs, protect his rights, and encourage the largest possible number of business people to invest their money in the Turkish real estate market and buy houses in Istanbul and other Turkish cities.
What are the rights of foreign investors in Turkey?
Obtaining real estate residency:
The real estate law in Turkey states that foreigners who buy a property in Turkey, whatever its value, have the right to obtain real estate residence in Turkey for a period of one or two years, subject to an extension unless the property remains in the name of its owner. It also grants the owner's family the right to reside in real estate; the spouse and children under the age of eighteen. The holder of this residence has the right to enter and exit Turkey freely whenever he wants without the need for a visa, and he is also entitled to move between Turkish cities without referring to the authorities or requesting a travel permit. He can also obtain health and education services free of charge or at nominal prices at some times. After eight years of real estate residence, the owner can apply for long-term residence in Turkey. And the desire of foreigners to obtain real estate residency has increased after the government tightened the renewal of tourist residency for foreigners, as it is the perfect option for those wishing to reside in Turkey now.
What is the right of a foreign investor in Turkey?
As we mentioned, Turkey is a country that has many facilities for investors, and as a result, we see today the numbers rising, not in an absurd manner. The Turkish government grants the investment owner the following:
1) Freedom of investment and national treatment unless provided for by international agreements and other special laws:
- a) Foreign investors are free to make foreign direct investments in Turkey,
- b) Foreign investors shall be subject to equal treatment with local investors.
2) Expropriation and nationalization
Foreign direct investments may not be expropriated or nationalized, except for a public purpose and against due process compensation.
Foreign investors may freely transfer abroad: profits, dividends, proceeds from the sale or liquidation of all or any part of an investment, amounts arising from licenses, management, and similar agreements, refunds, and interest payments arising from foreign loans through banks or private financial institutions.
4) Access to real estate
Companies may freely acquire real estate or limited rights through a legal entity in Turkey established or with the participation of foreign investors, provided that such acquisitions are allowed for Turkish citizens.
5) Dispute Resolution
For the settlement of disputes arising from investment agreements subject to private law and disputes arising from terms and contracts with the administration under which concessions relating to public services are granted, foreign investors may apply either to authorized local courts, or to national or international courts for arbitration or any other means of dispute settlement, with the fulfillment of the conditions contained in the relevant regulations and the agreement of the parties thereon.
6) Evaluation of non-cash capital
Non-cash capital is assessed within the regulations of the Turkish Commercial Code. However, shares and bonds of companies residing abroad will be accepted as foreign capital for foreign investors. Values determined by the home country courts, other relevant authorities in the home country, or other international institutions carrying out the assessments will be accepted.
These measures are followed by significant economic and tourism benefits. Many countries blame Turkey for this openness, but in fact, its fruits are reflected in a very beautiful and significant way that reflects the country's culture and civilization.
Although it is at the gates of Europe, of course, it attracts even many European investors to its cities and coasts. We may have heard of how many investors have obtained Turkish citizenship as a result. A feasible investment, of course!