Foreigners' investments in the real estate sector have soared from $2.621 billion to $5 billion over the past three years. Sector representatives attribute this upsurge mainly to the enactment of the reciprocity law, contractors' construction of houses as desired by foreigners, the sector's promotion campaigns abroad and its broader participation in international fairs, as well as the appreciation of foreign currencies against the Turkish lira.
Istanbul Constructors Association (İNDER) Chairman Nazmi Durbakayım said foreign investments in the real estate sector are expected to rise to $5.5 billion for the end of 2015 from $1.343 billion in 2004, considering that foreign investments in the sector stood at $5.020 billion in the first 11 months of 2015. Touching on the causes of the two-fold increase in foreign investments in the sector over the past three years, Durbakayım said: "Turkish contractors have come to know what kind of houses foreigners want to buy. They began selling more houses in a more convenient way by constructing houses that appeal to the desire of Middle Eastern and European customers."
According to Durbakayım, the appreciation of foreign currencies against the lira over the past year aroused the pending demands of foreigners as it enabled them to purchase houses more cheaply. Additionally, the government's concrete steps toward the reciprocity law and the disclosure of major incentives for foreigners supported house sales to foreigners. Also, both public and private institutions' pronouncement of these developments in international fairs led to a two-fold increase in sales volume.
Dubai International Real Estate Fair Turkey representative and LMG Global Investment CEO Gökhan İlgar stressed that Turkey is a new player in the global real estate market, adding that foreign investments in the sector, which have considerably risen over the past three years, are not yet sufficient. Referring to the fact that the annual volume of the global real estate market is $1 trillion, İlgar said Turkey's share of this volume is merely five per 1,000. İlgar suggested that the sector must focus its attention on commercial real estate, such as shopping malls, hotels and offices, to attain a higher turnover, adding that larger-scale investments can be attracted via commercial real estate instruments. Highlighting the occupancy rate of 90 percent in Istanbul's hotels and an enormous demand for hotels, İlgar added that from now on, Turkey must focus on commercial projects to attract Arabian capital, in particular, and to increase bed capacity in hotels in big cities.