Inquiries from potential buyers, especially from Dubai and Saudi Arabia, started coming in before Turkey passed a new property law last week.
Business and pleasure: Turkey's real-estate attraction to Arab buyers
ISTANBUL // Strolling through the Talimhane neighbourhood in central Istanbul on a sunny spring day last week, Faisal Al Rashidi, a tourist from Kuwait, pondered the possibility of staying in a place of his own instead of in a hotel during his next visit.
"I am thinking about buying or renting a summer house in Bursa," the former Ottoman capital 100 kilometres south of Istanbul that has become a popular destination for Arab tourists. "Just a little house, to spend the summer here with my family. I am thinking a lot about this."
Mr Al Rashidi is not alone. In response to a rising demand by would-be property buyers from abroad, the Turkish parliament passed a law that makes it easier for foreigners - especially Arabs - to acquire real-estate in Turkey. The law became official last Friday.
Government officials and real-estate agents said they expect a wave of foreign buyers, especially from Arab countries whose citizens were barred from buying real estate in Turkey under the old rules.
Erdogan Bayraktar, the Turkish construction minister, said inquiries from potential buyers, especially from Dubai, Saudi Arabia and Iran, had started coming in even before the new law was passed. Turkish construction companies received down payments, and the sale of many apartments and houses was expected to be finalised once the new law was in force, the minister said, according to news reports.
In the past, Turkish nationalists opposed efforts to liberalise property laws because of concerns that chunks of Turkey could fall into foreign hands. But the new bill was passed by a 220-35 margin.
Ali Agoglu, the chairman of Agoglu Corporate Group - one of Turkey's biggest construction companies, told the Turkish newspaper Sabah that he expected the new law to generate US$20 billion (Dh 73.5bn) in revenue in the next two years, with his own company alone planning to sell apartments and houses worth $2bn.
The Abu Dhabi-based Rotana Hotels and the Viceroy Hotel Group said this month they were planning projects in Turkey.
In Talimhane, an area of Istanbul where many shops have signs in Arabic and Arabic-speaking personnel, Ugur Pordogan, the general manager of a travel agency, confirmed demands from Arab clients for property had picked up. "Many people ask me via telephone and email," he said in his office. In expectation of the law, Mr Pordogan has opened a business with an office on the central Taksim Square to deal with Arab clients.
Many Arabs were looking for big apartments or for villas in new housing projects on the outskirts of Istanbul, Mr Pordogan said. "We are en vogue right now," he said. "Europe is going down, Turkey is rising. Everybody wants to invest in Turkey."
Besides increasing the maximum size of real-estate a foreigner may buy from 2.5 hectares to 60 hectares, the law also abolishes the so-called rule of reciprocity under which only citizens of countries allowing Turks to own property could buy real-estate. The cancellation of that rule is crucial for efforts to attract Arab buyers, said Turkish officials and real-estate agents.
Mr Bayraktar, the minister, said the law would benefit the Turkish economy. The country has enjoyed an enormous economic boom with growth rates surpassing 10 per cent in recent years but is facing a slowdown and hoping for a soft landing. The government expects a growth rate of about 4 per cent this year, after 8.5 per cent in 2011.
"We are seeing that the countries that let foreigners buy [property] without insisting on reciprocity are the world's strongest countries when it comes to the economy and democracy," Mr Bayraktar said on his ministry's website.
In Talimhane, Huseyin Cuher, another real-estate agent, said most Arab clients were very well prepared, even bringing their own translators with them. "There are many investors who want to buy buildings here in Talimhane and turn them into hotels," he said. He showed one building nearby that is on the market for about $25m.
The Turkish owner of the building, who declined to be named, said he welcomed the interest by Arab would-be buyers. "I don't care if they are Arabs, Germans or Americans," he said. "I am selling to make money."
Not only Arabs are looking for property. As the building owner was speaking in Mr Cuher's office, a representative of a potential buyer from Azerbaijan came in and said his client was offering up to $30m for the building. "We can discuss it," the owner said.
Mr Pordogan said there were two categories of Arab clients. "There are the businessmen who want to make money. They want to turn buildings into hotels, or they want to buy existing hotels or travel agencies." The second categories were "normal people buying summer houses in Istanbul, Bursa or Yalova", a spa town famous for its hot springs near Bursa.