Investment Opportunities In The Turkish Market 8 October 2019

Due to the economic situation experienced in recent years, there occur a lot of advantages for foreign investors to invest in Turkey. Considering its industry base, human capital, infrastructure and geographic advantages, Turkey is a valid destination for investors seeking high long-run returns.

Why should foreign investors prefer Turkey?

First of all, caused by economic situation and the decrease in business volume in the country, the value of many companies in the stock market (Borsa İstanbul) has been under-priced since February. Therefore, important opportunities emerged for foreign investors in the mergers and acquisitions of Turkish companies. Due to the decrease of the volatility of the exchange rate, reformist investment climate, tax benefits and incentives, foreign investors will begin to buy more shares, paving the way for increasing in transaction volumes.

Are the exchange rate fluctuations an advantage?

The recent depreciation of the Turkish lira (TL) against foreign currencies can be shown as another reason to invest in Turkey. This depreciation has made the value of Turkish assets cheaper, creating profitable investment opportunities for foreign capital. Individuals and business people who invest in Turkey at such an appropriate time will get higher returns in the medium and long run. For instance, the value loss caused reducing the cost of trained and qualified labor force. According to data of the Turkish Statistic Institue, there are over 32.3 million young, well-educated and motivated professionals in Turkey. This provides an important opportunity for foreign investors to find qualified employees for cheap wages. Also, the depreciation of Turkish lira has created advantages for the companies which make exporting production in Turkey.

Furthermore, it becomes difficult for domestic investors to take loans from banks nowadays. Considering that the financing sources are banks, this difficulty in obtaining credit from banks makes foreign financing companies become more important for domestic investors.

Does it make sense for foreign investors to invest in the real estate sector in Turkey?

There are also attractive opportunities for real estate investments for foreign investors due to the significant drop in prices in the real estate sector. Also the lack of capital and the difficulty in obtaining credit from banks by domestic investors provides an advantage for real estate sector. The increase in housing sales to foreigners by 64.5 percent in the January-July period compared to the same period of the previous year is an indicator of this advantage of foreigners.

At this point it should be noticed that with the regulation made in 2018, an additional advantage is that by acquiring property worth at least $ 250,000 and making it possible to acquire Turkish citizenship if various conditions are met. The regulation also applies to individuals investing or depositing at least $ 500,000, or foreigners providing jobs to at least 50 Turkish citizens. In addition, according to the new regulation, foreigners can purchase real estate without paying VAT.

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The solution partner of Kasaroglu Law Office which provides extensive services in the field of Merging & Acquisation is “Kasaroğlu Uluslararası Danışmanlık Hizmetleri A.Ş." with its significant expertise and experience in this area.