Which is better to buy property in Turkey in Turkish lira or in dollars?
Recently, the exchange rate of the Turkish lira has changed and inflation has increased with the end of each year, so that many real estate investors in Turkey are wondering: which is better when buying real estate in Turkey, paying in Turkish lira or in dollars?
The agreement to pay the price of the property in Turkish lira is better than the US dollar, due to the low exchange rate of the Turkish lira. In other words, whoever pays the first installment in Turkish lira and completes the rest of the installments in Turkish lira, and there is a change in the value of the lira, this will benefit the investor who owns the US dollar, as he will spend a smaller amount in US dollars to convert it to the required amount in Turkish lira, and therefore paying the price of the property in Turkish lira is better. For foreign investors who own US dollars, of course, bearing in mind that the location of the property is in a good place and choosing a reliable company so that the investor does not fall into the trap of fraud.
It should be noted that the appropriate time should be used to benefit from the change in the exchange rate of the Turkish lira in favor of the investor, in other words, the price of the property must be determined at the exchange rate of the Turkish lira. The lira falls, and the appropriate time must be used to disburse the amount, so that the investor is profitable in any case.
On the other hand, when considering the change in the exchange rate of the Turkish lira, the investor should also consider the possibility of an increase in the value of the Turkish lira, so the profit of real estate investment should not be based on the current exchange rate and wait for the exchange rate to stabilize.
What happened?
The Turkish real estate market between 2012 and 2018 was characterized by an unprecedented real estate boom in Turkish history. It was not in vain, but the Turkish real estate sector is planned to take the lead in economic growth and become a major source of foreign currency by attracting foreign buyers, and it seems to have been very successful in its mission. The sector accounted for approximately 8.4% of Turkey's GDP over the past decade.
As usual, Turkey was exposed to internal and external crises, especially during the renaissance period, but the surprise came from among all these crises, as things are close to collapse or at least negative fluctuations due to crises; The Turkish real estate sector accounted for the influx of foreign investment into the sector, amounting to nearly half of the total foreign direct investment in Turkey last year. Of the $10.8 billion represented by total foreign direct investment inflows, which entered the country in 2017, $4.6 billion was accounted for by real estate and construction, levels not previously determined by the Turkish economy. Foreign buyers' purchases of real estate doubled in 2017 from 2016 to $1.7 billion.
The inconsistency is exactly how real estate prices continue to rise, which gives the potential to be profitable. A house was bought by someone in Antalya city center in 2013 and he wants to sell now. He will inevitably make a lot of profit from the price difference between the date of purchase and sale. Official statistics support this. Government studies indicate that the house price index in Turkey rose in June 2018 by 0.55% compared to May 2018, and compared to the same period last year, the average house price in Turkey was about 10%, compared to the past three years. The percentage increased by about 38% to reach 82% compared to prices about 8 years ago.
The result
The economy is now ranked 18th among the world's economies, with a GDP of over $900 billion, and the real estate sector accounts for a fifth of the total. But it is facing a new crisis and a major fall in its local currency. The lira lost about 50% of its value. Inflation was 15.9% in July 2018, more than five times the average for rich countries. The government loan in foreign currency increased significantly, and the thing that widened the economic wound was the announcement by US President "Trump" to double the US import tariffs on Turkish steel and aluminum in terms of 50% and 20%, respectively.
This devaluation caused the lira to weaken against other currencies and gave many advantages to foreigners. The person who had a dollar last year will take 3.5 liras, the same person who can now get about 6.5 liras for this dollar.
Do we buy?
In light of the increasing purchasing power of foreigners due to the fluctuation of the lira, with the stagnation of the real estate sector and its inability to be affected by crises; Some may wonder if this is the right time to go to Turkey and buy a property, despite the crisis in the Turkish economy, and it cannot predict its results under any circumstances, so there are many reasons that support the timing of entering the property. The fact that the sector is not affected by the recurring crises that hit the economy from time to time, as was mentioned recently, investment in the real estate market as usual is stable and supports long-term investment.
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