A new Golden Visa player has now emerged in Europe, and this time, it’s Turkey.
Buoyed by the success of the golden visa investment immigration programmes in other parts of Europe, Turkey has rolled out a new investor visa scheme that may just be the right cup of tea for Chinese real estate buyers.
Turkey has upgraded its investment visa system1 to propose a plethora of enticing factors, granting full residency for high net worth individuals (HNWIs) who invest $1 million to $3 million in either real estate, shares in Turkish companies or government bonds, and maintain that investment for three years.
Considering Chinese companies have already invested $18.7 billion in Turkey over the past ten years, this recent move by the Turkish government could lead to a rise in demand from Chinese property investors in Turkish hotspots, such as Istanbul and Bodrum.
Success of the Golden Visa investor visas with Chinese
Investor visas have been a huge success all over the world, and Turkey wants a slice of the pie by following the footsteps of Portugal, Spain, and Greece.
Since launching its investor visa programme in 2013, Greece has attracted at least €335 million in investment since launching its programme.2 As of November 2016, Chinese – who were granted over 600 residence permits out of 1,500 issued to non-European property investors – account for 42% of all successful applications, making them the largest group of non-European visa applicants in Greece.2
Portugal is yet another prime example, which saw investment via its Golden Visa programme hit €874 million in 2016, an 87.5% y-o-y increase that took total investment flows into Portugal to €2.4 billion since it was launched in 2012.3
With 3,050 visas secured, applicants from China are by far the largest group to have acquired Golden Visa permits in Portugal, compared to 247 from Brazil, 148 from Russia, 137 from South Africa, and 72 from Lebanon.4
Spain, another European country to pioneer Golden Visas, booked €1.71 billion in investment through the programme between January and October 2016, up 63% y-o-y. Within this period, Chinese investors sank €469 million into Spain real estate, spending an average of €703,724 on properties in Madrid, their most favoured investment location.5
That said, compared with competing countries in Europe, Turkey ranks as one of the more expensive investor visa schemes. The minimum investment threshold of $1 million is higher than the $369,000 (€350,000) required for a Portuguese investor visa, and is also higher than the $267,000 required in Greece.
Besides that, Turkey is also not part of the Schengen area in the European Union yet, meaning a Turkish permanent residency visa does not offer quite the same travel opportunities for Chinese investors.
Still, this may change in future, especially as the Turkish government pushes for access to Schengen, meaning this may be a great time to get into the market and, on the plus side, the visa scheme has no residency requirements to qualify for permanent residency, which may make Turkey more attractive.
3 factors behind Turkey's appeal to Chinese real estate buyers
According to local reports in Turkey, Chinese buyer enquiries for Turkish property grew 250% y-o-y in 2015.6 With support from this new visa policy, the following powerful factors could turn up Turkey’s appeal with real estate buyers from China this year.
#1 Prime real estate bargains
The RMB has appreciated some 14% against the Turkish lira during the past twelve months7, boosting Chinese purchasing power and making the market increasingly attractive. What’s more, Turkish property was already at a good value – city centre apartment prices in Istanbul were averaging €2,688 per sq.m.8, compared with €9,628 per sq.m. in Paris9, and €17,533 per sq.m. in London.10
#2 Attractive climate, cultural, and tourism offerings
Set on the Aegean Sea, Turkey is an ideal location for holiday and lifestyle homes, offering balmy weather and a whole slew of tourist hotspots like Bodrum, Marmaris, Fethiye, and a sprawling selection of islands to hop around. Enchanting Turkish cities, particularly Istanbul’s famous Bazaars – most recently featured in the James Bond extravaganza Skyfall – provide plenty of cultural attractions for Chinese as well.
#3 Growing business hub for Chinese companies
Chinese companies invested $870 million in projects in Turkey during 2016, taking total investment in the past ten years to a huge $18.7 billion.12 With Istanbul’s strategic location as a business hub for the Mediterranean and the Middle East, China has been pushing for deals in the city as part of its One Belt, One Road (OBOR) plan, and will be expecting to expand further in the coming years. That’s why Turkish Airlines recently doubled its weekly flights between Istanbul and Shanghai13, because it’s anticipating an explosion in demand for flights on the route.
With the fundamentals in place, could Turkey emerge from the shadows to be the next up-and-coming investment destination for Chinese property investors this year? Either way, we believe Turkey will be receiving an increase in attention from Chinese property hunters, whose appetite for international property remains rampant, and are increasingly on the lookout for new, alternative locations to invest in.