Investing in Turkey: best opportunities for foreigners

Strong economy. Turkey’s economy has performed with steady growth from 2002 to 2023. Prudent fiscal policies and significant reforms have made Turkey one of its region’s primary recipients of foreign direct investment, FDI.

Turkey citizenship by investment: the program’s terms

The recent reforms have increased the role of the private sector in Turkey’s economy, enhanced the resiliency of the financial industry, placed public finance on a more solid foundation and strengthened the country’s macroeconomic fundamentals.

Here are some figures on economic growth in Turkey:

• real GDP grows at an average of 5,1% from 2002 to 2020;

• 239 billion dollars of FDI from 2003 to 2021;

• 11th largest economy (GDP at PPP) in the world;

• 3rd largest economy compared with EU countries in 2020 (GDP, Eurostat);

• 819 billion dollars of GDP in 2021, up from 236 billion in 2002.

The potential economic effects of the earthquake in Turkey could result in a loss of up to 1% of the country’s gross domestic product in 2023, the European Bank for Reconstruction and Development reported. An accident affected agricultural areas to a large extent, so spillovers to other sectors are limited.

Strategic location. Turkey is located at the crossroads of three continents and offers access to a combined market of Europe, the Middle East, North Africa, and Central Asia. The market’s worth is 26 trillion dollars in GDP.

Multinational companies increasingly choose Turkey as a manufacturing, export and management hub.

Lucrative incentives and tax relief. Turkey offers a comprehensive investment incentives program, which helps to accelerate the returns on investments and minimise the upfront cost burden.

The Turkish government also provides generous support programs for research and development (R&D), innovation projects, and employee training initiatives through various grants, incentives, and loans.

Turkey has signed Double Taxation Prevention Treaties with 86 countries. This enables tax paid in one of two countries to be offset against tax payable in the other.

Labour force. ​​​​​​​​​​​​​​​​​​Turkey’s overall labour force is around 33.3 million people, which makes the country the 3rd largest labour force in Europe.

Turkey has posted the most significant labour force growth among the EU countries, and the essential contributor to this is the country’s young population. ​A rapid expansion in the number of universities has allowed Turkey to have more graduates, thus, a skilled workforce.

Key facts on the educational potential of Turkey:

• ​more than 8 million students are enrolled in higher education currently;

• over 9​00,000 university graduates annually;

• world-class engineering education.

Opportunity to get a second passport. The Turkish citizenship by investment program offers various investment options starting from $400,000. The obtaining process usually takes 6—8 months. More than 13,000 foreigners have obtained Turkish citizenship by investing since 2018.

Foreigners are free to pick among several assets fields:

1. Property — $400,000;

2. Business — $500,000;

3. Bonds— $500,000;

4. Public shares— $500,000;

5. Funds— $500,000;

6. Bank deposit — $500,000.

Three years after receiving the passport, you can return the investment.

Individual cost calculation for Turkish citizenship

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Real Estate. In 2021, FDI in Turkish real estate was 5.6 billion dollars, which is 42,2% of the total FDI that year.

Urban renewal dominates the agenda, particularly in Istanbul. Some projects in the city are Marmaray, Yavuz Sultan Selim Bridge, Eurasia Tunnel, the Istanbul Finance Center (IFC) and Istanbul Airport.

Key figures on the amounts of properties in Turkey:

• in 2022, the existing Grade A office stock in Istanbul surpassed 5.8 million square metres;

• 453 shopping centres are operational in Turkey with a total gross leasable area of 14 million square metres;

• Istanbul offers 37% of Turkey’s total leasable shopping centre area.

IT and startups. Turkey’s information and communication technologies sector has become essential to the economy.

Exports to the EU, Middle East, North Africa, Asia and North America reach 2 billion dollars. The European Union is Turkey’s primary export destination: it receives over 70% of Turkey’s IT and CT exports in software, hardware, equipment, and services.

Between 2020 and 2022, the Turkish startup ecosystem raised two decacorns, Trendyol and Getir, and three unicorns, Peak Games, Dream Games and Insider.

Early-stage investments in Turkey have increased significantly in recent years, with 2021 going down as a record year with 1.6 billion dollars worth of assets and 2022 maintaining the same trend in seed, early, and later VC stages. Regarding startup investments, Turkey ranked 10th in Europe.

Agrofood market. Turkey is the world’s 10th largest agricultural producer. The country has become one of the industry leaders thanks to favourable geographical conditions, climate, extensive arable lands, and abundant water supplies.

Turkey’s agriculture and food industry employs almost 18% of the country’s working population. It accounted for 5,5% of the country’s GDP in 2021, with a financial contribution to the overall GDP of 45 billion dollars.

Turkey is the world leader in producing apricots, cherries, figs, hazelnuts, and quinces.

Tourism. Turkey is the 4th most popular tourist destination in the world. The country has potential for cultural tourism and the increasingly popular boutique hotel concept, which blends well with the region’s characteristic nature, history, and culture.

Key points of the tourism capacity in Turkey:

• 8,300 km of coastline;

• 529 blue-flag beaches (ranks 3rd globally);

• 1,500 thermal springs (ranks 7th globally and 1st in Europe);

• bed capacity in the various thermal spa resorts has reached a combined 100,000.

Financial Services. The Turkish financial sector proved resilient during the global economic turmoil of 2009 thanks to regulatory reforms and structural overhaul. Overall, the industry has attracted 57 billion dollars since 2002.

Banking dominates the Turkish financial sector, accounting for over 70% of overall financial services. Insurance services and other economic activities also have significant growth potential.

One of the targets of Turkey’s government is to make Istanbul an international financial hub. Since the government launched the project for the Istanbul Financial Center, the city has been regarded as one of the emerging financial centres of the world.

Uncover the advantages, terms, and details of the Turkish investment program

Turkey is one of Europe’s most promising real estate markets, home to 85 million people. The country offers great opportunities for real estate developers and investors by combining a large construction sector with growing commercial and industrial output.

The total number of homes sold in the Turkish property market was 1.4 million in 2021. That year, a new record was set with the sales of 58,576 homes to foreigners. Istanbul was the top-performing province with 26,469 sales, followed by Antalya with 12,384 sales, Ankara with 3,672 sales, and Mersin with 2,513 sales.

Property purchase is also the most popular investment option under the Turkish citizenship program. Applicants are attracted by reasonable prices and good rental yields. The minimum amount to invest is $400,000.

Amir, 35 years old

Owner of a dental clinic in Mashhad

Obtaining Turkish citizenship by real estate investment

The investor obtained Turkish citizenship to have a safe haven and send children to a good school. He bought a duplex under construction in a residential complex in Alanya to participate in the investment program.

The investor’s family got Turkey passports as planned. The couple has rented an apartment in Alanya while their house is under construction. Amir also plans to open a dental clinic in Alanya.

Learn a case

To buy property in Turkey, you must obtain a tax number and open an account in a Turkish bank. After that, you can complete the deal and apply for citizenship.

You can rent your property out and benefit from up to 8% annual yields.

After receiving a Turkish passport, you must hold the property for at least 3 years, after which you can resell it. But if you have owned real estate for 5 years, you will not be subject to capital gains tax upon selling.

From 2023, investors can obtain a Turkish passport for purchasing two or more properties only if the sale is registered with a single contract of $400,000.

Examples of properties in Turkey

Turkey, Istanbul

$280,000 — $2,020,000

Furnished apartments in a prestigious area of Istanbul

55 m² — 200 m²

1—3

1—3

Turkey, Istanbul

$124,000 — $510,000

Apartments and commercial premises in a premium residential complex

40 m² — 162 m²

2—3

1—2

Turkey, Istanbul

$812,000 — $1,777,000

Modern and stylish apartments in European part of Istanbul

78 m² — 179 m²

1—3

1—2

There are no restrictions for foreign investors trading in the Turkish stock markets.

Borsa İstanbul, or the BIST, is the sole exchange entity of Turkey, combining the former Istanbul Stock Exchange ISE, the Istanbul Gold Exchange and the Derivatives Exchange of Turkey under one roof.

How to Invest in Turkey’s stock market:

1. Pick a broker who is the authorised intermediary to trade financial assets on the Borsa İstanbul.

2. Open a trading account. The broker provides you with access to their investment platforms, allowing sending purchase and sale orders to the central system of Borsa İstanbul.

3. Choose the financial asset — shares, sovereign bonds, or corporate bonds.

4. Submit a purchase order for a financial asset. It is possible to set a limit or market price for the selected asset.

The easier way to invest in the Turkish stock market is to invest in a broad market index using ETFs — exchange-traded funds that trade on exchanges, generally tracking a specific index. When you invest in an ETF, you get a bundle of assets you can buy and sell during market hours — potentially lowering your risk and exposure while helping to diversify your portfolio.

Buying government bonds for $500,000 makes you eligible for Turkish citizenship.

The conditions for setting up a business in Turkey are the same for foreign and local investors. International investors may establish any form of a company set out in the Turkish Commercial Code. It provides international standards, fosters private equity and public offering activities, and creates transparency in managing operations.

Establishing a company is carried out at Trade Registry Directorates located in Chambers of Commerce and designed to be a “one-stop shop”. The process is completed within the same day.

There are corporate and non-corporate forms of companies under the TCC, which states that companies may be established under the following corporate types:

• Joint Stock Company — JSC;

• Limited Liability Company — LLC.

Foreigners can buy shares in Turkish companies and get a second citizenship. The minimum amount to apply for a Turkey passport through business investments is $500,000.

Fund investments can be based on certificates of renting partnership accounts, gold and other precious metals, partnership shares, funds approved by the Capital Market Board, and capital market instruments.

There are many types of investment by depositing in investment funds, the most important of which are:

• Income Funds, which invest in highly liquid securities, such as treasury bills and bank deposits, and are preferred by most investors;

• Growth Funds, which make long-term investments in common stocks and are preferred by investors who aspire to achieve greater returns than those in the previous category.

Buying an investment fund unit with a minimum value of $500,000 is another way to obtain Turkish citizenship. A purchasing application can be submitted to the bank, and after it is submitted, it is sent to the Capital Markets Board.

Turkey banks offer businesses and individuals several options to invest in: mutual funds, stocks, deposit accounts and others.

How to open an account in a Turkish bank

For example, opening a Turkish Lira Time Deposit account in HSBC Bank gives you an opportunity to invest your foreign currency funds in Turkey. They offer the Central Bank guarantee of protection against exchange rate volatility. The additional return is calculated at the rates of 3%, 4%, 5% and 6% for 3, 6, 12 and 24 months, respectively.

In 2022 Garanti BBVA was named Turkey’s Best Investment Bank, according to Global Finance, one of the world’s leading financial magazines. The award confirms the bank’s expertise and reliability in offering investment instruments, such as investment funds and stocks or share certificates.

Foreigners can deposit $500,000 in a Turkish bank to obtain a second citizenship.

As we mentioned before, investment in Turkey’s economy can lead to citizenship. The country’s citizenship program offers six investment options.

Turkish Citizenship by Investment

All payments are made in US dollars due to the volatility of the Turkish national currency.

Investment options under the Turkey citizenship program start from $400,000 and include:

• real estate purchase;

• opening a business in Turkey and creating 50 jobs;

• opening a deposit in a Turkish bank;

• injecting capital into a Turkish company;

• buying government bonds;

• purchasing shares in Turkish investment funds.

Either way, besides the investment, the investor will also pay government fees for themselves and each family member wishing to obtain citizenship.

The main applicant must be over 18 and have the following:

• legal income;

• no standing criminal record;

• no violations of the Turkey visa regime;

• no severe illnesses such as HIV, hepatitis or tuberculosis.

The family members are considered participants with the investor — a spouse and children under 18. The investor’s parents and children over 18 can obtain a residence permit.

A Turkish passport gives a wide range of benefits. If the far east is your target, you can enjoy visa-free or visa-on-arrival access to most of the financial powerhouses in the region, including Japan, Singapore, South Korea, and Thailand.

If it is the USA, then Turkey is a treaty country for the E‑1 and E‑2 visa programs and enjoys visa-free access to 95% of south and central American countries.

The UK, Turkey and the EU signed the 1963 ‘Ankara Agreement’ treaty, allowing Turkish nationals and their families to live in the UK by establishing a business or taking up employment in a UK-based company.

For entry into the EU, Turkish nationals enjoy a privileged status, making it very easy to obtain Schengen visas. In addition, there is an agreement with Greece that allows Turkish citizens to visit for short holidays without requiring a Schengen visa.

1. Investors prefer Turkey because of its advantageous geographical location, skilled workforce, tax incentives and developed economy.

2. Among the top-safest investment options are real estate, tourism, startups and others.

3. The opportunity to get a second passport is one of the reasons why foreigners invest in the Turkey economy.

4. Investment options under the Turkey citizenship program are refundable.

5. To participate in the citizenship by investment program, you can buy a house in Turkey.