分类: israfil kahraman

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The Politically Driven Istanbul Property Market Cycle CBI-Investors Need to Understand


Istanbul’s property market works in predictable cycles created by a political balance. This enables the city to be one of the most profitable globally if you invest at the right time. This phenomenon is either explicitly or intuitively understood by locals, but pretty new to the foreign investors who have been coming to Turkey in the last two decades.

Everyone from Istanbul has heard the same story, typically from their close relatives (rather than second-hand accounts): Their relative had the opportunity to buy a piece of land for a comical price that is now worth millions. This has enabled a new class of elite in Istanbul.

Why did property in Istanbul appreciate so much after the turn of the millennium? The short answer: Istanbul’s politics.

Istanbul basically has a two-party system. One anti-construction party and one pro-construction party invariably dominate municipal elections. Traditionally, when the anti-construction party is in power, very few building permits are issued and the new supply of property is cut. When the pro-construction party rules, the demand accumulated during the anti-construction years results in a building boom. Sound familiar? Check Turkey’s recently experienced construction boom.

At a time when land was not worth much, Istanbul was governed by an anti-construction local government. It issued few building permits. The value of land remained depressed because those who might have wanted to buy it to build something on it were not getting permits.

This lack of new supply, naturally, had the effect of raising the price of the existing supply. Downtown real estate appreciated greatly. Because the city continues to grow sharply (the Metropolitan area’s population has swelled by nearly 2.5 million additional residents in the last decade, at an average growth rate 1.8% a year) there is constantly increasing demand for new property. Demand never falls. If you restrict new supply while demand keeps increasing, the inevitable result is extreme increases in price.

As the governing party shifted from anti-construction to pro-construction, building permit issuance accelerated once more. Now able to get building permits, developers quickly bid up the prices of land. This created hype and increased property prices even further and created a construction boom that shaped Turkey for a decade and a half.

When the inflated prices started decreasing, political favor also slowly shifted towards anti-construction parties. Today, Istanbul’s governor is decidedly anti-construction; he ran for office with the promise “not to build”.

What does this mean for prospective Istanbul property investors today?

We have now arrived at the best part of the cycle: New supply of real estate is highly curtailed, but demand keeps rising. Istanbul real estate is appreciating rapidly. Turkish residential property (chiefly driven by the Istanbul market) ranked #1 in appreciation in Knight Frank’s index in 2019, 2020, and 2021.

That trend will likely persist until the need for a new supply wave in construction is so pressing that it becomes politically untenable to oppose construction, and a change in municipal leadership takes place again.

More Opinion

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Istanbul’s property market works in predictable cycles created by a two-party system of local politics, writes İsrafil Kahraman.

Just as Bitcoin is now widely regarded as a hedge against inflation, an alternative residence is regarded as a hedge against all manner of adverse macro events, writes Nirbhay Handa.

From real estate to bonds and shares, global investors are spoilt for choice when it comes to investing in residencies. Except in Canada.


The post The Politically Driven Istanbul Property Market Cycle CBI-Investors Need to Understand appeared first on Investment Migration Insider.

Concerned About Lack of New Developments in Istanbul: 10 on the Weekend – İsrafil Kahraman

Ten On The Weekend is a semi-weekly feature in IMI, the concept of which is simple: Each time, we ask the same ten questions of a different industry figure, letting readers get to know the interviewee on a more personal and informal level than they might in an ordinary business setting.

Our guest this weekend is İsrafil Kahraman of Viya Citizenship.

How do you spend your weekends?

I start every day of the week, including the weekends, with a visit to my office. Saturdays are a good time to recap, and Sundays are worktime for Arab countries, so we must be active 24/7. I also try to spend quality time with my family, my four kids, and my wife.

What are your top three business goals this year?

The first is to expand my team with people of high quality, with whom we can work for the long term. We depend 100% on quality service provided by our team to serve our international partners in the Turkish CBI market, which requires a lot of effort.

The second is to set up a strong B2B network in the local market, consisting of law firms, accounting and audit firms, property brokers, and more, to promote citizenship programs to Turkish UHNWI. Turkey is one of the largest markets and we aim to carry our service provider model.

The third is to reach a top place in terms of online presence for “Turkish Citizenship” and “Property in Turkey”.

What’s your biggest business concern right now?

My biggest business concern is the lack of new developments in İstanbul’s real estate market. The current municipal policy limits them. While this benefits the client in a great way – driving up prices of the property they buy – it also makes it hard for us to promote a larger portfolio.

Which book is on your night-stand right now?

I have World Order by Kissinger. It’s a great book for understanding history and analyzing the future from a specific, Western point of view.

How and when did you first get into the investment migration industry?

We were advising an investment fund that exclusively targeted Egyptians as investors. Then, the citizenship program emerged in Turkey and all of them asked for citizenship for themselves. Being attorneys, we entered right into it. We then aggressively worked on the matter and became a full-service provider with a high standard of quality.

What was your proudest moment as a service provider?

Anytime I feel I have achieved a positive impact on my clients’ life, I feel very proud. But, some of my clients do not stop at getting the passport. They do more. One of my clients decided (and has now started) to build a factory that will employ more than 2,000 people in a small Black Sea city. We managed to get a land grant for him of 100.000 square meters, free. That was my proudest moment as a service provider, due to the impact it made for the local economy of that city, almost to ending unemployment there.

Which investment migration market development has surprised you the most in the last year?

The rising success and popularity of the Vanuatu program. Not because it does not have the elements for success but because it is one of many programs that offer a passport with donations. But the competitive pricing and the great excitement it brought to market helped, I believe. I am excited about that program.

If you could go 10 years back in time, what business decision would you change?

I would put more emphasis on internationalizing my business even earlier. We believe Turkey, and especially İstanbul, will become more and more a global place, and we are betting on this with our focus on foreign direct investment. I would do that earlier, I believe.

What investment migration industry personality do you most admire?

Sam Bayat. He has never-ending energy and determination for achievement. He really loves the job he is doing and does it with perfection. I admire him for these traits and for his friendship, his assistance to us in the investment migration industry since our earliest days, and his setting of an example for our firm to learn and improve from.

If all goes according to plan, what will you being doing five years from now?

If all goes according to plan, I will manage sales offices for a couple of projects in addition to my current business in CBI, and will also promote globally many CBI and RBI programs with wide networks and strong marketing infrastructure.

More From 10 on The Weekend

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İsrafil Kahraman is full of admiration for Sam Bayat, worries about the lack of new developments in Istanbul, and says he stops by the office seven days a week.

Patricia Casaburi plans to expand into the Caribbean, admires Bruno L’ecuyer, and feels blessed to have spent the pandemic in Portugal.

Ludovic Mapessa says his firm aims to open offices in West Africa and that he’s is surprised by the astonishing success of Turkey’s CIP.


The post Concerned About Lack of New Developments in Istanbul: 10 on the Weekend – İsrafil Kahraman appeared first on Investment Migration Insider.

Cautionary Tales from the Turkey CIP: Avoid These 5 Common Mistakes


The Turkish CIP is considered one of the simplest, fastest, and most straightforward CIPs globally; the colossal number of applications is a testament to that. But just in case you thought the world’s most applied-to citizenship by investment program was devoid of pitfalls, I’ve compiled a set of illustrative anecdotes to disabuse you of such notions.

Schrödinger’s Passport

As per my calculations, based on sporadic statements from Interior Minister Süleyman Soylu, the Turkish CIP has a rejection rate of about 9%. In this instance, however, you should not interpret the word ‘rejection’ literally because the Ministry has not outright declined most of those 9% of applications. The government, you see, is not in the habit of issuing rejection letters unless an applicant’s legal representative explicitly requests it. No notification system is available, and it is up to you to keep tabs on your file. If the wait for a government response drags on for many more months than what’s customary, therefore, one of two things are most likely to have happened:

  • There was a legitimate delay, perhaps due to lack of capacity; or
  • The application has longe-since been rejected.

If your file has been rejected, it is relegated to a legal purgatory of sorts, and a situation arises in which you, simultaneously, both may or may not still be in line for a Turkish passport. There’s no way to know until you “open the box” by proactively requesting information.

You pay, or you’ll pay

One of the program’s most redeeming features is that virtually any property on Turkish shores counts as an eligible investment. But it’s still perfectly possible to acquire a qualifying property, pass due diligence muster, and still get rejected because of innocuous procedural mistakes. 

A vital requirement to qualify under the program is providing proof that the principal applicant himself has paid at least US$250,000 for a property.

One applicant, who did not fully grasp this requirement, had his brother purchase the property on his behalf. The brother transferred the funds from his account and had the deed drafted in the principal applicant’s name. This procedure, however, resulted in the CIP application’s banishment to that legal Siberia, in which it would linger as not officially rejected but not approved either. The applicant, lawyer, and developer had to resell the property and transfer the funds once more for the application to get approved, losing precious time and money along the way. This applicant was lucky, as another developer may not have agreed to undergo this tedious process, having already made their profit.  

The unseen lien

In an application that, you’d think, should be an open-and-shut case, one investor spent an astonishing US$2 million acquiring Turkish property only to see his citizenship petition rejected, ironically, because of insufficient investment. The applicant, who bought ten units and invested eight times the minimum amount, was understandably baffled. What happened?

It turned out that there were mortgages on all of the units, nearly matching the value of the purchase. These mortgages were excluded from the title deeds because of the outstanding debts of the developer. 

When there is a mortgage on a title deed, the government values the property to be the purchase price minus the mortgage value. For instance, if a property is sold for US$250,000 but has a mortgage of US$120,000 pertaining to it, the government values the property at US$130,000. Only once the mortgage is fully paid is the property valued at its original purchase price.

In this unfortunate investor’s case, the value of the US$2 million acquisition net of mortgages was less than US$200,000. As a consequence, he did not meet the minimum investment criteria for an application that would have gone above and beyond in any other circumstance.

But no cigar

The Ministry of Urban and Environmental Affairs (MUEA) rejected a case of an investor who purchased a property worth US$250,000 because it did not meet the investment criteria. There were no mortgages this time around. Rather, the rejection resulted from a property valuation report gone awry.

While the property’s purchase value was US$250,000, the authorized appraiser returned a valuation of US$245,000, just US$5,000 short of the mark. This variance had occurred because of short-term fluctuations in the exchange rate between the US dollar and the Turkish lira, the latter famous for its rollercoaster-esque caprices. The investor then had to supplement his purchase with an additional US$30,000 acquisition, and you can bet your last lira it was not a penthouse in Taksim. 

Buying property for US$10-30,000 above the minimum can mitigate the risk of property valuations dropping before the Ministry gets a look at your application. Better safe than sorry.

The mediocre broker

It is splendid when the stars align; complete application, sufficient investment, and proper property valuation. But what happens when a middle-man messes that up?

An investor using a broker’s help transferred half of the investment amount to the developer and half to the broker, the latter agreeing to transfer it to the developer on the investor’s behalf. 

As alluded to earlier, officials at the Ministry of Interior are sticklers for the rule that says investors must themselves pay the seller directly, and in their own names.

An investor can use an intermediary in the form of a lawyer armed with an ironclad power of attorney (POA). A broker who does not have the authority to act on the investor’s behalf legally does not factor into the equation. This procedure leads to a merry-go-round of reselling, repurchasing, and re-transferring amounts to meet the requirements.

The Turkish CIP’s greatest power is also its Achilles heel; as the open market allows investors to pick and choose almost any type of property, it also creates a chaotic ecosystem that is difficult to navigate. 

More Opinion

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İsrafil Kahraman recounts five anecdotes of investors who had their Turkey citizenship applications rejected because of simple mistakes.

When Nuri Katz was asked how big his company is compared to others int he business, he didn’t know how to answer. So instead, he wrote an article for IMI in which he offers a more nuanced response.

Angie Rupert writes about how vaccinations, an immigration-friendly government, and a forecast post-pandemic consumption boom could spur a new wave of immigrant entrepreneurs.


The post Cautionary Tales from the Turkey CIP: Avoid These 5 Common Mistakes appeared first on Investment Migration Insider.