Aug.20 (NBD) -- Turkish Lira (TL) plunged to a record low of 6.6 against the U.S. dollar (USD) with the largest intraday drop of 20 percent last Friday. Lira has aggregately shed 54 percent in value since the begining of this year, which means a TRY 600,000 property can save an investor 60,000 U.S. dollars compared to earlier this year.

"In the second quarter of 2018, we sold 75 units (of houses) to Turkish nationals compared to 109 last year, same quarter", said Deggin Cameron, founder and director of real estate company Property Turkey. 

Ali Hepsen, a professor and housing expert at Istanbul University, explained to NBD that since the Turkish economy is significantly dollarized and import-driven, the rapid hike of the USD and EUR usually have a psychological impact on consumption and investment behaviors of the Turkish households who rather delay their large spending or investment decisions or consider instead of Real Estate, alternative assets for savings and investment such as high-interest bearing TRY dominated or hard currency deposit accounts, gold etc.

Turks are waiting for the currency to stabilize. Once the currency stabilizes, Turkish investors will return to market. Their biggest concerns are economic slowdown hence slow price recovery which would mean slow capital growth, added Cameron.

In the past two months, average prices of Turkish real estate (for foreign buyers buying in hard currency) has dropped by almost 30 percent. Since January 2018, prices dropped by almost 60 percent, said Deggin Cameron.

Istanbul real estate agent Armaya International told NBD that low TL currency rates creates good options for export and buying property by U.S. dollar exchanging to TL with rather good rates. By virtue of that property purchase inquiries for TR increased. Sale prices as TL can be paid as U.S. dollar with even 40 percent earnings.

According to the latest records of TURKSAT (Turkish Statistical Institute), in July 2018, home sales to foreigners reached 2,858 units, increasing by 65.6 percent compared to the same month of the previous year. Istanbul was the first province with 956 sales in July 2018.

Iraqi citizens bought 584 houses from Turkey in July followed by Iran with 321 house purchases, Saudi Arabia with 211 house purchases, Russia with 173 house purchases and Kuwait with 171 house purchases. The depreciation of the Turkish Lira is making real estate more advantageous for foreigners.

Cameron has a word of caution for investors that this is a very temporary opportunity for Turkish property prices will most certainly increase in the coming several months. Developers can not afford to keep their prices at current levels due to the fact that 50 percent of their construction costs are USD denominated which means their costs have gone up. So, pressure is on prices to be raised.

Cameron believed that now is prime time to invest, for Turkish Lira dropped and developers have not yet reacted by increasing their Lira prices. "They (developers) will most certainly start increasing the prices very soon, therefore right now is rock bottom and the only way is up," added Cameron.

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