Wednesday, 19th March 2008, 9:40:06
FOREIGN COMPANIES BANNED FROM BUYING TURKISH PROPERTY
Turkey, foreign companies, ban, Turkish British Chamber of Commerce and Industry, FDI
Turkey’s Constitutional Court has annulled part of a law allowing the sale of property to foreign companies – a move which could damage the country’s burgeoning $620billion a year economy.
Turkey’s centre-right government had previously approved a law allowing the sale of Turkish property to foreign citizens and businesses in an attempt to gain entry to the EU. However, according to Reuters, the court ruled against this decision last week after complaints from the nationalist-leaning Republican People’s Party. The decision by the court affects part of the law that allows companies established by foreign investors or joint ventures involving foreign firms to acquire property in Turkey.
Speaking after the ruling, Finance Minister Kemal Unakitan told reporters that his pro-business government would try to take action against the court’s decision. “This does not help our efforts to attract foreign investors into Turkey,” he noted.
The Turkish British Chamber of Commerce and Industry (TBCCI) told OPP that it believes the true extent of the ruling’s implications will be known after publication of the judgement.
“At this stage we would reiterate the view that foreign nationals should not be hurt by the decision because the Constitutional Court allows six months for the law to take affect and the government can at this time make new changes in the title-deed law,” explained Yavuz Sokmen, CEO of the TBCCI. “When the detailed ruling of the Court is published in the Official Gazette, we would be in a better position to reassess the matter with a view for the shape of the new legal framework.”
Basak Yildiz, a Turkish lawyer at the International Law Partnership, said that although the majority of private buyers will not be affected by this, those purchasing specific types of land and property will be hit by the changes.
"There are some restricted areas for foreign individual buyers in Turkey, such as military zones, rural lands, and a limit of 30 hectares on a single purchase," she said. "Many foreign buyers intending to purchase a property zoned in these restricted areas were setting up an inactive Turkish company, but due to this change, this route will not available."
The biggest concern expressed by some of the firms talking to OPP, is t he possibility of foreign companies not being allowed to purchase land for project development - which could seriously affect the billion-dollar industry.
“In the unlikely event that the law change is not repealed, it is going to affect how we can purchase land and develop this ourselves in Turkey - as we are a Turkish company part owned by foreign investors,” said Gordon Lyons, from Turkish specialists International Property Agents. “In Turkey there is from time to time objections to various forms of foreign ownership and investment from the opposition party. However, the ruling pro-business party, which was recently re-elected, is very much in favour of foreign investment and as such, I would think it unlikely that they will not amend the relevant laws to once again permit the sale of real estate to foreign owned Turkish companies. Such investment in real estate accounted last year for over 10% of the total FDI, which would have a serious affect on the financing of the growing current account deficit in Turkey.
“It would not make any sense to prohibit on a continuing basis something that is having a positive effect on the economy of the country as a whole,” he added.
Several IPOs have been planned for the Turkish property sector this year and it is not yet known how this ruling will affect the outcome of these transactions.
So, in the unfortunate event that they did join, this means they cancel the law ??? Yeah I bet.
And for those that are link mad, here it is.
http://www.opp.org.uk/news_article.asp?id=2326
