ISTANBUL (Reuters) - Turkey has slashed the financial and investment criteria for foreigners to become Turkish citizens, in a move expected to double annual property investment by foreigners to around $10 billion, according to sector officials.

The government has been taking measures to boost investment in the economy and shore up the lira, which has fallen 40 percent this year due to jitters about President Tayyip Erdogan’s sway over monetary policy and a row with the United States that has triggered reciprocal sanctions and trade curbs.

According to new regulations, foreigners can become citizens if they own property worth $250,000 for three years, down from a previous value set at $1 million, or if they hold $500,000 of Turkish debt for three years, down from a previous $3 million.

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The reduction of the minimum limit to invest for citizenship is expected to double property sales and bring in cash which would otherwise be invested in Greece or other European Union countries, sector officials said.

Foreigners purchased $4.6 billion worth of properties last year, with a large proportion of them from Iraq, Saudi Arabia, Kuwait and Russia, according to official data.

“Annual sales of $10 billion is not an unrealistic amount; it can be achieved with the new regulation change,” Real Estate Investment Association (GYODER) Chair Feyzullah Yetgin said.

Turkish house sales dropped 12.5 percent year-on-year in August. However, property purchases by foreigners were up around 130 percent, focused mainly in Istanbul and holiday destination Antalya, data showed on Wednesday.

Turkey has introduced measures to tackle the slowdown in housing market including lowering mortgage loan rates by state-lenders and discounts by well-known property construction firms.

“A citizenship industry was created recently for example in Greece and Portugal. The competition may work well for Turkey now,” said Makbule Yonel Maya, the general manager of TSKB Real Estate Valuation.

Under the new rules, foreigners could qualify for Turkish citizenship if they meet any one of a series of criteria. The sharp reduction in the required foreign currency value applies to fixed capital investments and bank deposits, as well as for properties and bond holdings.

The amount of required fixed capital investment was reduced to $500,000 from $2 million and the size of bank deposits was cut to $500,000 from $3 million, the decision published on Official Gazette said.

It also halved the number of employees an applicant must employ to gain Turkish citizenship, to 50 from 100.

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Turkey has significantly eased the required limits for foreigners to acquire Turkish citizenship to encourage investment, according to new regulations published in the country’s Official Gazette on Sept. 19.

The lower limit of fixed capital investments to acquire Turkish citizenship for foreigners has been reduced to $500,000 from $2 million.

Foreigners who own real estate in Turkey worth a minimum of $250,000, instead of $1 million, can avail Turkish citizenship.

The deposit requirement of minimum $3 million in Turkish banks has also been lowered to $500,000.

Foreigners who generate jobs for minimum 50 people will also be able to take Turkish citizenship, the decree signed by President Recep Tayyip Erdoğan said. The previous number required was 100.

Foreign investors should hold the properties or continue the minimum limit of financial investments for at least three years to meet the criteria for Turkish citizenship.

Property sector hails new rules

The new regulation has especially been hailed by the property sector, which eyes nearly $10 billion sales to foreigners annually.

“With the first reciprocity rule in 2012, which stipulated the right to obtain Turkish citizenship to foreigners who invested $1 million in real estate in Turkey, we have achieved an increase of our property sales to foreigners to $4.6 billion on an annual basis. Arab countries especially buy properties in Turkey to find a relief from the geographical instability,” said Feyzullah Yetkin, the head of the Real Estate Investment Partnership Association (GYODER).

“We expect a further increase in foreign demand with the new regulation, which was launched today,” he said on Sept. 19.

In the initial stage, sales to foreigners will likely hit $10 billion, according to Yetgin.

“In the mid-term, we can see $20 billion of sales on a yearly basis,” he said, adding that Turkey’s perception should also be maintained here.

According to sector data, 11,816 houses were sold to foreigners for $2.1 billion in total.

“A foreigner pays $177,000 on average for a house in Turkey,” said Konutder board member Erden Timur.

“The new regulation will encourage foreigners with a higher income to buy houses worth over $250,000,” he added.

According to GYODER data, Turkey now has 820,000 house stocks, which are ready to be sold.

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Turkish President Recep Tayyip Erdogan has ratified amendments to the law on granting citizenship, in order to simplify this process, Trend reports citing the Turkish newspaper “Resmi Gazete”.

Foreigners who invest $250,000 in Turkish economy will be able to obtain Turkish citizenship, the report said.

Earlier, this amount was $500,000.

From 2015 to August 9, 2018, 721,735 people received residence permits in Turkey. Foreign citizens who have permanent jobs in Turkey, who buy real estate and arrive in Turkey for study purposes, as well as those who create a family with a Turkish citizen can get residence permits in Turkey.

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