Turkey is tightening investment rules for foreign citizenship from June.

Ankara: Raising prices for foreigners seeking citizenship through real estate investments is the latest move by the Turkish government to tackle the country's financial woes.

The revised rules will allow Turkey to overcome its external account surplus and change the profile of foreign investors. A popular ad reads, "Only until June 3, you can apply for Turkish citizenship by investing $250,000. Get Turkish passport and citizenship in the most prestigious projects in Istanbul. "

With widespread condemnation of the country's soaring housing prices, which affects Turkish citizens the most, the government recently increased the amount that foreigners must invest in real estate to obtain citizenship. Under the new rules, a foreign citizen who buys real estate worth at least $400,000 (previously $250,000 was required) can obtain Turkish citizenship. The funds must be a deposit in a Turkish bank and the property must not be sold for three years. Foreign citizens who meet these conditions, as well as their spouses and children under the age of 18, will automatically receive Turkish passports.

The purchase of homes by foreign nationals is expected to soften Turkey's external account surplus and support the real estate market and construction companies. Turkey's excess annual budget deficit tripled in April from a year earlier to 50.2 billion liras ($3.23 billion). The country also had an external account deficit of $5.5 billion.

Foreign citizens who join a private pension system with at least $500,000 or its foreign currency equivalent and remain in the system for three years are also eligible for Turkish citizenship. Foreign entrepreneurs who provide jobs for 50 people in Turkey or deposit $500,000 in Turkish bank accounts without withdrawal for three years can also obtain Turkish citizenship under the amended law. The change in the legislation will come into force from June 13.

Russians, Ukrainians and Gulf nationals are currently the main clients in the Turkish real estate market, they purchase real estate in southern resort towns and Istanbul. Russians also set a record 64 companies in March, quadrupling the number from the previous month. The number of houses sold in Turkey by foreign buyers has increased by 58 percent annually, according to official data. Russians top the list of foreign buyers with 1,152 homes.

"As the amount of investment required for citizenship has been reduced from $1 million to $250,000 over the past four years, demand for Turkish citizenship has increased. But increasing this amount to $400,000 will also improve the profile of foreign investors in Turkey," said Selen Kolan-Imir, a lawyer specializing in citizenship issues.

Other experts say the growing interest in the Turkish real estate market by foreigners could lead to an uncontrollable rise in housing prices. The depreciation of the Turkish lira also makes the Turkish real estate market more attractive to foreign investors. "Instead of asking people to invest in real estate, foreigners should be encouraged to create jobs or open innovative startups, which will bring long-term benefits to the Turkish economy," Kolan-Imir told Arab News.

With more foreign children gaining Turkish citizenship through investment, the country should also provide new educational and social facilities, she added. "Recently, there are many private international schools that are opening up for foreign children living in Turkey with their parents or for those who become new Turkish citizens. "

Bulut Bagci, president of the World Tourism Forum Institute, said offering citizenship through investment is common in Europe and Turkey is choosing a similar path. "Compared to similar cases in Europe, especially in the UK, the amount is still small. However, it will support tourism in Turkey and increase tourism revenue because people who buy a house will visit the country frequently and go to tourist destinations," he told Arab News.

Last month, however, some opposition parliamentarians submitted a proposal to temporarily ban the sale of real estate to foreigners. Bagci added that foreign citizens who have obtained Turkish citizenship should be encouraged to participate in the tourism sector by buying hotels and other establishments. "As a result of prolonged conflicts in its region, Turkey needs tourism revenues to meet foreign exchange needs. My only concern is that home buying should not be subject to abuse, and it should be closely monitored with strict regulation. I have heard many cases of people selling their houses after obtaining citizenship to capitalize on the sector," he said.

After the government recently unveiled a package of measures to provide affordable housing loans, President Recep Tayyip Erdoğan said real estate prices in Turkey should be closely monitored.