Real estate in Turkey

Real estate investment

Common structures used for investing in real estate are:

• Direct acquisition of the real estate.
• Acquisition of the shares of the company that owns the real estate.
• Investing in REITs.

REITs

REITs have recently become the key players in the Turkish real estate market. REITs in Turkey are strictly regulated by the Capital Markets Board, including in relation to minimum capital requirements (TRY20 million), permitted investments and certain portfolio restrictions.

Institutional investors

Investment by institutional investors is not very common in Turkey, as the market has been dominated by large family enterprises until recently. However, there is an increasing number of institutional and international investors that are active in the market, such as ECE Group headquartered in Germany, Coldwell Banker based in the US, EMG as a German-Swiss partnership, Goodman from Australia and Redevco of Belgium.

Private investors

Private investors have played a major role in the market so far. However, more recently, REITs are taking over their position in the market (see above, REITs).

Real estate legislation

The main piece of real estate legislation in Turkey is Chapter 4, Law of Property (Articles 683 to 1030) of the Turkish Civil Code (Civil Code). The Code of Obligations also includes provisions in relation to the sale and lease of real estate.

Sale of real estate

– Pre-contractual arrangements

A preliminary sale contract for real estate must be prepared in the form of a deed prepared by a notary public or by the Public Register office.

Large real estate companies may also enter into preliminary contracts with their customers before the start of construction to define the details relating to the real estate (such as the quality of the materials to be used). These contracts are not preliminary sale contracts in the technical sense.

– Sale contract

It is not usual to execute a detailed sale contract. The title of ownership is transferred by means of registration of the transfer of ownership before the Public Register with the mutual agreement of the parties. Since execution of the contract and the transfer of ownership by registration are carried out simultaneously before the Public Register, there is no explicit distinction between these two stages in practice.

– When legally binding

The parties are legally bound when the transfer of title is registered at the Public Register.

– Registration

The parties can register the change of title at any time.

– When title transfers

Title transfers once it is registered in the name of the new owner. For the sale to be legally valid, the title must be registered in the name of the new owner at the Public Register. Failure to comply with this requirement renders the sale null and void.

Real estate taxes and mitigation

VAT is payable on the sale of real estate. The current VAT rate is:

• 1% for households with a surface area below 150 square metres.
• 18% for households with a surface area above 150 square metres.
• 18% for business premises, irrespective of the surface area of the real estate.

The Value Added Tax Law sets out an exemption for corporate real estate sales. Under this exemption, the sale of real estate that has been listed as an asset of a company for two years is exempt from VAT. However, if the relevant company is engaged in real estate business and holds the relevant real estate for the purposes of that business, then the exemption does not apply.

Restrictions on foreign ownership or occupation

The acquisition of real estate or rights in rem over real estate in Turkey by foreign companies is restricted by law except for mortgage transactions which are not subject to restrictions. It is only permitted (Article 36, Land Register Law):

• To foreign legal entities incorporated for commercial purposes.
• In limited circumstances provided under specific laws (mainly the Tourism Incentive Law, Petroleum Law and the Industrial Zones Law).

Following the acquisition of the real estate, the owner must submit its intended project on the real estate to the approval of the Ministry of Economy within two years. The actual implementation of the project is then monitored by the Ministry of Economy.

In addition, a new Regulation on Acquisition of Real Estate and Rights in rem under the Land Register Law (Acquisition Regulation) was issued in August 2012. Under the Acquisition Regulation Turkish companies which have either direct or indirect foreign shareholding of 50% or more, or foreign shareholders who can appoint or remove from office the majority of the management team, can only acquire real estate or rights in rem over real estate in Turkey if this falls within their scope of activity as stated in the articles of association. Whether the acquisition falls within the company’s activity is determined by a commission of the relevant governorate (an administrative division of a country) of the province where the real estate is located.

However, establishment and foreclosure of mortgage on the real estate, acquisition of real estate or rights in rem over real estate in special investment areas are excluded from the permitting requirement.

Special permissions are required in the following cases:

• Permission of the commission of the relevant governorate if the land is located in special security areas.
• Permission of the General Staff (Turkish armed forces) or the commandership that has been authorised if the land is located in a high military zone or a security zone.

A company with foreign capital must apply to the relevant governorate before acquiring real estate or establishing a right in rem on real estate to determine whether the real estate falls into one of these categories (Acquisition Regulation).

Real estate investment

Common structures used for investing in real estate are:

• Direct acquisition of the real estate.
• Acquisition of the shares of the company that owns the real estate.
• Investing in REITs.

REITs

REITs have recently become the key players in the Turkish real estate market. REITs in Turkey are strictly regulated by the Capital Markets Board, including in relation to minimum capital requirements (TRY20 million), permitted investments and certain portfolio restrictions.

Institutional investors

Investment by institutional investors is not very common in Turkey, as the market has been dominated by large family enterprises until recently. However, there is an increasing number of institutional and international investors that are active in the market, such as ECE Group headquartered in Germany, Coldwell Banker based in the US, EMG as a German-Swiss partnership, Goodman from Australia and Redevco of Belgium.

Private investors

Private investors have played a major role in the market so far. However, more recently, REITs are taking over their position in the market (see above, REITs).

Real estate legislation

The main piece of real estate legislation in Turkey is Chapter 4, Law of Property (Articles 683 to 1030) of the Turkish Civil Code (Civil Code). The Code of Obligations also includes provisions in relation to the sale and lease of real estate.

Sale of real estate

– Pre-contractual arrangements

A preliminary sale contract for real estate must be prepared in the form of a deed prepared by a notary public or by the Public Register office.

Large real estate companies may also enter into preliminary contracts with their customers before the start of construction to define the details relating to the real estate (such as the quality of the materials to be used). These contracts are not preliminary sale contracts in the technical sense.

– Sale contract

It is not usual to execute a detailed sale contract. The title of ownership is transferred by means of registration of the transfer of ownership before the Public Register with the mutual agreement of the parties. Since execution of the contract and the transfer of ownership by registration are carried out simultaneously before the Public Register, there is no explicit distinction between these two stages in practice.

– When legally binding

The parties are legally bound when the transfer of title is registered at the Public Register.

– Registration

The parties can register the change of title at any time.

– When title transfers

Title transfers once it is registered in the name of the new owner. For the sale to be legally valid, the title must be registered in the name of the new owner at the Public Register. Failure to comply with this requirement renders the sale null and void.

Real estate taxes and mitigation

VAT is payable on the sale of real estate. The current VAT rate is:

• 1% for households with a surface area below 150 square metres.
• 18% for households with a surface area above 150 square metres.
• 18% for business premises, irrespective of the surface area of the real estate.

The Value Added Tax Law sets out an exemption for corporate real estate sales. Under this exemption, the sale of real estate that has been listed as an asset of a company for two years is exempt from VAT. However, if the relevant company is engaged in real estate business and holds the relevant real estate for the purposes of that business, then the exemption does not apply.

Restrictions on foreign ownership or occupation

The acquisition of real estate or rights in rem over real estate in Turkey by foreign companies is restricted by law except for mortgage transactions which are not subject to restrictions. It is only permitted (Article 36, Land Register Law):

• To foreign legal entities incorporated for commercial purposes.
• In limited circumstances provided under specific laws (mainly the Tourism Incentive Law, Petroleum Law and the Industrial Zones Law).

Following the acquisition of the real estate, the owner must submit its intended project on the real estate to the approval of the Ministry of Economy within two years. The actual implementation of the project is then monitored by the Ministry of Economy.

In addition, a new Regulation on Acquisition of Real Estate and Rights in rem under the Land Register Law (Acquisition Regulation) was issued in August 2012. Under the Acquisition Regulation Turkish companies which have either direct or indirect foreign shareholding of 50% or more, or foreign shareholders who can appoint or remove from office the majority of the management team, can only acquire real estate or rights in rem over real estate in Turkey if this falls within their scope of activity as stated in the articles of association. Whether the acquisition falls within the company’s activity is determined by a commission of the relevant governorate (an administrative division of a country) of the province where the real estate is located.

However, establishment and foreclosure of mortgage on the real estate, acquisition of real estate or rights in rem over real estate in special investment areas are excluded from the permitting requirement.

Special permissions are required in the following cases:

• Permission of the commission of the relevant governorate if the land is located in special security areas.
• Permission of the General Staff (Turkish armed forces) or the commandership that has been authorised if the land is located in a high military zone or a security zone.

A company with foreign capital must apply to the relevant governorate before acquiring real estate or establishing a right in rem on real estate to determine whether the real estate falls into one of these categories (Acquisition Regulation).

Real estate investment

Common structures used for investing in real estate are:

• Direct acquisition of the real estate.
• Acquisition of the shares of the company that owns the real estate.
• Investing in REITs.

REITs

REITs have recently become the key players in the Turkish real estate market. REITs in Turkey are strictly regulated by the Capital Markets Board, including in relation to minimum capital requirements (TRY20 million), permitted investments and certain portfolio restrictions.

Institutional investors

Investment by institutional investors is not very common in Turkey, as the market has been dominated by large family enterprises until recently. However, there is an increasing number of institutional and international investors that are active in the market, such as ECE Group headquartered in Germany, Coldwell Banker based in the US, EMG as a German-Swiss partnership, Goodman from Australia and Redevco of Belgium.

Private investors

Private investors have played a major role in the market so far. However, more recently, REITs are taking over their position in the market (see above, REITs).

Real estate legislation

The main piece of real estate legislation in Turkey is Chapter 4, Law of Property (Articles 683 to 1030) of the Turkish Civil Code (Civil Code). The Code of Obligations also includes provisions in relation to the sale and lease of real estate.

Sale of real estate

– Pre-contractual arrangements

A preliminary sale contract for real estate must be prepared in the form of a deed prepared by a notary public or by the Public Register office.

Large real estate companies may also enter into preliminary contracts with their customers before the start of construction to define the details relating to the real estate (such as the quality of the materials to be used). These contracts are not preliminary sale contracts in the technical sense.

– Sale contract

It is not usual to execute a detailed sale contract. The title of ownership is transferred by means of registration of the transfer of ownership before the Public Register with the mutual agreement of the parties. Since execution of the contract and the transfer of ownership by registration are carried out simultaneously before the Public Register, there is no explicit distinction between these two stages in practice.

– When legally binding

The parties are legally bound when the transfer of title is registered at the Public Register.

– Registration

The parties can register the change of title at any time.

– When title transfers

Title transfers once it is registered in the name of the new owner. For the sale to be legally valid, the title must be registered in the name of the new owner at the Public Register. Failure to comply with this requirement renders the sale null and void.

Real estate taxes and mitigation

VAT is payable on the sale of real estate. The current VAT rate is:

• 1% for households with a surface area below 150 square metres.
• 18% for households with a surface area above 150 square metres.
• 18% for business premises, irrespective of the surface area of the real estate.

The Value Added Tax Law sets out an exemption for corporate real estate sales. Under this exemption, the sale of real estate that has been listed as an asset of a company for two years is exempt from VAT. However, if the relevant company is engaged in real estate business and holds the relevant real estate for the purposes of that business, then the exemption does not apply.

Restrictions on foreign ownership or occupation

The acquisition of real estate or rights in rem over real estate in Turkey by foreign companies is restricted by law except for mortgage transactions which are not subject to restrictions. It is only permitted (Article 36, Land Register Law):

• To foreign legal entities incorporated for commercial purposes.
• In limited circumstances provided under specific laws (mainly the Tourism Incentive Law, Petroleum Law and the Industrial Zones Law).

Following the acquisition of the real estate, the owner must submit its intended project on the real estate to the approval of the Ministry of Economy within two years. The actual implementation of the project is then monitored by the Ministry of Economy.

In addition, a new Regulation on Acquisition of Real Estate and Rights in rem under the Land Register Law (Acquisition Regulation) was issued in August 2012. Under the Acquisition Regulation Turkish companies which have either direct or indirect foreign shareholding of 50% or more, or foreign shareholders who can appoint or remove from office the majority of the management team, can only acquire real estate or rights in rem over real estate in Turkey if this falls within their scope of activity as stated in the articles of association. Whether the acquisition falls within the company’s activity is determined by a commission of the relevant governorate (an administrative division of a country) of the province where the real estate is located.

However, establishment and foreclosure of mortgage on the real estate, acquisition of real estate or rights in rem over real estate in special investment areas are excluded from the permitting requirement.

Special permissions are required in the following cases:

• Permission of the commission of the relevant governorate if the land is located in special security areas.
• Permission of the General Staff (Turkish armed forces) or the commandership that has been authorised if the land is located in a high military zone or a security zone.

A company with foreign capital must apply to the relevant governorate before acquiring real estate or establishing a right in rem on real estate to determine whether the real estate falls into one of these categories (Acquisition Regulation).

Real estate investment

Common structures used for investing in real estate are:

• Direct acquisition of the real estate.
• Acquisition of the shares of the company that owns the real estate.
• Investing in REITs.

REITs

REITs have recently become the key players in the Turkish real estate market. REITs in Turkey are strictly regulated by the Capital Markets Board, including in relation to minimum capital requirements (TRY20 million), permitted investments and certain portfolio restrictions.

Institutional investors

Investment by institutional investors is not very common in Turkey, as the market has been dominated by large family enterprises until recently. However, there is an increasing number of institutional and international investors that are active in the market, such as ECE Group headquartered in Germany, Coldwell Banker based in the US, EMG as a German-Swiss partnership, Goodman from Australia and Redevco of Belgium.

Private investors

Private investors have played a major role in the market so far. However, more recently, REITs are taking over their position in the market (see above, REITs).

Real estate legislation

The main piece of real estate legislation in Turkey is Chapter 4, Law of Property (Articles 683 to 1030) of the Turkish Civil Code (Civil Code). The Code of Obligations also includes provisions in relation to the sale and lease of real estate.

Sale of real estate

– Pre-contractual arrangements

A preliminary sale contract for real estate must be prepared in the form of a deed prepared by a notary public or by the Public Register office.

Large real estate companies may also enter into preliminary contracts with their customers before the start of construction to define the details relating to the real estate (such as the quality of the materials to be used). These contracts are not preliminary sale contracts in the technical sense.

– Sale contract

It is not usual to execute a detailed sale contract. The title of ownership is transferred by means of registration of the transfer of ownership before the Public Register with the mutual agreement of the parties. Since execution of the contract and the transfer of ownership by registration are carried out simultaneously before the Public Register, there is no explicit distinction between these two stages in practice.

– When legally binding

The parties are legally bound when the transfer of title is registered at the Public Register.

– Registration

The parties can register the change of title at any time.

– When title transfers

Title transfers once it is registered in the name of the new owner. For the sale to be legally valid, the title must be registered in the name of the new owner at the Public Register. Failure to comply with this requirement renders the sale null and void.

Real estate taxes and mitigation

VAT is payable on the sale of real estate. The current VAT rate is:

• 1% for households with a surface area below 150 square metres.
• 18% for households with a surface area above 150 square metres.
• 18% for business premises, irrespective of the surface area of the real estate.

The Value Added Tax Law sets out an exemption for corporate real estate sales. Under this exemption, the sale of real estate that has been listed as an asset of a company for two years is exempt from VAT. However, if the relevant company is engaged in real estate business and holds the relevant real estate for the purposes of that business, then the exemption does not apply.

Restrictions on foreign ownership or occupation

The acquisition of real estate or rights in rem over real estate in Turkey by foreign companies is restricted by law except for mortgage transactions which are not subject to restrictions. It is only permitted (Article 36, Land Register Law):

• To foreign legal entities incorporated for commercial purposes.
• In limited circumstances provided under specific laws (mainly the Tourism Incentive Law, Petroleum Law and the Industrial Zones Law).

Following the acquisition of the real estate, the owner must submit its intended project on the real estate to the approval of the Ministry of Economy within two years. The actual implementation of the project is then monitored by the Ministry of Economy.

In addition, a new Regulation on Acquisition of Real Estate and Rights in rem under the Land Register Law (Acquisition Regulation) was issued in August 2012. Under the Acquisition Regulation Turkish companies which have either direct or indirect foreign shareholding of 50% or more, or foreign shareholders who can appoint or remove from office the majority of the management team, can only acquire real estate or rights in rem over real estate in Turkey if this falls within their scope of activity as stated in the articles of association. Whether the acquisition falls within the company’s activity is determined by a commission of the relevant governorate (an administrative division of a country) of the province where the real estate is located.

However, establishment and foreclosure of mortgage on the real estate, acquisition of real estate or rights in rem over real estate in special investment areas are excluded from the permitting requirement.

Special permissions are required in the following cases:

• Permission of the commission of the relevant governorate if the land is located in special security areas.
• Permission of the General Staff (Turkish armed forces) or the commandership that has been authorised if the land is located in a high military zone or a security zone.

A company with foreign capital must apply to the relevant governorate before acquiring real estate or establishing a right in rem on real estate to determine whether the real estate falls into one of these categories (Acquisition Regulation).

Real estate investment

Common structures used for investing in real estate are:

• Direct acquisition of the real estate.
• Acquisition of the shares of the company that owns the real estate.
• Investing in REITs.

REITs

REITs have recently become the key players in the Turkish real estate market. REITs in Turkey are strictly regulated by the Capital Markets Board, including in relation to minimum capital requirements (TRY20 million), permitted investments and certain portfolio restrictions.

Institutional investors

Investment by institutional investors is not very common in Turkey, as the market has been dominated by large family enterprises until recently. However, there is an increasing number of institutional and international investors that are active in the market, such as ECE Group headquartered in Germany, Coldwell Banker based in the US, EMG as a German-Swiss partnership, Goodman from Australia and Redevco of Belgium.

Private investors

Private investors have played a major role in the market so far. However, more recently, REITs are taking over their position in the market (see above, REITs).

Real estate legislation

The main piece of real estate legislation in Turkey is Chapter 4, Law of Property (Articles 683 to 1030) of the Turkish Civil Code (Civil Code). The Code of Obligations also includes provisions in relation to the sale and lease of real estate.

Sale of real estate

– Pre-contractual arrangements

A preliminary sale contract for real estate must be prepared in the form of a deed prepared by a notary public or by the Public Register office.

Large real estate companies may also enter into preliminary contracts with their customers before the start of construction to define the details relating to the real estate (such as the quality of the materials to be used). These contracts are not preliminary sale contracts in the technical sense.

– Sale contract

It is not usual to execute a detailed sale contract. The title of ownership is transferred by means of registration of the transfer of ownership before the Public Register with the mutual agreement of the parties. Since execution of the contract and the transfer of ownership by registration are carried out simultaneously before the Public Register, there is no explicit distinction between these two stages in practice.

– When legally binding

The parties are legally bound when the transfer of title is registered at the Public Register.

– Registration

The parties can register the change of title at any time.

– When title transfers

Title transfers once it is registered in the name of the new owner. For the sale to be legally valid, the title must be registered in the name of the new owner at the Public Register. Failure to comply with this requirement renders the sale null and void.

Real estate taxes and mitigation

VAT is payable on the sale of real estate. The current VAT rate is:

• 1% for households with a surface area below 150 square metres.
• 18% for households with a surface area above 150 square metres.
• 18% for business premises, irrespective of the surface area of the real estate.

The Value Added Tax Law sets out an exemption for corporate real estate sales. Under this exemption, the sale of real estate that has been listed as an asset of a company for two years is exempt from VAT. However, if the relevant company is engaged in real estate business and holds the relevant real estate for the purposes of that business, then the exemption does not apply.

Restrictions on foreign ownership or occupation

The acquisition of real estate or rights in rem over real estate in Turkey by foreign companies is restricted by law except for mortgage transactions which are not subject to restrictions. It is only permitted (Article 36, Land Register Law):

• To foreign legal entities incorporated for commercial purposes.
• In limited circumstances provided under specific laws (mainly the Tourism Incentive Law, Petroleum Law and the Industrial Zones Law).

Following the acquisition of the real estate, the owner must submit its intended project on the real estate to the approval of the Ministry of Economy within two years. The actual implementation of the project is then monitored by the Ministry of Economy.

In addition, a new Regulation on Acquisition of Real Estate and Rights in rem under the Land Register Law (Acquisition Regulation) was issued in August 2012. Under the Acquisition Regulation Turkish companies which have either direct or indirect foreign shareholding of 50% or more, or foreign shareholders who can appoint or remove from office the majority of the management team, can only acquire real estate or rights in rem over real estate in Turkey if this falls within their scope of activity as stated in the articles of association. Whether the acquisition falls within the company’s activity is determined by a commission of the relevant governorate (an administrative division of a country) of the province where the real estate is located.

However, establishment and foreclosure of mortgage on the real estate, acquisition of real estate or rights in rem over real estate in special investment areas are excluded from the permitting requirement.

Special permissions are required in the following cases:

• Permission of the commission of the relevant governorate if the land is located in special security areas.
• Permission of the General Staff (Turkish armed forces) or the commandership that has been authorised if the land is located in a high military zone or a security zone.

A company with foreign capital must apply to the relevant governorate before acquiring real estate or establishing a right in rem on real estate to determine whether the real estate falls into one of these categories (Acquisition Regulation).

Real estate investment

Common structures used for investing in real estate are:

• Direct acquisition of the real estate.
• Acquisition of the shares of the company that owns the real estate.
• Investing in REITs.

REITs

REITs have recently become the key players in the Turkish real estate market. REITs in Turkey are strictly regulated by the Capital Markets Board, including in relation to minimum capital requirements (TRY20 million), permitted investments and certain portfolio restrictions.

Institutional investors

Investment by institutional investors is not very common in Turkey, as the market has been dominated by large family enterprises until recently. However, there is an increasing number of institutional and international investors that are active in the market, such as ECE Group headquartered in Germany, Coldwell Banker based in the US, EMG as a German-Swiss partnership, Goodman from Australia and Redevco of Belgium.

Private investors

Private investors have played a major role in the market so far. However, more recently, REITs are taking over their position in the market (see above, REITs).

Real estate legislation

The main piece of real estate legislation in Turkey is Chapter 4, Law of Property (Articles 683 to 1030) of the Turkish Civil Code (Civil Code). The Code of Obligations also includes provisions in relation to the sale and lease of real estate.

Sale of real estate

– Pre-contractual arrangements

A preliminary sale contract for real estate must be prepared in the form of a deed prepared by a notary public or by the Public Register office.

Large real estate companies may also enter into preliminary contracts with their customers before the start of construction to define the details relating to the real estate (such as the quality of the materials to be used). These contracts are not preliminary sale contracts in the technical sense.

– Sale contract

It is not usual to execute a detailed sale contract. The title of ownership is transferred by means of registration of the transfer of ownership before the Public Register with the mutual agreement of the parties. Since execution of the contract and the transfer of ownership by registration are carried out simultaneously before the Public Register, there is no explicit distinction between these two stages in practice.

– When legally binding

The parties are legally bound when the transfer of title is registered at the Public Register.

– Registration

The parties can register the change of title at any time.

– When title transfers

Title transfers once it is registered in the name of the new owner. For the sale to be legally valid, the title must be registered in the name of the new owner at the Public Register. Failure to comply with this requirement renders the sale null and void.

Real estate taxes and mitigation

VAT is payable on the sale of real estate. The current VAT rate is:

• 1% for households with a surface area below 150 square metres.
• 18% for households with a surface area above 150 square metres.
• 18% for business premises, irrespective of the surface area of the real estate.

The Value Added Tax Law sets out an exemption for corporate real estate sales. Under this exemption, the sale of real estate that has been listed as an asset of a company for two years is exempt from VAT. However, if the relevant company is engaged in real estate business and holds the relevant real estate for the purposes of that business, then the exemption does not apply.

Restrictions on foreign ownership or occupation

The acquisition of real estate or rights in rem over real estate in Turkey by foreign companies is restricted by law except for mortgage transactions which are not subject to restrictions. It is only permitted (Article 36, Land Register Law):

• To foreign legal entities incorporated for commercial purposes.
• In limited circumstances provided under specific laws (mainly the Tourism Incentive Law, Petroleum Law and the Industrial Zones Law).

Following the acquisition of the real estate, the owner must submit its intended project on the real estate to the approval of the Ministry of Economy within two years. The actual implementation of the project is then monitored by the Ministry of Economy.

In addition, a new Regulation on Acquisition of Real Estate and Rights in rem under the Land Register Law (Acquisition Regulation) was issued in August 2012. Under the Acquisition Regulation Turkish companies which have either direct or indirect foreign shareholding of 50% or more, or foreign shareholders who can appoint or remove from office the majority of the management team, can only acquire real estate or rights in rem over real estate in Turkey if this falls within their scope of activity as stated in the articles of association. Whether the acquisition falls within the company’s activity is determined by a commission of the relevant governorate (an administrative division of a country) of the province where the real estate is located.

However, establishment and foreclosure of mortgage on the real estate, acquisition of real estate or rights in rem over real estate in special investment areas are excluded from the permitting requirement.

Special permissions are required in the following cases:

• Permission of the commission of the relevant governorate if the land is located in special security areas.
• Permission of the General Staff (Turkish armed forces) or the commandership that has been authorised if the land is located in a high military zone or a security zone.

A company with foreign capital must apply to the relevant governorate before acquiring real estate or establishing a right in rem on real estate to determine whether the real estate falls into one of these categories (Acquisition Regulation).

Real estate investment

Common structures used for investing in real estate are:

• Direct acquisition of the real estate.
• Acquisition of the shares of the company that owns the real estate.
• Investing in REITs.

REITs

REITs have recently become the key players in the Turkish real estate market. REITs in Turkey are strictly regulated by the Capital Markets Board, including in relation to minimum capital requirements (TRY20 million), permitted investments and certain portfolio restrictions.

Institutional investors

Investment by institutional investors is not very common in Turkey, as the market has been dominated by large family enterprises until recently. However, there is an increasing number of institutional and international investors that are active in the market, such as ECE Group headquartered in Germany, Coldwell Banker based in the US, EMG as a German-Swiss partnership, Goodman from Australia and Redevco of Belgium.

Private investors

Private investors have played a major role in the market so far. However, more recently, REITs are taking over their position in the market (see above, REITs).

Real estate legislation

The main piece of real estate legislation in Turkey is Chapter 4, Law of Property (Articles 683 to 1030) of the Turkish Civil Code (Civil Code). The Code of Obligations also includes provisions in relation to the sale and lease of real estate.

Sale of real estate

– Pre-contractual arrangements

A preliminary sale contract for real estate must be prepared in the form of a deed prepared by a notary public or by the Public Register office.

Large real estate companies may also enter into preliminary contracts with their customers before the start of construction to define the details relating to the real estate (such as the quality of the materials to be used). These contracts are not preliminary sale contracts in the technical sense.

– Sale contract

It is not usual to execute a detailed sale contract. The title of ownership is transferred by means of registration of the transfer of ownership before the Public Register with the mutual agreement of the parties. Since execution of the contract and the transfer of ownership by registration are carried out simultaneously before the Public Register, there is no explicit distinction between these two stages in practice.

– When legally binding

The parties are legally bound when the transfer of title is registered at the Public Register.

– Registration

The parties can register the change of title at any time.

– When title transfers

Title transfers once it is registered in the name of the new owner. For the sale to be legally valid, the title must be registered in the name of the new owner at the Public Register. Failure to comply with this requirement renders the sale null and void.

Real estate taxes and mitigation

VAT is payable on the sale of real estate. The current VAT rate is:

• 1% for households with a surface area below 150 square metres.
• 18% for households with a surface area above 150 square metres.
• 18% for business premises, irrespective of the surface area of the real estate.

The Value Added Tax Law sets out an exemption for corporate real estate sales. Under this exemption, the sale of real estate that has been listed as an asset of a company for two years is exempt from VAT. However, if the relevant company is engaged in real estate business and holds the relevant real estate for the purposes of that business, then the exemption does not apply.

Restrictions on foreign ownership or occupation

The acquisition of real estate or rights in rem over real estate in Turkey by foreign companies is restricted by law except for mortgage transactions which are not subject to restrictions. It is only permitted (Article 36, Land Register Law):

• To foreign legal entities incorporated for commercial purposes.
• In limited circumstances provided under specific laws (mainly the Tourism Incentive Law, Petroleum Law and the Industrial Zones Law).

Following the acquisition of the real estate, the owner must submit its intended project on the real estate to the approval of the Ministry of Economy within two years. The actual implementation of the project is then monitored by the Ministry of Economy.

In addition, a new Regulation on Acquisition of Real Estate and Rights in rem under the Land Register Law (Acquisition Regulation) was issued in August 2012. Under the Acquisition Regulation Turkish companies which have either direct or indirect foreign shareholding of 50% or more, or foreign shareholders who can appoint or remove from office the majority of the management team, can only acquire real estate or rights in rem over real estate in Turkey if this falls within their scope of activity as stated in the articles of association. Whether the acquisition falls within the company’s activity is determined by a commission of the relevant governorate (an administrative division of a country) of the province where the real estate is located.

However, establishment and foreclosure of mortgage on the real estate, acquisition of real estate or rights in rem over real estate in special investment areas are excluded from the permitting requirement.

Special permissions are required in the following cases:

• Permission of the commission of the relevant governorate if the land is located in special security areas.
• Permission of the General Staff (Turkish armed forces) or the commandership that has been authorised if the land is located in a high military zone or a security zone.

A company with foreign capital must apply to the relevant governorate before acquiring real estate or establishing a right in rem on real estate to determine whether the real estate falls into one of these categories (Acquisition Regulation).

Real estate investment

Common structures used for investing in real estate are:

• Direct acquisition of the real estate.
• Acquisition of the shares of the company that owns the real estate.
• Investing in REITs.

REITs

REITs have recently become the key players in the Turkish real estate market. REITs in Turkey are strictly regulated by the Capital Markets Board, including in relation to minimum capital requirements (TRY20 million), permitted investments and certain portfolio restrictions.

Institutional investors

Investment by institutional investors is not very common in Turkey, as the market has been dominated by large family enterprises until recently. However, there is an increasing number of institutional and international investors that are active in the market, such as ECE Group headquartered in Germany, Coldwell Banker based in the US, EMG as a German-Swiss partnership, Goodman from Australia and Redevco of Belgium.

Private investors

Private investors have played a major role in the market so far. However, more recently, REITs are taking over their position in the market (see above, REITs).

Real estate legislation

The main piece of real estate legislation in Turkey is Chapter 4, Law of Property (Articles 683 to 1030) of the Turkish Civil Code (Civil Code). The Code of Obligations also includes provisions in relation to the sale and lease of real estate.

Sale of real estate

– Pre-contractual arrangements

A preliminary sale contract for real estate must be prepared in the form of a deed prepared by a notary public or by the Public Register office.

Large real estate companies may also enter into preliminary contracts with their customers before the start of construction to define the details relating to the real estate (such as the quality of the materials to be used). These contracts are not preliminary sale contracts in the technical sense.

– Sale contract

It is not usual to execute a detailed sale contract. The title of ownership is transferred by means of registration of the transfer of ownership before the Public Register with the mutual agreement of the parties. Since execution of the contract and the transfer of ownership by registration are carried out simultaneously before the Public Register, there is no explicit distinction between these two stages in practice.

– When legally binding

The parties are legally bound when the transfer of title is registered at the Public Register.

– Registration

The parties can register the change of title at any time.

– When title transfers

Title transfers once it is registered in the name of the new owner. For the sale to be legally valid, the title must be registered in the name of the new owner at the Public Register. Failure to comply with this requirement renders the sale null and void.

Real estate taxes and mitigation

VAT is payable on the sale of real estate. The current VAT rate is:

• 1% for households with a surface area below 150 square metres.
• 18% for households with a surface area above 150 square metres.
• 18% for business premises, irrespective of the surface area of the real estate.

The Value Added Tax Law sets out an exemption for corporate real estate sales. Under this exemption, the sale of real estate that has been listed as an asset of a company for two years is exempt from VAT. However, if the relevant company is engaged in real estate business and holds the relevant real estate for the purposes of that business, then the exemption does not apply.

Restrictions on foreign ownership or occupation

The acquisition of real estate or rights in rem over real estate in Turkey by foreign companies is restricted by law except for mortgage transactions which are not subject to restrictions. It is only permitted (Article 36, Land Register Law):

• To foreign legal entities incorporated for commercial purposes.
• In limited circumstances provided under specific laws (mainly the Tourism Incentive Law, Petroleum Law and the Industrial Zones Law).

Following the acquisition of the real estate, the owner must submit its intended project on the real estate to the approval of the Ministry of Economy within two years. The actual implementation of the project is then monitored by the Ministry of Economy.

In addition, a new Regulation on Acquisition of Real Estate and Rights in rem under the Land Register Law (Acquisition Regulation) was issued in August 2012. Under the Acquisition Regulation Turkish companies which have either direct or indirect foreign shareholding of 50% or more, or foreign shareholders who can appoint or remove from office the majority of the management team, can only acquire real estate or rights in rem over real estate in Turkey if this falls within their scope of activity as stated in the articles of association. Whether the acquisition falls within the company’s activity is determined by a commission of the relevant governorate (an administrative division of a country) of the province where the real estate is located.

However, establishment and foreclosure of mortgage on the real estate, acquisition of real estate or rights in rem over real estate in special investment areas are excluded from the permitting requirement.

Special permissions are required in the following cases:

• Permission of the commission of the relevant governorate if the land is located in special security areas.
• Permission of the General Staff (Turkish armed forces) or the commandership that has been authorised if the land is located in a high military zone or a security zone.

A company with foreign capital must apply to the relevant governorate before acquiring real estate or establishing a right in rem on real estate to determine whether the real estate falls into one of these categories (Acquisition Regulation).

Real estate investment

Common structures used for investing in real estate are:

• Direct acquisition of the real estate.
• Acquisition of the shares of the company that owns the real estate.
• Investing in REITs.

REITs

REITs have recently become the key players in the Turkish real estate market. REITs in Turkey are strictly regulated by the Capital Markets Board, including in relation to minimum capital requirements (TRY20 million), permitted investments and certain portfolio restrictions.

Institutional investors

Investment by institutional investors is not very common in Turkey, as the market has been dominated by large family enterprises until recently. However, there is an increasing number of institutional and international investors that are active in the market, such as ECE Group headquartered in Germany, Coldwell Banker based in the US, EMG as a German-Swiss partnership, Goodman from Australia and Redevco of Belgium.

Private investors

Private investors have played a major role in the market so far. However, more recently, REITs are taking over their position in the market (see above, REITs).

Real estate legislation

The main piece of real estate legislation in Turkey is Chapter 4, Law of Property (Articles 683 to 1030) of the Turkish Civil Code (Civil Code). The Code of Obligations also includes provisions in relation to the sale and lease of real estate.

Sale of real estate

– Pre-contractual arrangements

A preliminary sale contract for real estate must be prepared in the form of a deed prepared by a notary public or by the Public Register office.

Large real estate companies may also enter into preliminary contracts with their customers before the start of construction to define the details relating to the real estate (such as the quality of the materials to be used). These contracts are not preliminary sale contracts in the technical sense.

– Sale contract

It is not usual to execute a detailed sale contract. The title of ownership is transferred by means of registration of the transfer of ownership before the Public Register with the mutual agreement of the parties. Since execution of the contract and the transfer of ownership by registration are carried out simultaneously before the Public Register, there is no explicit distinction between these two stages in practice.

– When legally binding

The parties are legally bound when the transfer of title is registered at the Public Register.

– Registration

The parties can register the change of title at any time.

– When title transfers

Title transfers once it is registered in the name of the new owner. For the sale to be legally valid, the title must be registered in the name of the new owner at the Public Register. Failure to comply with this requirement renders the sale null and void.

Real estate taxes and mitigation

VAT is payable on the sale of real estate. The current VAT rate is:

• 1% for households with a surface area below 150 square metres.
• 18% for households with a surface area above 150 square metres.
• 18% for business premises, irrespective of the surface area of the real estate.

The Value Added Tax Law sets out an exemption for corporate real estate sales. Under this exemption, the sale of real estate that has been listed as an asset of a company for two years is exempt from VAT. However, if the relevant company is engaged in real estate business and holds the relevant real estate for the purposes of that business, then the exemption does not apply.

Restrictions on foreign ownership or occupation

The acquisition of real estate or rights in rem over real estate in Turkey by foreign companies is restricted by law except for mortgage transactions which are not subject to restrictions. It is only permitted (Article 36, Land Register Law):

• To foreign legal entities incorporated for commercial purposes.
• In limited circumstances provided under specific laws (mainly the Tourism Incentive Law, Petroleum Law and the Industrial Zones Law).

Following the acquisition of the real estate, the owner must submit its intended project on the real estate to the approval of the Ministry of Economy within two years. The actual implementation of the project is then monitored by the Ministry of Economy.

In addition, a new Regulation on Acquisition of Real Estate and Rights in rem under the Land Register Law (Acquisition Regulation) was issued in August 2012. Under the Acquisition Regulation Turkish companies which have either direct or indirect foreign shareholding of 50% or more, or foreign shareholders who can appoint or remove from office the majority of the management team, can only acquire real estate or rights in rem over real estate in Turkey if this falls within their scope of activity as stated in the articles of association. Whether the acquisition falls within the company’s activity is determined by a commission of the relevant governorate (an administrative division of a country) of the province where the real estate is located.

However, establishment and foreclosure of mortgage on the real estate, acquisition of real estate or rights in rem over real estate in special investment areas are excluded from the permitting requirement.

Special permissions are required in the following cases:

• Permission of the commission of the relevant governorate if the land is located in special security areas.
• Permission of the General Staff (Turkish armed forces) or the commandership that has been authorised if the land is located in a high military zone or a security zone.

A company with foreign capital must apply to the relevant governorate before acquiring real estate or establishing a right in rem on real estate to determine whether the real estate falls into one of these categories (Acquisition Regulation).

Real estate investment

Common structures used for investing in real estate are:

• Direct acquisition of the real estate.
• Acquisition of the shares of the company that owns the real estate.
• Investing in REITs.

REITs

REITs have recently become the key players in the Turkish real estate market. REITs in Turkey are strictly regulated by the Capital Markets Board, including in relation to minimum capital requirements (TRY20 million), permitted investments and certain portfolio restrictions.

Institutional investors

Investment by institutional investors is not very common in Turkey, as the market has been dominated by large family enterprises until recently. However, there is an increasing number of institutional and international investors that are active in the market, such as ECE Group headquartered in Germany, Coldwell Banker based in the US, EMG as a German-Swiss partnership, Goodman from Australia and Redevco of Belgium.

Private investors

Private investors have played a major role in the market so far. However, more recently, REITs are taking over their position in the market (see above, REITs).

Real estate legislation

The main piece of real estate legislation in Turkey is Chapter 4, Law of Property (Articles 683 to 1030) of the Turkish Civil Code (Civil Code). The Code of Obligations also includes provisions in relation to the sale and lease of real estate.

Sale of real estate

– Pre-contractual arrangements

A preliminary sale contract for real estate must be prepared in the form of a deed prepared by a notary public or by the Public Register office.

Large real estate companies may also enter into preliminary contracts with their customers before the start of construction to define the details relating to the real estate (such as the quality of the materials to be used). These contracts are not preliminary sale contracts in the technical sense.

– Sale contract

It is not usual to execute a detailed sale contract. The title of ownership is transferred by means of registration of the transfer of ownership before the Public Register with the mutual agreement of the parties. Since execution of the contract and the transfer of ownership by registration are carried out simultaneously before the Public Register, there is no explicit distinction between these two stages in practice.

– When legally binding

The parties are legally bound when the transfer of title is registered at the Public Register.

– Registration

The parties can register the change of title at any time.

– When title transfers

Title transfers once it is registered in the name of the new owner. For the sale to be legally valid, the title must be registered in the name of the new owner at the Public Register. Failure to comply with this requirement renders the sale null and void.

Real estate taxes and mitigation

VAT is payable on the sale of real estate. The current VAT rate is:

• 1% for households with a surface area below 150 square metres.
• 18% for households with a surface area above 150 square metres.
• 18% for business premises, irrespective of the surface area of the real estate.

The Value Added Tax Law sets out an exemption for corporate real estate sales. Under this exemption, the sale of real estate that has been listed as an asset of a company for two years is exempt from VAT. However, if the relevant company is engaged in real estate business and holds the relevant real estate for the purposes of that business, then the exemption does not apply.

Restrictions on foreign ownership or occupation

The acquisition of real estate or rights in rem over real estate in Turkey by foreign companies is restricted by law except for mortgage transactions which are not subject to restrictions. It is only permitted (Article 36, Land Register Law):

• To foreign legal entities incorporated for commercial purposes.
• In limited circumstances provided under specific laws (mainly the Tourism Incentive Law, Petroleum Law and the Industrial Zones Law).

Following the acquisition of the real estate, the owner must submit its intended project on the real estate to the approval of the Ministry of Economy within two years. The actual implementation of the project is then monitored by the Ministry of Economy.

In addition, a new Regulation on Acquisition of Real Estate and Rights in rem under the Land Register Law (Acquisition Regulation) was issued in August 2012. Under the Acquisition Regulation Turkish companies which have either direct or indirect foreign shareholding of 50% or more, or foreign shareholders who can appoint or remove from office the majority of the management team, can only acquire real estate or rights in rem over real estate in Turkey if this falls within their scope of activity as stated in the articles of association. Whether the acquisition falls within the company’s activity is determined by a commission of the relevant governorate (an administrative division of a country) of the province where the real estate is located.

However, establishment and foreclosure of mortgage on the real estate, acquisition of real estate or rights in rem over real estate in special investment areas are excluded from the permitting requirement.

Special permissions are required in the following cases:

• Permission of the commission of the relevant governorate if the land is located in special security areas.
• Permission of the General Staff (Turkish armed forces) or the commandership that has been authorised if the land is located in a high military zone or a security zone.

A company with foreign capital must apply to the relevant governorate before acquiring real estate or establishing a right in rem on real estate to determine whether the real estate falls into one of these categories (Acquisition Regulation).

Real estate investment

Common structures used for investing in real estate are:

• Direct acquisition of the real estate.
• Acquisition of the shares of the company that owns the real estate.
• Investing in REITs.

REITs

REITs have recently become the key players in the Turkish real estate market. REITs in Turkey are strictly regulated by the Capital Markets Board, including in relation to minimum capital requirements (TRY20 million), permitted investments and certain portfolio restrictions.

Institutional investors

Investment by institutional investors is not very common in Turkey, as the market has been dominated by large family enterprises until recently. However, there is an increasing number of institutional and international investors that are active in the market, such as ECE Group headquartered in Germany, Coldwell Banker based in the US, EMG as a German-Swiss partnership, Goodman from Australia and Redevco of Belgium.

Private investors

Private investors have played a major role in the market so far. However, more recently, REITs are taking over their position in the market (see above, REITs).

Real estate legislation

The main piece of real estate legislation in Turkey is Chapter 4, Law of Property (Articles 683 to 1030) of the Turkish Civil Code (Civil Code). The Code of Obligations also includes provisions in relation to the sale and lease of real estate.

Sale of real estate

– Pre-contractual arrangements

A preliminary sale contract for real estate must be prepared in the form of a deed prepared by a notary public or by the Public Register office.

Large real estate companies may also enter into preliminary contracts with their customers before the start of construction to define the details relating to the real estate (such as the quality of the materials to be used). These contracts are not preliminary sale contracts in the technical sense.

– Sale contract

It is not usual to execute a detailed sale contract. The title of ownership is transferred by means of registration of the transfer of ownership before the Public Register with the mutual agreement of the parties. Since execution of the contract and the transfer of ownership by registration are carried out simultaneously before the Public Register, there is no explicit distinction between these two stages in practice.

– When legally binding

The parties are legally bound when the transfer of title is registered at the Public Register.

– Registration

The parties can register the change of title at any time.

– When title transfers

Title transfers once it is registered in the name of the new owner. For the sale to be legally valid, the title must be registered in the name of the new owner at the Public Register. Failure to comply with this requirement renders the sale null and void.

Real estate taxes and mitigation

VAT is payable on the sale of real estate. The current VAT rate is:

• 1% for households with a surface area below 150 square metres.
• 18% for households with a surface area above 150 square metres.
• 18% for business premises, irrespective of the surface area of the real estate.

The Value Added Tax Law sets out an exemption for corporate real estate sales. Under this exemption, the sale of real estate that has been listed as an asset of a company for two years is exempt from VAT. However, if the relevant company is engaged in real estate business and holds the relevant real estate for the purposes of that business, then the exemption does not apply.

Restrictions on foreign ownership or occupation

The acquisition of real estate or rights in rem over real estate in Turkey by foreign companies is restricted by law except for mortgage transactions which are not subject to restrictions. It is only permitted (Article 36, Land Register Law):

• To foreign legal entities incorporated for commercial purposes.
• In limited circumstances provided under specific laws (mainly the Tourism Incentive Law, Petroleum Law and the Industrial Zones Law).

Following the acquisition of the real estate, the owner must submit its intended project on the real estate to the approval of the Ministry of Economy within two years. The actual implementation of the project is then monitored by the Ministry of Economy.

In addition, a new Regulation on Acquisition of Real Estate and Rights in rem under the Land Register Law (Acquisition Regulation) was issued in August 2012. Under the Acquisition Regulation Turkish companies which have either direct or indirect foreign shareholding of 50% or more, or foreign shareholders who can appoint or remove from office the majority of the management team, can only acquire real estate or rights in rem over real estate in Turkey if this falls within their scope of activity as stated in the articles of association. Whether the acquisition falls within the company’s activity is determined by a commission of the relevant governorate (an administrative division of a country) of the province where the real estate is located.

However, establishment and foreclosure of mortgage on the real estate, acquisition of real estate or rights in rem over real estate in special investment areas are excluded from the permitting requirement.

Special permissions are required in the following cases:

• Permission of the commission of the relevant governorate if the land is located in special security areas.
• Permission of the General Staff (Turkish armed forces) or the commandership that has been authorised if the land is located in a high military zone or a security zone.

A company with foreign capital must apply to the relevant governorate before acquiring real estate or establishing a right in rem on real estate to determine whether the real estate falls into one of these categories (Acquisition Regulation).

Real estate investment

Common structures used for investing in real estate are:

• Direct acquisition of the real estate.
• Acquisition of the shares of the company that owns the real estate.
• Investing in REITs.

REITs

REITs have recently become the key players in the Turkish real estate market. REITs in Turkey are strictly regulated by the Capital Markets Board, including in relation to minimum capital requirements (TRY20 million), permitted investments and certain portfolio restrictions.

Institutional investors

Investment by institutional investors is not very common in Turkey, as the market has been dominated by large family enterprises until recently. However, there is an increasing number of institutional and international investors that are active in the market, such as ECE Group headquartered in Germany, Coldwell Banker based in the US, EMG as a German-Swiss partnership, Goodman from Australia and Redevco of Belgium.

Private investors

Private investors have played a major role in the market so far. However, more recently, REITs are taking over their position in the market (see above, REITs).

Real estate legislation

The main piece of real estate legislation in Turkey is Chapter 4, Law of Property (Articles 683 to 1030) of the Turkish Civil Code (Civil Code). The Code of Obligations also includes provisions in relation to the sale and lease of real estate.

Sale of real estate

– Pre-contractual arrangements

A preliminary sale contract for real estate must be prepared in the form of a deed prepared by a notary public or by the Public Register office.

Large real estate companies may also enter into preliminary contracts with their customers before the start of construction to define the details relating to the real estate (such as the quality of the materials to be used). These contracts are not preliminary sale contracts in the technical sense.

– Sale contract

It is not usual to execute a detailed sale contract. The title of ownership is transferred by means of registration of the transfer of ownership before the Public Register with the mutual agreement of the parties. Since execution of the contract and the transfer of ownership by registration are carried out simultaneously before the Public Register, there is no explicit distinction between these two stages in practice.

– When legally binding

The parties are legally bound when the transfer of title is registered at the Public Register.

– Registration

The parties can register the change of title at any time.

– When title transfers

Title transfers once it is registered in the name of the new owner. For the sale to be legally valid, the title must be registered in the name of the new owner at the Public Register. Failure to comply with this requirement renders the sale null and void.

Real estate taxes and mitigation

VAT is payable on the sale of real estate. The current VAT rate is:

• 1% for households with a surface area below 150 square metres.
• 18% for households with a surface area above 150 square metres.
• 18% for business premises, irrespective of the surface area of the real estate.

The Value Added Tax Law sets out an exemption for corporate real estate sales. Under this exemption, the sale of real estate that has been listed as an asset of a company for two years is exempt from VAT. However, if the relevant company is engaged in real estate business and holds the relevant real estate for the purposes of that business, then the exemption does not apply.

Restrictions on foreign ownership or occupation

The acquisition of real estate or rights in rem over real estate in Turkey by foreign companies is restricted by law except for mortgage transactions which are not subject to restrictions. It is only permitted (Article 36, Land Register Law):

• To foreign legal entities incorporated for commercial purposes.
• In limited circumstances provided under specific laws (mainly the Tourism Incentive Law, Petroleum Law and the Industrial Zones Law).

Following the acquisition of the real estate, the owner must submit its intended project on the real estate to the approval of the Ministry of Economy within two years. The actual implementation of the project is then monitored by the Ministry of Economy.

In addition, a new Regulation on Acquisition of Real Estate and Rights in rem under the Land Register Law (Acquisition Regulation) was issued in August 2012. Under the Acquisition Regulation Turkish companies which have either direct or indirect foreign shareholding of 50% or more, or foreign shareholders who can appoint or remove from office the majority of the management team, can only acquire real estate or rights in rem over real estate in Turkey if this falls within their scope of activity as stated in the articles of association. Whether the acquisition falls within the company’s activity is determined by a commission of the relevant governorate (an administrative division of a country) of the province where the real estate is located.

However, establishment and foreclosure of mortgage on the real estate, acquisition of real estate or rights in rem over real estate in special investment areas are excluded from the permitting requirement.

Special permissions are required in the following cases:

• Permission of the commission of the relevant governorate if the land is located in special security areas.
• Permission of the General Staff (Turkish armed forces) or the commandership that has been authorised if the land is located in a high military zone or a security zone.

A company with foreign capital must apply to the relevant governorate before acquiring real estate or establishing a right in rem on real estate to determine whether the real estate falls into one of these categories (Acquisition Regulation).

Real estate investment

Common structures used for investing in real estate are:

• Direct acquisition of the real estate.
• Acquisition of the shares of the company that owns the real estate.
• Investing in REITs.

REITs

REITs have recently become the key players in the Turkish real estate market. REITs in Turkey are strictly regulated by the Capital Markets Board, including in relation to minimum capital requirements (TRY20 million), permitted investments and certain portfolio restrictions.

Institutional investors

Investment by institutional investors is not very common in Turkey, as the market has been dominated by large family enterprises until recently. However, there is an increasing number of institutional and international investors that are active in the market, such as ECE Group headquartered in Germany, Coldwell Banker based in the US, EMG as a German-Swiss partnership, Goodman from Australia and Redevco of Belgium.

Private investors

Private investors have played a major role in the market so far. However, more recently, REITs are taking over their position in the market (see above, REITs).

Real estate legislation

The main piece of real estate legislation in Turkey is Chapter 4, Law of Property (Articles 683 to 1030) of the Turkish Civil Code (Civil Code). The Code of Obligations also includes provisions in relation to the sale and lease of real estate.

Sale of real estate

– Pre-contractual arrangements

A preliminary sale contract for real estate must be prepared in the form of a deed prepared by a notary public or by the Public Register office.

Large real estate companies may also enter into preliminary contracts with their customers before the start of construction to define the details relating to the real estate (such as the quality of the materials to be used). These contracts are not preliminary sale contracts in the technical sense.

– Sale contract

It is not usual to execute a detailed sale contract. The title of ownership is transferred by means of registration of the transfer of ownership before the Public Register with the mutual agreement of the parties. Since execution of the contract and the transfer of ownership by registration are carried out simultaneously before the Public Register, there is no explicit distinction between these two stages in practice.

– When legally binding

The parties are legally bound when the transfer of title is registered at the Public Register.

– Registration

The parties can register the change of title at any time.

– When title transfers

Title transfers once it is registered in the name of the new owner. For the sale to be legally valid, the title must be registered in the name of the new owner at the Public Register. Failure to comply with this requirement renders the sale null and void.

Real estate taxes and mitigation

VAT is payable on the sale of real estate. The current VAT rate is:

• 1% for households with a surface area below 150 square metres.
• 18% for households with a surface area above 150 square metres.
• 18% for business premises, irrespective of the surface area of the real estate.

The Value Added Tax Law sets out an exemption for corporate real estate sales. Under this exemption, the sale of real estate that has been listed as an asset of a company for two years is exempt from VAT. However, if the relevant company is engaged in real estate business and holds the relevant real estate for the purposes of that business, then the exemption does not apply.

Restrictions on foreign ownership or occupation

The acquisition of real estate or rights in rem over real estate in Turkey by foreign companies is restricted by law except for mortgage transactions which are not subject to restrictions. It is only permitted (Article 36, Land Register Law):

• To foreign legal entities incorporated for commercial purposes.
• In limited circumstances provided under specific laws (mainly the Tourism Incentive Law, Petroleum Law and the Industrial Zones Law).

Following the acquisition of the real estate, the owner must submit its intended project on the real estate to the approval of the Ministry of Economy within two years. The actual implementation of the project is then monitored by the Ministry of Economy.

In addition, a new Regulation on Acquisition of Real Estate and Rights in rem under the Land Register Law (Acquisition Regulation) was issued in August 2012. Under the Acquisition Regulation Turkish companies which have either direct or indirect foreign shareholding of 50% or more, or foreign shareholders who can appoint or remove from office the majority of the management team, can only acquire real estate or rights in rem over real estate in Turkey if this falls within their scope of activity as stated in the articles of association. Whether the acquisition falls within the company’s activity is determined by a commission of the relevant governorate (an administrative division of a country) of the province where the real estate is located.

However, establishment and foreclosure of mortgage on the real estate, acquisition of real estate or rights in rem over real estate in special investment areas are excluded from the permitting requirement.

Special permissions are required in the following cases:

• Permission of the commission of the relevant governorate if the land is located in special security areas.
• Permission of the General Staff (Turkish armed forces) or the commandership that has been authorised if the land is located in a high military zone or a security zone.

A company with foreign capital must apply to the relevant governorate before acquiring real estate or establishing a right in rem on real estate to determine whether the real estate falls into one of these categories (Acquisition Regulation).

Real estate investment

Common structures used for investing in real estate are:

• Direct acquisition of the real estate.
• Acquisition of the shares of the company that owns the real estate.
• Investing in REITs.

REITs

REITs have recently become the key players in the Turkish real estate market. REITs in Turkey are strictly regulated by the Capital Markets Board, including in relation to minimum capital requirements (TRY20 million), permitted investments and certain portfolio restrictions.

Institutional investors

Investment by institutional investors is not very common in Turkey, as the market has been dominated by large family enterprises until recently. However, there is an increasing number of institutional and international investors that are active in the market, such as ECE Group headquartered in Germany, Coldwell Banker based in the US, EMG as a German-Swiss partnership, Goodman from Australia and Redevco of Belgium.

Private investors

Private investors have played a major role in the market so far. However, more recently, REITs are taking over their position in the market (see above, REITs).

Real estate legislation

The main piece of real estate legislation in Turkey is Chapter 4, Law of Property (Articles 683 to 1030) of the Turkish Civil Code (Civil Code). The Code of Obligations also includes provisions in relation to the sale and lease of real estate.

Sale of real estate

– Pre-contractual arrangements

A preliminary sale contract for real estate must be prepared in the form of a deed prepared by a notary public or by the Public Register office.

Large real estate companies may also enter into preliminary contracts with their customers before the start of construction to define the details relating to the real estate (such as the quality of the materials to be used). These contracts are not preliminary sale contracts in the technical sense.

– Sale contract

It is not usual to execute a detailed sale contract. The title of ownership is transferred by means of registration of the transfer of ownership before the Public Register with the mutual agreement of the parties. Since execution of the contract and the transfer of ownership by registration are carried out simultaneously before the Public Register, there is no explicit distinction between these two stages in practice.

– When legally binding

The parties are legally bound when the transfer of title is registered at the Public Register.

– Registration

The parties can register the change of title at any time.

– When title transfers

Title transfers once it is registered in the name of the new owner. For the sale to be legally valid, the title must be registered in the name of the new owner at the Public Register. Failure to comply with this requirement renders the sale null and void.

Real estate taxes and mitigation

VAT is payable on the sale of real estate. The current VAT rate is:

• 1% for households with a surface area below 150 square metres.
• 18% for households with a surface area above 150 square metres.
• 18% for business premises, irrespective of the surface area of the real estate.

The Value Added Tax Law sets out an exemption for corporate real estate sales. Under this exemption, the sale of real estate that has been listed as an asset of a company for two years is exempt from VAT. However, if the relevant company is engaged in real estate business and holds the relevant real estate for the purposes of that business, then the exemption does not apply.

Restrictions on foreign ownership or occupation

The acquisition of real estate or rights in rem over real estate in Turkey by foreign companies is restricted by law except for mortgage transactions which are not subject to restrictions. It is only permitted (Article 36, Land Register Law):

• To foreign legal entities incorporated for commercial purposes.
• In limited circumstances provided under specific laws (mainly the Tourism Incentive Law, Petroleum Law and the Industrial Zones Law).

Following the acquisition of the real estate, the owner must submit its intended project on the real estate to the approval of the Ministry of Economy within two years. The actual implementation of the project is then monitored by the Ministry of Economy.

In addition, a new Regulation on Acquisition of Real Estate and Rights in rem under the Land Register Law (Acquisition Regulation) was issued in August 2012. Under the Acquisition Regulation Turkish companies which have either direct or indirect foreign shareholding of 50% or more, or foreign shareholders who can appoint or remove from office the majority of the management team, can only acquire real estate or rights in rem over real estate in Turkey if this falls within their scope of activity as stated in the articles of association. Whether the acquisition falls within the company’s activity is determined by a commission of the relevant governorate (an administrative division of a country) of the province where the real estate is located.

However, establishment and foreclosure of mortgage on the real estate, acquisition of real estate or rights in rem over real estate in special investment areas are excluded from the permitting requirement.

Special permissions are required in the following cases:

• Permission of the commission of the relevant governorate if the land is located in special security areas.
• Permission of the General Staff (Turkish armed forces) or the commandership that has been authorised if the land is located in a high military zone or a security zone.

A company with foreign capital must apply to the relevant governorate before acquiring real estate or establishing a right in rem on real estate to determine whether the real estate falls into one of these categories (Acquisition Regulation).

Real estate investment

Common structures used for investing in real estate are:

• Direct acquisition of the real estate.
• Acquisition of the shares of the company that owns the real estate.
• Investing in REITs.

REITs

REITs have recently become the key players in the Turkish real estate market. REITs in Turkey are strictly regulated by the Capital Markets Board, including in relation to minimum capital requirements (TRY20 million), permitted investments and certain portfolio restrictions.

Institutional investors

Investment by institutional investors is not very common in Turkey, as the market has been dominated by large family enterprises until recently. However, there is an increasing number of institutional and international investors that are active in the market, such as ECE Group headquartered in Germany, Coldwell Banker based in the US, EMG as a German-Swiss partnership, Goodman from Australia and Redevco of Belgium.

Private investors

Private investors have played a major role in the market so far. However, more recently, REITs are taking over their position in the market (see above, REITs).

Real estate legislation

The main piece of real estate legislation in Turkey is Chapter 4, Law of Property (Articles 683 to 1030) of the Turkish Civil Code (Civil Code). The Code of Obligations also includes provisions in relation to the sale and lease of real estate.

Sale of real estate

– Pre-contractual arrangements

A preliminary sale contract for real estate must be prepared in the form of a deed prepared by a notary public or by the Public Register office.

Large real estate companies may also enter into preliminary contracts with their customers before the start of construction to define the details relating to the real estate (such as the quality of the materials to be used). These contracts are not preliminary sale contracts in the technical sense.

– Sale contract

It is not usual to execute a detailed sale contract. The title of ownership is transferred by means of registration of the transfer of ownership before the Public Register with the mutual agreement of the parties. Since execution of the contract and the transfer of ownership by registration are carried out simultaneously before the Public Register, there is no explicit distinction between these two stages in practice.

– When legally binding

The parties are legally bound when the transfer of title is registered at the Public Register.

– Registration

The parties can register the change of title at any time.

– When title transfers

Title transfers once it is registered in the name of the new owner. For the sale to be legally valid, the title must be registered in the name of the new owner at the Public Register. Failure to comply with this requirement renders the sale null and void.

Real estate taxes and mitigation

VAT is payable on the sale of real estate. The current VAT rate is:

• 1% for households with a surface area below 150 square metres.
• 18% for households with a surface area above 150 square metres.
• 18% for business premises, irrespective of the surface area of the real estate.

The Value Added Tax Law sets out an exemption for corporate real estate sales. Under this exemption, the sale of real estate that has been listed as an asset of a company for two years is exempt from VAT. However, if the relevant company is engaged in real estate business and holds the relevant real estate for the purposes of that business, then the exemption does not apply.

Restrictions on foreign ownership or occupation

The acquisition of real estate or rights in rem over real estate in Turkey by foreign companies is restricted by law except for mortgage transactions which are not subject to restrictions. It is only permitted (Article 36, Land Register Law):

• To foreign legal entities incorporated for commercial purposes.
• In limited circumstances provided under specific laws (mainly the Tourism Incentive Law, Petroleum Law and the Industrial Zones Law).

Following the acquisition of the real estate, the owner must submit its intended project on the real estate to the approval of the Ministry of Economy within two years. The actual implementation of the project is then monitored by the Ministry of Economy.

In addition, a new Regulation on Acquisition of Real Estate and Rights in rem under the Land Register Law (Acquisition Regulation) was issued in August 2012. Under the Acquisition Regulation Turkish companies which have either direct or indirect foreign shareholding of 50% or more, or foreign shareholders who can appoint or remove from office the majority of the management team, can only acquire real estate or rights in rem over real estate in Turkey if this falls within their scope of activity as stated in the articles of association. Whether the acquisition falls within the company’s activity is determined by a commission of the relevant governorate (an administrative division of a country) of the province where the real estate is located.

However, establishment and foreclosure of mortgage on the real estate, acquisition of real estate or rights in rem over real estate in special investment areas are excluded from the permitting requirement.

Special permissions are required in the following cases:

• Permission of the commission of the relevant governorate if the land is located in special security areas.
• Permission of the General Staff (Turkish armed forces) or the commandership that has been authorised if the land is located in a high military zone or a security zone.

A company with foreign capital must apply to the relevant governorate before acquiring real estate or establishing a right in rem on real estate to determine whether the real estate falls into one of these categories (Acquisition Regulation).

Real estate investment

Common structures used for investing in real estate are:

• Direct acquisition of the real estate.
• Acquisition of the shares of the company that owns the real estate.
• Investing in REITs.

REITs

REITs have recently become the key players in the Turkish real estate market. REITs in Turkey are strictly regulated by the Capital Markets Board, including in relation to minimum capital requirements (TRY20 million), permitted investments and certain portfolio restrictions.

Institutional investors

Investment by institutional investors is not very common in Turkey, as the market has been dominated by large family enterprises until recently. However, there is an increasing number of institutional and international investors that are active in the market, such as ECE Group headquartered in Germany, Coldwell Banker based in the US, EMG as a German-Swiss partnership, Goodman from Australia and Redevco of Belgium.

Private investors

Private investors have played a major role in the market so far. However, more recently, REITs are taking over their position in the market (see above, REITs).

Real estate legislation

The main piece of real estate legislation in Turkey is Chapter 4, Law of Property (Articles 683 to 1030) of the Turkish Civil Code (Civil Code). The Code of Obligations also includes provisions in relation to the sale and lease of real estate.

Sale of real estate

– Pre-contractual arrangements

A preliminary sale contract for real estate must be prepared in the form of a deed prepared by a notary public or by the Public Register office.

Large real estate companies may also enter into preliminary contracts with their customers before the start of construction to define the details relating to the real estate (such as the quality of the materials to be used). These contracts are not preliminary sale contracts in the technical sense.

– Sale contract

It is not usual to execute a detailed sale contract. The title of ownership is transferred by means of registration of the transfer of ownership before the Public Register with the mutual agreement of the parties. Since execution of the contract and the transfer of ownership by registration are carried out simultaneously before the Public Register, there is no explicit distinction between these two stages in practice.

– When legally binding

The parties are legally bound when the transfer of title is registered at the Public Register.

– Registration

The parties can register the change of title at any time.

– When title transfers

Title transfers once it is registered in the name of the new owner. For the sale to be legally valid, the title must be registered in the name of the new owner at the Public Register. Failure to comply with this requirement renders the sale null and void.

Real estate taxes and mitigation

VAT is payable on the sale of real estate. The current VAT rate is:

• 1% for households with a surface area below 150 square metres.
• 18% for households with a surface area above 150 square metres.
• 18% for business premises, irrespective of the surface area of the real estate.

The Value Added Tax Law sets out an exemption for corporate real estate sales. Under this exemption, the sale of real estate that has been listed as an asset of a company for two years is exempt from VAT. However, if the relevant company is engaged in real estate business and holds the relevant real estate for the purposes of that business, then the exemption does not apply.

Restrictions on foreign ownership or occupation

The acquisition of real estate or rights in rem over real estate in Turkey by foreign companies is restricted by law except for mortgage transactions which are not subject to restrictions. It is only permitted (Article 36, Land Register Law):

• To foreign legal entities incorporated for commercial purposes.
• In limited circumstances provided under specific laws (mainly the Tourism Incentive Law, Petroleum Law and the Industrial Zones Law).

Following the acquisition of the real estate, the owner must submit its intended project on the real estate to the approval of the Ministry of Economy within two years. The actual implementation of the project is then monitored by the Ministry of Economy.

In addition, a new Regulation on Acquisition of Real Estate and Rights in rem under the Land Register Law (Acquisition Regulation) was issued in August 2012. Under the Acquisition Regulation Turkish companies which have either direct or indirect foreign shareholding of 50% or more, or foreign shareholders who can appoint or remove from office the majority of the management team, can only acquire real estate or rights in rem over real estate in Turkey if this falls within their scope of activity as stated in the articles of association. Whether the acquisition falls within the company’s activity is determined by a commission of the relevant governorate (an administrative division of a country) of the province where the real estate is located.

However, establishment and foreclosure of mortgage on the real estate, acquisition of real estate or rights in rem over real estate in special investment areas are excluded from the permitting requirement.

Special permissions are required in the following cases:

• Permission of the commission of the relevant governorate if the land is located in special security areas.
• Permission of the General Staff (Turkish armed forces) or the commandership that has been authorised if the land is located in a high military zone or a security zone.

A company with foreign capital must apply to the relevant governorate before acquiring real estate or establishing a right in rem on real estate to determine whether the real estate falls into one of these categories (Acquisition Regulation).

Real estate investment

Common structures used for investing in real estate are:

• Direct acquisition of the real estate.
• Acquisition of the shares of the company that owns the real estate.
• Investing in REITs.

REITs

REITs have recently become the key players in the Turkish real estate market. REITs in Turkey are strictly regulated by the Capital Markets Board, including in relation to minimum capital requirements (TRY20 million), permitted investments and certain portfolio restrictions.

Institutional investors

Investment by institutional investors is not very common in Turkey, as the market has been dominated by large family enterprises until recently. However, there is an increasing number of institutional and international investors that are active in the market, such as ECE Group headquartered in Germany, Coldwell Banker based in the US, EMG as a German-Swiss partnership, Goodman from Australia and Redevco of Belgium.

Private investors

Private investors have played a major role in the market so far. However, more recently, REITs are taking over their position in the market (see above, REITs).

Real estate legislation

The main piece of real estate legislation in Turkey is Chapter 4, Law of Property (Articles 683 to 1030) of the Turkish Civil Code (Civil Code). The Code of Obligations also includes provisions in relation to the sale and lease of real estate.

Sale of real estate

– Pre-contractual arrangements

A preliminary sale contract for real estate must be prepared in the form of a deed prepared by a notary public or by the Public Register office.

Large real estate companies may also enter into preliminary contracts with their customers before the start of construction to define the details relating to the real estate (such as the quality of the materials to be used). These contracts are not preliminary sale contracts in the technical sense.

– Sale contract

It is not usual to execute a detailed sale contract. The title of ownership is transferred by means of registration of the transfer of ownership before the Public Register with the mutual agreement of the parties. Since execution of the contract and the transfer of ownership by registration are carried out simultaneously before the Public Register, there is no explicit distinction between these two stages in practice.

– When legally binding

The parties are legally bound when the transfer of title is registered at the Public Register.

– Registration

The parties can register the change of title at any time.

– When title transfers

Title transfers once it is registered in the name of the new owner. For the sale to be legally valid, the title must be registered in the name of the new owner at the Public Register. Failure to comply with this requirement renders the sale null and void.

Real estate taxes and mitigation

VAT is payable on the sale of real estate. The current VAT rate is:

• 1% for households with a surface area below 150 square metres.
• 18% for households with a surface area above 150 square metres.
• 18% for business premises, irrespective of the surface area of the real estate.

The Value Added Tax Law sets out an exemption for corporate real estate sales. Under this exemption, the sale of real estate that has been listed as an asset of a company for two years is exempt from VAT. However, if the relevant company is engaged in real estate business and holds the relevant real estate for the purposes of that business, then the exemption does not apply.

Restrictions on foreign ownership or occupation

The acquisition of real estate or rights in rem over real estate in Turkey by foreign companies is restricted by law except for mortgage transactions which are not subject to restrictions. It is only permitted (Article 36, Land Register Law):

• To foreign legal entities incorporated for commercial purposes.
• In limited circumstances provided under specific laws (mainly the Tourism Incentive Law, Petroleum Law and the Industrial Zones Law).

Following the acquisition of the real estate, the owner must submit its intended project on the real estate to the approval of the Ministry of Economy within two years. The actual implementation of the project is then monitored by the Ministry of Economy.

In addition, a new Regulation on Acquisition of Real Estate and Rights in rem under the Land Register Law (Acquisition Regulation) was issued in August 2012. Under the Acquisition Regulation Turkish companies which have either direct or indirect foreign shareholding of 50% or more, or foreign shareholders who can appoint or remove from office the majority of the management team, can only acquire real estate or rights in rem over real estate in Turkey if this falls within their scope of activity as stated in the articles of association. Whether the acquisition falls within the company’s activity is determined by a commission of the relevant governorate (an administrative division of a country) of the province where the real estate is located.

However, establishment and foreclosure of mortgage on the real estate, acquisition of real estate or rights in rem over real estate in special investment areas are excluded from the permitting requirement.

Special permissions are required in the following cases:

• Permission of the commission of the relevant governorate if the land is located in special security areas.
• Permission of the General Staff (Turkish armed forces) or the commandership that has been authorised if the land is located in a high military zone or a security zone.

A company with foreign capital must apply to the relevant governorate before acquiring real estate or establishing a right in rem on real estate to determine whether the real estate falls into one of these categories (Acquisition Regulation).