Foreigners snap up iconic waterfront mansions in Istanbul

They are among Istanbul’s most iconic sights -- magnificent waterside mansions strung out along the Bosphorus as the waters of the strait dividing Europe and Asia lap almost at their front doors. Once the preserve of the Ottoman elite and affluent foreigners working in what was Constantinople, the mansions, known as yalis, were made famous in novels and more recently through modern Turkey’s hugely successful TV soap operas.

But dozens are now up for sale as Turkey enters a more troubled economic period and owners seek to cash in their luxury assets. Prospective new owners can expect to pay up to $100 million (87 million euros) for one of the premium properties -- but have the chance of obtaining a Turkish passport thrown in. With such a hefty asking price -- as well as the opportunity of becoming a Turkish national -- buyers are likely to be foreigners, heralding a drastic shake-up in the mansions’ ownership. Real-estate brokers in Istanbul said that out of around 600 waterside yalis along the Bosphorus, 60 were currently up for sale.

The Turkish lira this summer plunged in value as markets reacted to a bitter spat with the United States and many buyers think now is the perfect time to snap up property assets while the currency is cheap. Sales have to be in Turkish lira -- President Recep Tayyip Erdogan’s government has banned the sale, rent or leasing of property being conducted in, or indexed to foreign currencies. Brokers say that in a major turnaround, prospective buyers are almost never Turkish and are likely to be from the Middle East, especially Ankara’s closest Gulf ally, Qatar.

“With the lira losing value, Istanbul has become a paradise for people from the Gulf with higher purchasing power in their hands,” Hamed Elhamian, sales director at ANKA Invest, said. “Investors from the Gulf believe that the lira will rise in value in the near future and their investments will appreciate in a very short time,” he said. Ugur Ayhan, a luxury real-estate consultant, also said foreign buyers had been showing greater interest in Turkey over recent months. “Our potential clients are largely from Middle Eastern countries. We see people from Azerbaijan and Iran but we have a customer portfolio dominated by Qatar,” he said.

Along with the financial incentives, another attraction of buying a property is the possibility of gaining a Turkish passport, which offers eased or visa-free travel to key destinations. Under a decree issued last month, Turkey made it easier for foreigners to become Turkish citizens by reducing the financial and investment criteria for citizenship. Foreigners now need to have $500,000 deposited in Turkish banks -- down from the previously required $3 million -- while fixed capital investment was cut from $2 million to $500,000.

And crucially, individuals owning property worth $250,000 or more are now also entitled to become Turkish citizens, compared with the previous value necessary of $1 million. Yet Ayhan said that, while the latest measures would ramp up demand for newly-built apartments in Istanbul, a yali was an ultra-luxury asset beyond the range of most buyers. “It is not possible to buy a luxury apartment, let alone a yali with $250,000,” he said. Among the hundreds of mansions along the two sides of the Bosphorus, 360 of them are of historic value, according to real-estate broker Pinar Ayikcan Tuna. For the historic mansions, potential buyers need to receive permission from both the development directorate of the Bosphorus and the council of monuments for any renovations or to fortify a building’s exterior facade.

“Turkish laws require that historic buildings are renovated or restored according to the original,” Ayhan said. Some of the mansions are still owned by members of the Turkish elite, including the two largest family conglomerates: Koc and Sabanci. However, said Elhamian: “The domestic interest in the real estate is very low.” “Many local Turkish citizens and developers are looking to sell their real estate to foreigners who are looking to buy luxury properties worth more than the $250,000 needed for citizenship.”