Turkey’s Real Estate Market in 2024–2025: Risks and Restrictions for Foreign Investors

Turkey’s real estate market is undergoing a large-scale restructuring. New short-term rental rules, additional taxes, and declining foreign interest are reshaping traditional investment strategies. Where Airbnb income and quick resale to overseas buyers once dominated, these models are now losing efficiency. This article summarizes key regulatory changes and practical implications for investors—from legal requirements to macroeconomic risks.

Liquidity Crunch

Official lira-denominated indices show growth, but in hard currency (EUR/USD) prices for some developers have fallen substantially amid a liquidity crunch and discounting. Real cases: a unit that was “marketed” at €160,000 “yesterday” is now closing at €80–90,000 with some sellers. Looking only at TRY is a mistake; investment models must be run in hard currency and adjusted for inflation.

Over the same period, overall housing-price inflation fluctuated, reaching 69.03% in 2024. As of June 2025, rent inflation stood at 82.97% and housing-price inflation at 65.53%. Now add the local currency’s depreciation, rising market supply, and additional government restrictions. It’s no surprise that foreign owners are not just losing profit but slipping into negative returns and negative capitalization, often unable to recoup their investment on exit—the loss at sale can at times exceed 60% of the purchase price in hard-currency terms.

How to “unpack the nesting doll” of prices:
Nominal in TRY. Check the RPPI/developer price lists in lira.
Real price. Subtract inflation — RPPI itself gives the real trend: in July it was −0.5% y/y.
FX. Recalculate into EUR/USD at the current rate.
Rule of thumb. If your TRY price growth over the year is below the TRY depreciation vs. EUR/USD for the same period, then in hard currency your price fell — even if indices/price lists show “growth.”

Why many offers show −40–50% off peak in EUR/USD:
— liquidity stress at some developers → “peşin” (cash) discounts of 10–25% and more;
— a smaller hard-currency buyer base: foreigners’ share of transactions has shrunk to ~1.3–1.6%;
— marketing keeps old anchor list prices in TRY “at the top,” but the final deal reflects FX-repriced levels plus a discount.
TÜİK

Regional nuances (nominal in TRY): Ankara looks stronger (+42.9% y/y), Istanbul is mid-range (+33.5%), Izmir is weaker (+31.0% y/y and −1.0% m/m in July). Still, this is nominal and in lira; converting to EUR/USD can flip the picture.

Add to this the persistent rent inflation, which stood at 92% in June 2023. By July 2025 it had eased slightly to 83%, but it continues to exert heavy pressure on overall consumer prices. And, of course, it weighs on yields: price growth in lira was long capped at 25%, which didn’t cover the lira’s inflation/depreciation. Landlords are losing money month after month.

Meanwhile, according to official data from the Turkish Statistical Institute (TurkStat), after an 18% contraction in the first quarter of 2025, activity in Turkey’s housing market surged in the second quarter. Compared with the same period a year earlier, the number of buildings granted occupancy permits rose by 18.1%, the number of dwellings by 44.3%, and total floor area by 30.2%. The increase in supply further pushes down both rents and sale prices—additional losses on top of the lira’s steep annual depreciation.

How to sanity-check your deal quickly:
Take the “then” and “now” price in TRY.
Find the monthly average FX rates for those months (e.g., USD/TRY or EUR/TRY).
Convert both prices into the same currency: EUR price = TRY price / (EUR/TRY).
Compare percentages and factor in the real RPPI (if you need an inflation deflator).

Bottom line for investors: track three lines at once — nominal (TRY), real (minus inflation), and FX (EUR/USD). Without that, it’s easy to “see growth” that has already turned into a decline in hard-currency returns.

Importantly, experts forecast that inflation will continue to worsen. According to the central bank, higher-than-expected August inflation data confirmed the persistent difficulties in achieving disinflation.

Short-Term Rentals: Regulatory Shock

Permit and Plaque (İzin Belgesi). Rentals under 100 days are now only legal with official authorization from the Ministry of Culture and Tourism and the display of a plaque at the property entrance. Lack of documentation leads to orders to legalize activity and heavy fines.

These rules were first codified in Law No. 7464 (Nov 2, 2023) and detailed in a regulation effective Jan 1, 2024. Applications are filed via the e-Devlet
system, and plaques must be installed within 30 days. Each plaque contains a unique permit number and QR code linking to property details.

Penalties are strict: TRY 100,000 (~$2,500) for the first violation, rising to TRY 500,000–1,000,000 for repeat offenses. Online platforms also face fines of TRY 100,000 per illegal listing.

Concentration limit. In multi-unit buildings, one owner may license only up to 25% of apartments to prevent “mini-hotels.”

Taxes and Mandatory Fees

Transfer duty (tapu harcı). A 4% title deed transfer tax applies to all sales, officially split between buyer and seller but usually borne by the buyer. For a property worth TRY 1 million, the fee equals TRY 40,000.

Annual property tax (Emlak Vergisi). Residential properties are taxed at 0.1–0.2% of cadastral value depending on location, commercial at 0.2–0.4%. In Istanbul, a TRY 2 million apartment results in a yearly tax of TRY 4,000.

Accommodation Tax. Since 2023, short-term rentals incur an additional 2% accommodation tax, on top of VAT.

Rental income tax (PIT). Both residents and non-residents pay progressive income tax on rental earnings (15%–40%). The 2024 exemption threshold was TRY 33,000.

Macroeconomic Pressures

Inflation remains a key risk. TÜİK reported annual CPI growth of 32.95% in August 2025, with housing costs rising over 53% year-on-year.

Housing prices rose 32.8% nominally in July 2025, but inflation-adjusted figures show a 0.5% decline—the first negative real growth in years.

Declining Foreign Demand

Foreign purchases fell 32.1% in 2024 and continued dropping in 2025. In July 2025, foreigners bought just 1,913 homes, only 1.3% of total sales. Russians led with 315 deals, followed by Iranians (152) and Germans (135).

This structural decline highlights that “buy and flip to a foreigner” is no longer viable. Holding periods are longer, liquidity is weaker, and external demand no longer drives growth.

Business Models Under Pressure

Model A: Short-term rentals (Airbnb). Heavily regulated, requiring unanimous neighbor consent, İzin Belgesi, and subject to large fines plus multiple taxes.

Model B: Long-term rentals. More stable legally, but yields are modest after taxes and expenses.

Model C: Buy-to-hold. With inflation-adjusted price stagnation, speculative gains are limited.

Investor Checklist

Rental strategy: Ensure readiness to obtain permits and secure unanimous neighbor approval.

Taxes and fees: Budget for 4% tapu harcı, annual property tax, 2% accommodation tax, and PIT on rental income.

Price growth: Consider real vs. nominal appreciation amid >30% inflation.

Exit/liquidity: Don’t rely on foreign demand for quick resales.

Conclusion

Turkey remains a major and diverse market, but old investment models are no longer straightforward. Investors must factor in:

Strict legal compliance (permits, plaques, neighbor approval, 25% cap).

High tax burdens (accommodation tax, PIT, property tax, transfer duty).

Macroeconomic headwinds (high inflation, weaker foreign demand).

Sustainable strategies now require long-term horizons, conservative financial planning, and strict adherence to regulatory norms.