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Foreign Companies Acquiring Property in Turkey: A Comprehensive Guide

In Turkey, only commercial companies that are established under the laws of their respective countries and have legal personality may engage in Acquiring Property in Turkey and rights in rem as foreign legal entities. Legal entities other than trading companies (foundations, associations, etc.) are not allowed to acquire real estate and may not have rights in rem.

Acquiring Property in Turkey

The acquisition of real estate by commercial enterprises that are established abroad under the laws of their respective countries and have legal personality may be granted in exceptional cases and is only considered permissible if stipulated under the provisions of international conventions or special provisions. The specific codes, including the related provisions, underscore the stringent requirements governing Acquiring Property in Turkey. It is imperative for foreign entities to navigate the legal landscape meticulously, ensuring compliance with regulations delineated in Turkish law.

Furthermore, eligibility for Acquiring Property in Turkey hinges on adherence to specific criteria outlined in international conventions and special provisions. Commercial enterprises established abroad seeking to engage in real estate transactions must carefully consider the nuanced conditions specified in laws such as Law No. 6491 on Turkish Oil, Law No. 2634 on Tourism Incentives, and Law No. 4737 on Industrial Zones.

In summary, the process of Acquiring Property in Turkey by foreign legal entities, particularly commercial enterprises, demands a thorough understanding of the legal frameworks embedded in Turkish law, with a keen awareness of the exceptional circumstances and conditions delineated in the relevant codes and provisions.

NOTE: About mortgages, an exception is provided where there is no restriction on the mortgages to be taken on the property in favor of foreign natural and legal persons.

Gurcan Partners stands ready to provide comprehensive support throughout every stage of Acquiring Property in Turkey process. Please feel free to contact us via email info [@] gurcanpartners.com

What is the basic principle for foreign companies to engage in Acquiring Property in Turkey?

As stated above, it is not legally possible for both companies and other legal entities (associations, foundations, etc.) to acquire real estate in Turkey. However, companies established by the legislation of foreign countries (Tourism Incentive Law No. 2634, Industrial Zones Law No. 4737, Petroleum Law No. 6326, etc.) may acquire real estate (such as usufruct rights, usufruct rights, etc.) within the framework of certain special laws. 

It should also be noted that although foreign associations and foundations cannot engage in Acquiring Property in Turkey under normal conditions, they can overcome this obstacle by establishing an economic enterprise in Turkey and acquiring the real estate through that enterprise. This highlights an alternative avenue for foreign associations and foundations to navigate the regulations surrounding real estate acquisition in Turkey.

Under which special circumstances can foreign companies participate in Acquiring Property in Turkey?

Foreign companies will be able to acquire real estate if they fall within the scope of any of the following laws

• Law No. 2634 on Tourism Incentives: The Ministry of Culture and Tourism may decide to allocate real estates in culture and tourism protection and development zones and tourism centers to foreign tourism enterprises.  
• Law No. 4737 on Industrial Zones: The Ministry of Science and Industry may grant easement rights or utilization permits to foreign companies in areas allocated as “Industrial Zones”.
• Turkish Petroleum Law No. 6491: Companies established by the legislation of foreign countries may hold “Petroleum Rights” according to this Law and may lease the land required for petroleum operations from the Ministry of Finance, request the establishment of easement rights or obtain the right of use. In addition, even if the relevant lands are subject to private ownership, these companies will be able to request easement rights / lease by agreeing with the private property owner; if this agreement is not realized, they will be able to request the expropriation of the relevant land.

Even if companies established under the legislation of foreign countries cannot acquire real estate under any of the above laws, they can overcome this obstacle by establishing a company in Turkey, and this issue is explained in detail below. This approach underscores the alternative avenue available for Acquiring Property in Turkey by foreign companies, emphasizing the importance of complying with the established legal frameworks.

Check out our article on Company Formation in Turkey.

Our dedicated team is here to guide you through every step of the process of Acquiring Property in Turkey for foreigners. Gurcan Consultancy provides comprehensive consultation services. For expert assistance with your process, feel free to reach out to us anytime at: info [@] gurcanpartners.com

What are the other restrictions on Acquiring Property in Turkey imposed on foreign companies?

• The size of the real estate acquired by a company cannot be more than 30 hectares and cannot exceed 10% of the privately owned areas in the district where it is located.
• If a commercial company established following the legislation of a foreign country has purchased land/plots, it is obliged to realize a project on that real estate and must submit the relevant project for the approval of the Ministry within two years.
• Foreign-origin trading companies must obtain permission from the relevant commands for immovable properties to be purchased within military prohibited zones and military security zones, and from the provincial governorate for immovable properties within special security zones.

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If foreign legal entities acquire real estate in violation of the conditions set out in this letter or if they do not fulfill the obligations they must comply with, they will be required to liquidate the real estate within one year. Otherwise, the relevant real estate will be liquidated by the Ministry of Finance, and the value obtained will be paid to the right holder. This underscores the strict regulations governing Acquiring Property in Turkey by foreign legal entities and the consequences for non-compliance.

How does real estate acquisition by foreign capital companies operate when it comes to Acquiring Property in Turkey?

As mentioned above, the Acquiring Property in Turkey by companies established under the legislation of foreign countries is subject to severe conditions. However, this obstacle can be solved by establishing a company in Turkey and acquiring the real estate through that company.

What are the conditions for foreign capital companies when it comes to Acquiring Property in Turkey?

As a basic rule, companies with foreign capital established in Turkey will be able to engage in Acquiring Property in Turkey and acquire limited real rights (easement, etc.) to realize their purposes of activity.

Therefore, a textile manufacturing company will be able to buy a factory, while a retail company will not be able to own a house or land (unless it is related to its field of activity).

The most significant obstacle for foreign capital companies in this regard is the real estate they will buy in areas that fall under military exclusion zones, military security zones, and special security zones. To buy real estate in these areas, the permission of the Governorate or the General Staff will be required.

Incidentally, it should be noted that even if the owners of these companies are persons who cannot buy real estate in Turkey, there is no restriction in terms of the companies in which they hold shares. Therefore, even though a foundation, association, or company established following the laws of a foreign country will not be able to purchase real estate in Turkey, they will be able to acquire real estate through the company they will establish by Turkish Law.

Our specialized team at Gurcan Consultancy stands ready to assist you throughout each phase of the procedure for foreigners embarking on the journey of Acquiring Property in Turkey. With a focus on comprehensive consultation services, we are dedicated to providing tailored guidance to ensure a seamless and informed experience. For expert assistance aligned with your unique requirements, do not hesitate to contact us at any time: info [@] gurcanpartners.com. We are committed to addressing your queries and delivering specialized support for the entire process of acquiring property in Turkey.

Are there any exceptions to this rule regarding Acquiring Property in Turkey?

Although Foreign Capital Companies established in Turkey can acquire real estate within the above conditions;

• Establishment of immovable pledge, (Mortgage etc.)
• Property acquisitions within the scope of real estate pledge foreclosure,
• Transfer of immovable property and limited real rights arising from mergers and demergers,
• Acquisition of immovable property and limited real rights in special investment zones such as organized industrial zones, industrial zones, technology development zones and free zones; and
• (provided that the obligation to dispose of it within a certain period continues by the relevant legislation) for immovable properties acquired by banks due to transactions considered as loans within the framework of the Banking Law dated 19/10/2005 and numbered 5411 or for the collection of their receivables 

the above conditions will not apply.

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Feel free to reach out to us through the following contact information:

E-MAIL: info [@] gurcanpartners.com
TELEPHONE: +90 850 466 42 60

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Which types of foreign capital companies are subject to these procedures when it comes to Acquiring Property in Turkey?

Although the title of this article seems to cover all foreign capital companies, many foreign capital companies will be able to freely acquire real estate without being subject to the conditions in this article. Legal entities of foreign citizens / (associations, companies, foundations, etc.) or international organizations

• has a 50% or more shareholding or
• Appoint / dismiss the majority of the persons with management rights

companies will be subject to the restrictions and procedures under this letter.

Which companies are considered foreign-owned in the context of Acquiring Property in Turkey?

Not all companies with foreign capital are legally considered as foreign-owned companies. If the majority shares of a company with foreign capital are held by foreigners or foreigners have control over the managerial staff, the company is deemed to be a company with foreign capital.  For a Turkish company to be considered a Turkish company with foreign capital within the meaning of Article 36 of the Land Registry Law;

• Foreign natural persons, legal entities established by the laws of foreign countries and international organizations holding 50% or more of the shares
• Foreign natural persons, legal entities established by the laws of foreign countries and international organizations have the authority to appoint or dismiss the majority of the persons with management rights
• If the above-mentioned companies are directly or indirectly shareholders of another company established in Turkey, the shareholding rate of the foreign investor in the partnered company must be 50% or more.
• Foreign investors must directly or indirectly acquire 50% or more of the shares of the local capital companies owning the immovable property and the shareholding rate of foreign investors in the existing foreign capital companies owning the immovable property must reach 50% or more as a result of the share transfer. 

For companies with foreign capital that do not meet these conditions, the general rules apply and they are treated as Turkish companies.

The company that qualifies as a foreign-capitalized company as a result of a share transfer must notify the Ministry of Trade within one month following the share transfer by Article 5 of the Implementing Regulation of the Foreign Direct Investment Law. The notification obligation applies to subsidiaries only if they own real estate.

Companies included in Article 36 of the Land Registry Law are only companies with legal personality. Partnerships such as consortium, joint venture, joint venture, etc., which are considered as ordinary companies and ordinary companies, do not fall within the scope of Article 36 of the Land Registry Law since they do not have legal personality according to Turkish law.  On the other hand, for investments made through joint ventures, a distinction should be made according to the type of joint venture.

Where should companies apply for real estate purchases when considering Acquiring Property in Turkey?

Companies with foreign capital must include the phrase “Foreign Capital Company within the scope of Article 36 of the Land Registry Law No. 2644” in the authorization certificate and apply to the Provincial Planning and Coordination Directorate of the Governorship with the necessary documents.

In the authorization certificate for companies that are not considered as foreign capital companies by law, although they have foreign capital in their structure, the phrase “It is a Foreign Capital Company outside the scope of Article 36 of the Land Registry Law No. 2644” should be included. Such companies are considered as Turkish companies, and applications for Acquiring Property in Turkey are made directly to the land registry offices.

What are the documents required for the application when considering Acquiring Property in Turkey?

• Application petition.
• Title deed registration information about the immovable and a coordinated survey sample.
• A letter of undertaking stating that the immovable property or limited rights in rem on the immovable are requested to carry out the fields of activity specified in the articles of association of the company and that the immovable will be used for this purpose, and the signature circular of the company official who signed the letter of undertaking.
• An authorization certificate showing that the company is authorized to dispose of immovable property and its representative.
• If the shares of the company are not traded on the stock exchange, a document showing the current status obtained within the last month from the trade registry office where the company headquarters is registered, including the names or titles, citizenship and shareholding rates of foreign shareholders.
• If the shares of the company are traded on the stock exchange, a document showing the current status obtained from the Central Registry Agency A.Ş., including the names or titles, citizenship and shareholding rates of the foreign investors holding 10% or more of the company capital among the shares traded on the stock exchange and the names or titles, citizenship and shareholding rates of the foreign investors holding shares that are not traded on the stock exchange.
• In companies where foreign investors have the authority to appoint or dismiss the majority of the managers, although their shareholding is below 50%, a copy of the articles of association approved by the trade registry office where the company headquarters is registered.
• If the shares of the company are not traded on the stock exchange, the notarized copies of the relevant pages of the share ledger showing the shareholding structure of the company must also be submitted to the trade registry directorate by the relevant company within the scope of the issuance of the document showing the current situation obtained within the last month from the trade registry directorate where the company headquarters is registered, including the names or titles, nationality and shareholding rates of the foreign shareholders.

Gurcan Partners is positioned to deliver extensive and dedicated support throughout the entire spectrum of the process involved in Acquiring Property in Turkey. Our professional team is ready to provide detailed assistance, guaranteeing a seamless and tailor-made experience that caters to your specific requirements. Please do not hesitate to reach out to us via email at info [@] gurcanpartners.com for any inquiries or consultations. We are committed to ensuring your journey in acquiring property in Turkey is not only successful but also guided by comprehensive and personalized support.

How can an application be made for the process of Acquiring Property in Turkey?

The investor can apply in person, by mail, or by e-mail for the process of Acquiring Property in Turkey. During the applications made in person, the application documents are examined, and any deficiencies and inaccuracies that can be corrected immediately are addressed without the need for further correspondence. Deficiencies and inaccuracies detected afterward are notified to the company or subsidiary in writing.

What are the transaction costs associated with Acquiring Property in Turkey?

Foreigners Acquiring Property in Turkey are required to pay title deed fees and revolving fund fees for title deed transactions.

Foreign real persons and companies with foreign capital are required to pay a title deed fee at the rate of 20 per thousand separately for the seller and the buyer over the value declared for sale, not less than the real estate declaration value declared by the Municipality. If there is a fee exemption, a letter from the Tax Office regarding this issue must be submitted.

 

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Feel free to reach out to us through the following contact information:

E-MAIL: info [@] gurcanpartners.com

Gurcan Partners Turkey Office
ADDRESS: Kanyon Tower D Buyukdere Avenue. No. 185, 34394 İstanbul/Turkey
TELEPHONE: +90 850 466 42 60