Our compatriots investing in foreign real estate are increasingly looking towards Istanbul
However, the governor of Chukotka should not be upset. There are palaces in Istanbul that are no worse, and the owners are more accommodating. For example, $150 million – and the Yalı Erbilgin castle, built in an Eastern style and standing right on the Bosphorus, is yours. And this, by the way, is a whole town concentrated on an area of 6,000 square meters. Here you have 64 rooms, your own pier, and dining terraces with a view of the majestic Sultan's Topkapi Palace. And that's not all. There are two living rooms with a total area of nearly 800 square meters, decorated with marble columns, gold cornices, and pilasters. Istanbul today has about 270 buildings of this level. Currently, four of them are put up for sale.
Of course, the story with Abramovich and the "Lion Palace" is a special case. However, there are now many wealthy citizens who want to acquire property on the shores of the Bosphorus. Some even speak of a new trend: our compatriots, who until recently considered it good form to have housing in the UK or Spain, are now choosing Turkish Istanbul. Is that true?
Turkish March
When in 2003 a law came into force in the country allowing foreign citizens to purchase land and houses, thousands of our compatriots rushed to develop the "Turkish coast". It must be said that real estate transactions had been carried out in Turkey even earlier, before the official permission. The first to "nail their shield on the gates of Tsargrad" were, of course, the "shuttle traders", who bought cheap apartments in the Laleli shopping district. The square meters were used as warehouses and stuffed to the ceiling with all kinds of junk – from underwear to sheepskin coats. Our enterprising compatriots, not having the legal right to buy housing, resorted to various tricks: for example, they entered into fictitious marriages with calculating Turks.
Interestingly, Laleli, when I first found myself in its labyrinths, reminded me of London's Hackney Wick market, which supports many immigrants. Around the same dreary gray buildings, in the ground floors of which lively trade unfolds. Everywhere you can hear native speech. Tired, hungry – pop into one of the many restaurants with homemade Russian cuisine. For example, in the establishment under the sign "Aquarius" for $5, a waitress Natasha will feed you borscht, pelmeni, and kvass. They will not sell you strong drinks for anything: the local population still recalls with horror how a couple of years ago Russians, having overdone it with alcohol, almost destroyed half the district. Since then, even beer has been removed from the menu.
Laleli is certainly a district where Russian speakers are remembered for their checked bags, strange shouts like "Natashka, where the hell are you?!", and the habit of sweeping goods off the shelves without waiting for dust to settle on them. But that is in the past. Recently, respectable people who consider this city the "Eastern brother" of London or even its alternative have been appearing more and more often in Istanbul.
How to get into Europe?
Istanbul is located in two parts of the world at once – Europe and Asia. From one bank to the other across the strait you can get via two bridges – the Bosphorus Bridge and the Sultan Mehmed Fatih Bridge. The Turks themselves joke that their Asia is in Europe, and Europe in Asia. For example, it is in the European part that most minarets and Eastern palaces are located. But the architectural appearance of the Asian part resembles European megacities. By the way, living in Europe and commuting to work in Asia (and vice versa) for Istanbulites is tantamount to suicide. Both bridges over the Bosphorus are deadlocked during rush hour due to traffic jams. The city has about 12 million people, and every second person has a car. We arrived in Istanbul early in the morning, but the city roads were already clogged with cars. It took us about two hours to get to the Bosphorus embankment, to the neighborhoods being developed by our compatriots.
In many large cities of the world there is sure to be a district considered purely Russian. In New York it is Brighton Beach, in Paris it is Passy, and in Istanbul it is the districts of Etiler, Arnavutköy, Bebek, and Levent, right on the embankment in the European part. Ten years ago, Russian language was exotic here. Now, wherever you go, you hear familiar speech. By the way, the apartments of local major bankers and heads of energy corporations are also located here. Why did our people drop anchor here? It turns out that almost a hundred years ago this place was a suburb, practically a wasteland. Emigrants from Russia were given land here for free. But over time, the city grew, stretched along the strait, and the former suburb found itself almost in the very center of Istanbul. Over the last 50 years, wealthy Turks have preferred to settle here, and the area became fashionable. Today, many compare it with London's Kensington, Chelsea, Belgravia, and Mayfair.
Under the Blue Sky
We are sitting with our compatriot Andrei Korneev on the shore of the Bosphorus, slowly drinking tea. I want to understand what made him and dozens of our fellow citizens sell property in Kazan, Novgorod, Ivanovo, and other Russian cities and settle on the Bosphorus coast. "I bought an apartment here after selling an apartment in the center of the capital," he says. "I lived here for a year and understood why our ancestors developed these places. Istanbul is built on hills, and this is a city with a lot of sky. Whether you drive on the highway or stroll along small streets, you will still end up on a hill. And when you look at the minarets, it seems that the sky itself is resting on them."
Turkish authorities allowed foreigners to buy real estate and land in 2003. And they got a bit too clever on this issue, because two years later they revoked their decision, as the law allowed buying up unlimited amounts of land. Local politicians panicked and sent the document back for revision. In January 2005, restrictions were introduced on the amount of land that private individuals could acquire. Now it is allowed to sell no more than two and a half hectares per owner.
The price of land, naturally, directly depends on the area. For example, if outside the city, in the Silivri district, the cost per square meter can be as low as $15, then in the Beşiktaş district, on the Bosphorus waterfront, it is already ten times higher. Turks adhere to a rule of "symmetry" in relations with the former Soviet Union. Since the procedure for Turks to acquire real estate in CIS countries is not legally defined, our compatriots in Turkey often face problems. They can only buy an apartment or house in Turkey together with the land. In doing so, the owner receives a so-called tapu – a title deed. Our citizens cannot buy a bare piece of land. It will only be leased to them on a long-term basis – for 49 or 99 years.
But in order to get the tapu, you first have to go through the procedure of obtaining a residence permit – oturma. To do this, it is enough to go to the police station at the location of the purchased property, present your foreign passport and a bank statement for at least $2,000. Within one week, a residence permit valid for 6 months will be issued, with further extension up to 5 years. If after 3 months you change your mind about buying the apartment, the oturma is automatically canceled.
Buy-Sell
Demand for real estate in Istanbul is growing today. Prices are increasing by an average of 25% per year. And if two years ago an apartment of 80 sq m in the city center could be bought for $100,000, now its cost is around $350,000. According to Zener Kilik, director of a local construction corporation, up to thirty new residential complexes should appear in the city by the end of the year: 'There is practically no free land in the city center now. So many developers buy old houses and build modern complexes on their sites. Today, over 12 million people live in Istanbul, and the city needs renewal.'
'Turkey is already a leader in the sales ranking compared to other European countries,' says Anastasia Markova, owner of the real estate company Hometurkey. 'And if the Bodrum region is, so to speak, a mass product, then Istanbul is a kind of exclusive product, of interest mainly to wealthy people, among whom there are many Russian speakers.'
Turks, by the way, are completely unconcerned about the origin of finances. Stories are told of cases when Russians came to realtors with suitcases of cash and bought entire floors. Why? Possibly as an investment method. An apartment can always be rented out, yielding up to 10% per annum, or resold, yielding at least a quarter above the original price. At the same time, taxes on purchase and sale are low, amounting to 3% of the amount stated in the tapu. This price is usually halved. The annual property tax is about 0.3-0.4% of the declared market value of the property. That is, having bought a mansion for half a million dollars and stated $250,000 in the tapu, you will pay a one-time tax of about $7,500, and the annual payment will be only $75.
'Of course, expensive historic mansions on the Bosphorus, like the one that Russian oligarch Abramovich took an interest in, can be on sale for years,' says realtor Irfan Tufeksever. 'In working with these properties, we adhere to the motto of Swiss bankers: money does not tolerate haste and publicity. The signing of the contract, if it comes to that, takes place over tea. However, you cannot buy such a mansion, demolish it and build a new one on this land – all palaces are listed. Therefore, their acquisition is more like an investment in cultural heritage.'
Turkish Subjects
The East, as is known, is a delicate matter. For example, if in the UK people can spend about ten minutes on a business meeting and solve all problems during that time, in Istanbul such negotiations will last at least two hours. And when both sides understand that they are one big family, you can safely sign the contract. But you must always remember to be cautious when choosing business partners. It's no secret that in Turkey everyone considers each other brothers and may offer you to register the property in the name of their relatives. However, in that case, you do not get ownership rights, but your Turkish partner does. Moreover, the apartments being sold may be under mortgage, or some forgotten heirs may appear. Yet, in business terms, Istanbul attracts our compatriots. Why?
'Huge amounts of money circulate here; our compatriots specialize in construction, textile, and tourism businesses – the latter, by the way, provides about 40% of the country's budget revenues,' says Anastasia Markova. 'Many of our fellow citizens invest in retail space, which brings their owners about 15% profit per year through rental.'
It has become fashionable to buy so-called resident apartments in glass skyscrapers and rent them out as offices to large companies. For example, a square meter of such space in the Şişli district costs from $4,000 to $10,000. The construction and sale of yachts are becoming very profitable businesses. And there are rumors that part of the local shipyard now also belongs to Russians.
But it would be wrong to say that all doors are open to us in Istanbul. Rather, they are waiting here not for our compatriots, but for their capital. Although many compatriots admit that doing business in Turkey is much easier than in over-bureaucratized Europe. In an interview with Itogi, a businessman from Moscow who has settled in Istanbul confessed: 'You can easily pump any money here from offshore or the Cayman Islands. The multitude of financial schemes that allow bypassing tax authorities makes Istanbul attractive for investing large capitals. And Russians here are not yet jostling each other like they do in London.'
Undoubtedly, today the city on the Bosphorus is an international business metropolis where interests from virtually all business sectors intersect. Here are the representative offices of major global companies. And despite the fact that the economy in Turkey is not as stable as the British one, businessmen still consider investing money here a very profitable business.
It is believed that Turkey's intention to join the European Union increases its attractiveness for business. Although local press writes that the talk around this is more like a political mousetrap luring foreign capital into the country. Istanbul Mayor Kadir Topbaş, in an interview with Itogi, was not surprised that today more and more Russian speakers are choosing his city as their place of residence: 'How many of them live here? No one has even counted. Your compatriots in the eyes of locals are respectable businessmen investing considerable money in both the city and the country. For example, just last year total investment was estimated at about $3 billion. We always welcome them and are ready to create favorable conditions for living, business, and leisure.'
Will Istanbul ever become a 'second London' for our compatriots? 'In England I can find everything that is good in Turkey. But whether I can find London-clean streets, polite cops, a solid pound, and confidence that my property rights are protected by a wall of laws in Istanbul is a big question for me,' says one of our fellow countrymen who long ago settled in a charming townhouse in London's Knightsbridge. Well, as the classic said, East is East, West is West, and the twain shall never meet. Even if only the Bosphorus separates them...