Exchange rate fluctuations pose the biggest challenge to any investment process, and the greater the amount of money pumped into the investment, the greater the question of how to maintain the purchasing power of the currency in which I am dealing and how to avoid falling into losses or perhaps obtaining profits, so the investor Who wants to buy a property in Turkey asks, should I buy the property in Turkish lira or dollars?
Turkish lira exchange rate changes
Changing the exchange rate of the Turkish lira affects construction and cladding costs, and thus strongly affects real estate prices in the Turkish market. We will explain this impact mechanism:
The rise in the price of the Turkish lira against the US dollar translates to an increase in construction costs and an increase in the price of the property. The very important point here is that there is a time interval between the decrease in the price of the Turkish lira and the rise in the price of the property, according to economic theories the exchange rate reversal in general takes time to apply to all The production loops all the way to the final product, and here lies the golden opportunity...
When the beginnings of the rise in the exchange rate of the Turkish lira appear, act quickly and buy the property, as the continuation of the exchange rate at a natural rise means an increase in the price of the same property that you purchased at the previous exchange rate, the profit that you have obtained is due to the difference between the two real estate prices when the two exchange rates of the Turkish lira change,
As for the opposite picture, it appears to us when the exchange rate of the Turkish lira drops and its impact on the decrease in construction costs (but not at the speed of its rise that we discussed earlier), which means a decrease in real estate prices as well.
Factors affecting the change in the exchange rate of the Turkish lira against foreign currencies
On the occasion of talking about the change in the exchange rate of the Turkish lira and its impact on changing real estate prices in the Turkish real estate market, we will talk about some of the factors that affect the exchange rate:
- The trade balance, which is the difference between the exports and imports of the country.
- Increased demand for the local Turkish currency leads to an increase in the exchange rate of the Turkish lira.
- The economic theory says that the increase in demand for products leads to an increase in their prices and thus the occurrence of the phenomenon known as inflation and associated with a rise in interest rates, which is reflected in the exchange rate of the Turkish lira and thus the price of the property.
But the question here is, do I have this experience that helps me to intervene in buying at the right moment, or is this step a kind of risk?
The reasons that support the timing of entering the real estate market
Real estate investment is a long-term investment, in the sense that it is slow to be affected by the fluctuations that afflict the economies of different countries, especially Turkey, due to its constant impact on the permanent changes surrounding it in the continents of Asia and Europe. Add to this the precautionary measures taken by the Turkish government to support its economy, as it is keen to maintain good relations with Countries that top the list of foreign investors and thus ensure the continuation of cash flow by these investors and feed the real estate sector constantly in terms of demand.
The Turkish government issued a presidential decree requiring that the property be priced in Turkish lira only to ensure the cash flow of the Turkish lira and thus mitigate exchange rate fluctuations.
The previous data paves the way for us to answer the broad question, do I buy property in Turkey in Turkish lira or in dollars?
- All the information that there are several factors that control the severity of the change in the exchange rate of the Turkish lira and thus the slight impact of real estate prices in the Turkish real estate market gives you a positive indication that buying a property in Turkish lira is better.
- Buying a property in Turkish lira is better than buying it in US dollars, but it is not always better. When the value of the Turkish lira gradually decrease (the exchange rate rises), buying the property in Turkish lira in this case is better than the US dollar, while in the opposite case when the Turkish lira recovers and increases in value It is better to buy the property in US dollars.
- The buyer of the property in Turkish lira can continue the process of saving in the price of the property. At the beginning of the project, the investor needs financing to complete the project stages, and here the buyer can intervene and obtain offers.
- Participation in project financing, even in Turkish lira, needs a factor of confidence that the project will continue, and the Turkish Military Housing Corporation is the strong guarantor of project financing and completion.
Real estate prices in Turkey and the factors affecting them
Apart from the fluctuations in the exchange rate of the Turkish lira and its impact on real estate prices in the Turkish real estate market, there are factors related to the property itself that affect and control its price:
- The right way to buy: Once you know the real estate values in the target area well, you are ready to discover profitable deals that are directly affected by the location of the property.
- The proximity of the property to large shopping centers means that the demand for it will increase, and thus the price of this property will rise.
- The location of the property near the transportation network means ease of movement and this is an attractive factor for the investor and affects the price of the property as well.
- The condition of the property, if it is new and in good condition and equipped with the necessary equipment, it will increase in demand by tenants or even by investors, which will certainly affect the price of the property or its rent, on the contrary, if the property is dilapidated, old and not equipped as it should.
At first glance, it may seem complicated and it requires a lot of accuracy, experience, patience, continuous monitoring of financial markets, changes in currency exchange rates and their impact, taking the appropriate time to intervene and making a decision to buy a property, in addition to choosing the appropriate currency for purchase... All these variables become logical when you reap the profits resulting from these differences in prices and make sure that it deserves all this scrutiny and analysis, good luck.
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