Turkish lira and real estate investment
The effects of the decline of the Turkish lira against the dollar are not limited to negative effects only
, but also have clear positive effects
The real estate sector in Turkey is one of the sectors that benefited from the depreciation of the lira
The decline of the Turkish lira against the dollar began with the last third of October 2020, and it
opened the way for many questions about the price of the new Turkish lira and what extent the lira will fall to and its impact on the various economic sectors in Turkey
But what are the causes of fluctuations in the exchange rate of the Turkish lira?
On March 19, 2021, the Turkish Central Bank issued a decision to raise the interest rate from 17% to 19% on repurchases in an attempt to control the decline of the Turkish lira against foreign currencies.
On May 6, 2021, the Turkish Central Bank decided to fix the interest rate at 19% due to the downturn in the economy as a result of the outbreak of the Corona epidemic and the rise in prices of basic commodities, in an attempt to make the exchange rate of the Turkish lira stable.
After that, Turkish President Recep Tayyip Erdogan called for a reduction in the interest rate, in order to reduce inflation in the Turkish economy, after which the Turkish Central Bank announced on 09/23/2021 a reduction in the interest rate by 100 points to become 18%, after which the Turkish lira exchange rate fell directly as a result first to decide
After less than a month, the Turkish Central Bank decided to cut interest rates by 200 basis points from 18% to 16%, so that the lira fell rapidly from 9.22 Turkish liras against the US dollar to reach its lowest level at 9.84, and then returned and fell slightly.
In addition to the interest rate cut, there were a number of factors that affected the exchange rate of the Turkish lira, according to experts and economic analysts, including the recent internal political turmoil, most notably
Some Turkish opposition political parties have called for early presidential elections, as well as the issue of the Turkish president’s statement about the 10 undesirable ambassadors in Turkey
The increase in global inflation and expectations about inflation in the United States of America led to raising the yields of Treasury bonds, and consequently the dollar indices rose, which negatively affected the currencies of emerging market countries such as Turkey.
And do not forget the impact of the Corona virus and its negative economic secretions on all countries of the world, including Turkey
The decline of the Turkish lira and the real estate market
After the recent fluctuation in the exchange rate of the Turkish lira and its decline against foreign currencies, the question has become: Is buying a property at this time in Turkey considered a successful investment or a risk?
Risks are always present in any investment, so the smart investor must determine the factors of success and continuity of his investment and ideally exploit opportunities,
when the value of the Turkish lira drops, real estate prices in Turkey will rise because Turkey imports a lot of raw materials for construction and reconstruction, but this rise is not an instant jump Rather, it will be after a period of time, and since the investor is a foreigner, the amount he would have paid for an average property, for example in the suburbs of Istanbul, will enable him to buy a property of higher and better quality in vital areas.
After construction companies raise real estate prices in accordance with the new exchange rate,
the investor will then be able to To achieve a successful investment and avoid investment risks
On the other hand, to avoid more risks, foreign investors can buy the property they want in installments, with a down payment and the rest over 20 months, for example, in Turkish lira, and then they monitor the exchange rate of the lira.