Investing in Türkiye: Property or Bank Deposit, Which is Better?

Given the recent economic fluctuations and rising inflation rates in many countries, most people with significant liquidity are looking for safe and profitable investment opportunities abroad. Turkey has become an attractive destination for investors due to its strategic geographical location, high economic growth potential, and competitive exchange rate. One of the most common ways to invest in Turkey is to buy property and deposit it in banks in the country. But which of these methods is the better choice?

To answer this question, we need to consider various factors, including risk appetite, investment duration, exchange rate, inflation, and other economic factors that can affect property value and bank deposit interest. If you have cash assets and want to invest them in Turkey, we suggest you stay with us until the end of this article.

Review of buying a house and investing in real estate in Türkiye

If you are looking for a safe and profitable investment, buying property in Turkey, especially in advanced cities like Istanbul, is an excellent option. The Turkish economy and consequently the country’s real estate market have grown significantly in recent years. This continuous growth guarantees long-term profitability of your investment. Unliake many markets, real estate investment in Turkey has an almost certain profitability. Of course, the level of profitability and the time frame for achieving profit depend on various factors.

From luxury apartments in the heart of the city to beach villas in tourist areas, there are a variety of investment options in Turkey. You can also rent out your property and benefit from the monthly rental income. This income can cover part of your expenses and even bring you a significant profit.

By purchasing a property worth $400,000 in Turkey, you can obtain a Turkish passport. You can also obtain Turkish residency by purchasing a house worth at least $200,000. In addition, the property deed in Turkey is a legal document, which means that you will be the full owner of your property. We should not forget that the Turkish property market is low-risk. The Turkish housing market is less risky than many other markets.

What is the expected return on investment in Turkish real estate?

Investing in real estate in Turkey alone does not mean that the investment will be profitable. The property you buy must have at least two or more of the following characteristics in order to be considered a profitable investment. These characteristics include:

• Location of the property

• The credit of the company or organization that built the property

• Distance of the property to important and strategic areas of the city

• The property’s proximity to the region’s economic and employment hubs

• The property’s proximity to the region’s tourist and tourism hubs

• When you enter a construction project

In general, the more valuable the location of the property you purchase, the greater the reputation of the company building the property, and the shorter its distance from economic and employment hubs, tourist areas, and strategic areas of the city, the higher the profitability will be for you.

Let us also add that the profitability of pre-purchase (or pre-sale) projects is higher than ready-to-deliver projects. But the percentage of this profit varies from property to property. In some projects, you may reach 50% profit within 3 months, and in some projects you must wait at least a year to reach the profitability stage. But overall, it has a definite profitability.

Review of deposits in Turkish banks and expected profit returns

The Central Bank of Turkey increased bank interest rates from 35% to 40% on November 23, 2023, with the aim of reducing inflation and supporting the national currency. Since then, the annual interest rate of Turkish banks for lira deposits has been between 40 and 50% (of course, this interest rate varies from bank to bank and is not the same in all banks). For dollar accounts, this figure is between 0.5 and 1%.

Now, if you want to open a Turkish lira or dollar deposit account, you must have a Turkish passport or one of the valid types of residence in this country (such as residential, work or study residence). Your investment deposit account can be for one month, three months, six months, nine months or one year. After opening the account and depositing cash capital into this account, you can benefit from its annual interest.

But regarding the return on investment with the bank deposit method, given that Turkey’s inflation rate is around 60 percent and the value of the lira is lower than the dollar, naturally if you want to keep your capital in the bank for a long time and get a 40 to 50 percent interest, you will still be behind inflation and your money will become worthless. But if you intend to deposit for a short period (for example, 3 months), bank interest can be better than buying property. Because basically, investing in property will have a higher profit in the long term.

Of course, be aware that the bank interest rate in Turkey will reach 30 to 35 percent in 2025 for the third month onwards, and the interest can be withdrawn at the end of each period, and 7.5 percent tax will be deducted from it.

Ultimately, is it better to buy property in Türkiye or to deposit in Turkish banks?

Are you looking for an opportunity to grow your assets? Investing in Turkey has become an attractive option, given the recent economic fluctuations and the growth of the real estate market. But the main question is, is it better to deposit your capital in a bank or consider buying a property?

• Economic inflation and the depreciation of the lira against the dollar

Inflation in Turkey, like in many other countries, is rapidly increasing. This means that your money is worth less every day. The current inflation rate is around 60 percent, and with the decline in the lira, if you keep your capital in lira in the bank, you will eventually receive an interest rate of 40 to 50 percent, which is lower than the inflation rate. By depositing in a bank, even with a high interest rate, the real value of your money will still decrease. However, property, as a physical asset, retains its value and can even bring you significant profits as prices increase.

• Housing prices rise at the same time as the dollar rises

Many building materials in Turkey are imported and foreign. Therefore, the increase in the dollar directly affects the cost of buildings. In this way, with the increase in property prices, your profit will definitely be much higher than the 40 to 50 percent lira profit of banks. This means that by buying property, you are insuring yourself against the increase in the dollar.

Double profit with increased property value and rental income

With this simple comparison, we understand that depositing in Turkish banks, even with the maximum interest rate, is not a good idea. Because in a situation where the inflation rate is much higher than the interest rate on deposits, depositing means losing the value of the money. In addition, if your capital is in a currency other than the lira, exchange rate fluctuations can negatively affect the value of your deposit.

But investing in property kills two birds with one stone! First, the value of your property increases over time. Second, you can rent out your property and enjoy the rental income on a monthly or annual basis. This means that in addition to capital gains, you will also have a stable income.

Overall, given Turkey’s current economic conditions and the high potential for growth in the real estate market, investing in property can be a great opportunity to grow your assets. Are you ready to take a step forward and secure your financial future? Contact our experts now for a free consultation and more information.