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For almost a decade, real estate has undoubtedly been one of the hottest foreign investment sectors in Turkey. Needless to say that the enactment of liberal laws/regulations, which allow investors to acquire real estates much more conveniently than before, has played a major role in the latter. In Turkey, a body of laws composed of (i) Land Registry Law1 , (ii) Foreign Direct Investment Law2 and (iii) Military Forbidden Zones and Security Zones Law3 should collectively be taken into account as regards any real estate acquisition in which foreign individuals or legal entities are directly or indirectly involved. Besides, the regulations issued by the relevant ministries in accordance with the aforementioned laws should be considered.

The partial annulment of some of the said laws by the Turkish Constitutional Court and frequent amendments to the relevant regulations have unfortunately caused the matter of “real estate acquisition by foreigners in Turkey” to be quite complicated. Before continuing to read this article, one should remember that a foreign-related real estate acquisition in Turkey may be realized in 3 (three) different manners: (a) The acquiring party may be a foreign individual (who does not have Turkish nationality), (b) The acquiring party may be a foreign legal entity (which is incorporated outside of Turkey subject to the applicable foreign law), or (c) The acquiring party may be a Turkish company (incorporated in Turkey in accordance with Turkish law) whose shares are partly or wholly owned by foreign individuals and/or legal entities (“Foreign-owned Company”).

While the first two possibilities mentioned above are called “direct acquisitions”, the third one is an “indirect acquisition” because although the acquiring party is a Turkish company, the foreign nationality of its shareholders makes the transaction “foreign-related” and thus subject to approval by official bodies. In order to not cause any confusion to its readers, this article will only discuss indirect acquisitions which highly interest foreign investors. The essential provision regarding indirect real estate acquisitions in Turkey is Article 36 of Land Registry Law. It stipulates that Turkish companies4 which are established or subsequently acquired by foreign investors may acquire (i) the ownership of real estates or (ii) rights in rem on real estates in order to carry out their business activities set forth in their Articles of Association.