Turkey’s real estate market continues to attract investors from across the globe due to its dynamic growth, geographical significance, and legal structure that supports private property ownership. However, instead of purchasing properties as individuals, many investors—both local and foreign—prefer to form real estate companies. This article examines the legal justifications and strategic advantages of establishing a real estate company in Turkey under Turkish law.
1. Legal Foundation for Real Estate Companies in Turkey
Turkey provides a strong legal framework for establishing and operating real estate companies. The main sources of law include:
a) Turkish Commercial Code (TCC) – Law No. 6102
- Regulates the establishment, governance, and operation of companies (Ltd. and A.Ş.)
- Provides legal identity and capacity to companies
- Allows real estate activities within the scope of the Articles of Association
b) Title Deed Law (Tapu Kanunu) – Law No. 2644
- Ensures legal ownership and registration of property
- Permits legal persons (companies) to acquire immovable property
- Article 35 addresses foreign company ownership of real estate
c) Law on the Regulation of Real Estate Trade – Regulation 2018/116
- Governs real estate brokerage and real estate development
- Introduces licensing, authorization, and ethical standards
d) Tax Procedure Law & Income Tax Law
- Defines taxation and accounting for companies involved in real estate
Through these legislative instruments, the Turkish legal system encourages structured investment while protecting property rights.
2. Strategic Reasons for Incorporating a Real Estate Company
Investors have multiple compelling reasons for incorporating a real estate entity rather than purchasing property in their personal names:
A. Limited Liability and Risk Management
- Companies offer limited liability protection: shareholders are only responsible up to the amount of capital they contribute.
- This is particularly valuable in high-value transactions or development projects with construction, contractor, or leasing risks.
B. Tax Optimization Opportunities
- Corporate entities can benefit from deductible expenses (e.g., maintenance, depreciation, salaries, consultancy fees).
- Opportunity to defer taxes through reinvestment strategies.
- Access to reduced corporate tax rates, VAT exemptions (under certain conditions), and capital gain deferrals on property sales.
C. Ease of Asset Management and Transfer
- Properties can be managed centrally through one entity.
- Selling company shares instead of the property itself can reduce transaction costs, taxes, and bureaucracy.
- Facilitates succession planning and investment exit strategies.
D. Professional Image and Operational Capacity
- Corporate identity inspires greater credibility with banks, investors, and clients.
- Ability to:
- Hire staff (e.g., lawyers, engineers, brokers)
- Enter into construction contracts and long-term leases
- Apply for government incentives and urban development projects
E. Access to Joint Ventures and Capital Raising
- Companies—especially Joint Stock Companies—can:
- Attract foreign or institutional investors
- Engage in joint ventures
- Issue shares or bonds
- Secure project financing through mortgage or project pledges
3. Advantages for Foreign Investors
Foreign nationals and legal persons often face restrictions when acquiring property individually in Turkey. However, through a Turkish-incorporated real estate company:
- No reciprocity requirement (as long as the company is a Turkish legal entity)
- Broader acquisition rights, especially for agricultural or strategic lands (subject to military and security clearance)
- Corporate flexibility to invest in different regions or diversify portfolios
This structure aligns with Article 36 of the Land Registry Law, allowing Turkish companies with foreign shareholders to acquire real estate within permitted zones.
4. Alignment with Investment-Based Residence Programs
Foreign investors who establish companies and invest in real estate above certain thresholds may also qualify for:
- Short-term residence permits
- Turquoise Card applications
- Turkish citizenship by investment (via investment in real estate ≥ $400,000)
Such benefits significantly incentivize the formal establishment of real estate companies over individual ownership.
5. Enabling Large-Scale Development and Construction Projects
In Turkey, most property development and construction activities are regulated by:
- Municipal zoning laws
- Building regulations
- Contractor registration requirements
Operating as a legal entity is often mandatory to:
- Obtain construction licenses
- Develop and sell units under pre-sale contracts
- Enter public-private partnerships
- Receive bank or investor financing
This is particularly important for urban transformation and mass housing projects, which require formal and registered entities.
6. Real Estate Brokerage and Consultancy
If the business intends to engage in real estate brokerage (buying, selling, renting on behalf of others), a formal company is required by law. Furthermore, the company must:
- Employ certified staff
- Apply for a real estate trading license
- Maintain a registered office with minimum technical standards
Operating without such a structure risks administrative penalties and closure.
7. Business Continuity and Expansion
Companies have a perpetual legal personality. In contrast to individuals who may sell or transfer properties sporadically, companies can:
- Plan for long-term development
- Enter into multiple contracts simultaneously
- Employ scalable operational models (e.g., multiple offices, regional teams)
- Build a recognizable brand
For investors thinking strategically and long-term, this structure is indispensable.
Conclusion
While individuals may legally own real estate in Turkey, the incorporation of a real estate company offers numerous legal protections, financial benefits, and strategic advantages. For professional investors, developers, and brokers—particularly foreign ones—the company route is not only recommended but often essential.
When combined with the Turkish legal framework that supports real estate entrepreneurship, a formal company setup becomes the optimal path for sustainable, compliant, and scalable property investment in Turkey.
INTERN LAW FACULTY STUDENT
YAĞMUR YORULMAZ
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