Analysts and economics varied regarding the impact of the presidential decree issued on Thursday 13 September 2018, deciding dealing with Turkish Lira in sale, rental real estate and movable properties' contracts rather than foreign currencies.
According
to the decree on the amendment of law No. 32 on the protection of Turkish
Currency value, the replacement of sale, rental and movable properties between
citizens residing within the Turkish shall not be determined in foreign
currency or its equivalent except for limited cases decided by the Ministry of
Finance.
The official Anadolu agency said the contracts include the sale and purchase of real estate and movable properties, the rental of all property including transport and finance, "works, services executed by leasing."
Contracts
previously concluded and denominated in foreign currencies shall be
re-determined in Turkish lira between the contract parties, except in cases
decided by the ministry within 30 days of the decree execution day.
The
decree noted that the Ministry of Finance and Treasury would supervise the
application of the provisions.
The
Turkish analyst Yusuf Katipoglu said in an interview with the Al Arabi newspaper
that the decree has negative and positive effects. It will increase the strong
demand for the lira and decrease the demand for the dollar, which will achieve
balance in the market and increase the price of the lira that will restore
confidence from investors after losing more than 40% of its value since the
beginning of the year.
"The decree will have a negative impact on the tenant," he said. Proposing " short- and medium-term lease contracts to avoid that. because annual or long-term contracts will have a negative impact on tenants as the local currency improves he said.
He
noted that there is an increase in rents in Turkey, which is equivalent to the
inflation rate. This year it will be between 10 and 15 percent added to the
real estate rent, which will decline with the Lira recovery and reduction of
inflation rate which is more than 12% in Turkey now.
According
to the new Arab newspaper, real estate traders see that the new decree, will
increase sales, especially for those who are outside Turkey, who measure the
price in foreign currencies, and will contribute on the sector recovery, which
began to suffer some deadlock during the past two months.