An IMGW News Report:
Türkiye’s wealth growth surpasses global expectations despite high inflation, with a 157% increase in wealth per adult from 2022 to 2023. Meanwhile, the Türkiye Citizenship by Investment Programme has attracted nearly 19,000 new citizens, offering visa-free travel and investment opportunities despite the country’s 71% inflation rate.
Highlights
- Türkiye has experienced a remarkable 157% increase in wealth per adult from 2022 to 2023, as detailed in the UBS Global Wealth Report 2024.
- Other nations with significant average wealth growth per adult include Qatar at 20% and South Africa at around 16%, while the US saw a modest rise of 2.5%.
- Türkiye’s inflation rate is an astonishing 71%, greatly affecting the purchasing power of its 85 million residents.
Türkiye has established itself as a global leader in wealth growth, recording a 157% increase in wealth per adult between 2022 and 2023, according to UBS’s Global Wealth Report 2024. This remarkable growth far outpaces other nations.
Following Türkiye, the highest increases in average wealth per adult were observed in Russia and Qatar at nearly 20%, and South Africa at just over 16%. In contrast, the United States saw a modest 2.5% increase.
Inflation in Türkiye currently hovers around 72%, a formidable figure that has significantly eroded the purchasing power of its 85 million residents in recent years. The Turkish lira has lost nearly 83% of its value against the dollar over the past five years, now trading at 33 lira to the dollar as of 09:07 BST on Wednesday.
Despite these challenges, Turks with assets such as real estate have seen their wealth increase as inflation drives up the value of these holdings. UBS defines net worth or “wealth” as “the value of financial assets plus real assets (principally housing) owned by households, minus their debts.”
During a media call, the report’s authors discussed the correlation between inflation and wealth increases in Türkiye. Samuel Adams, an economist at UBS Global Wealth Management, explained:
“In many ways, high inflation helps to explain why wealth has increased so significantly in local currency terms compared to other countries. Wealth is measured in nominal terms, and with high inflation, real assets like housing tend to see price rises that match or exceed inflation.”
Adams added, “However, not all benefit equally. Those without such assets or whose wages do not keep up with inflation will be negatively impacted.”
The report also highlighted the “currency effect,” which can significantly impact wealth growth figures. Local currency growth rates for wealth can be vastly different from those in dollar terms.
“For instance, Türkiye’s impressive growth of over 63% in USD terms more than doubles to nearly 158% in Turkish lira,” the report highlighted. In Japan, growth in wealth per adult in USD terms was under 2% between 2022-23, but in local currency, it was 9%.
Assessing wealth growth from 2008 to 2023, UBS noted that “the most dramatic changes have occurred in Türkiye”, where average wealth per adult has increased by 1708% in local currency.
Paul Donovan, Chief Economist at UBS Global Wealth Management, pointed out the distinction between being asset-rich and cash-rich, particularly in Türkiye.
“In terms of living standards, it’s essential to remember that while house values may have risen, real wages might have fallen at the same time. This situation can result in individuals being asset-rich but cash-poor,” Donovan explained. “Many economic stresses in Türkiye in recent years have stemmed from negative real income rather than asset performance.”
Additional Insights: The Türkiye Citizenship by Investment Programme
Launched in January 2017, the Türkiye Citizenship by Investment Programme, also known as the Turkish Golden Visa, aims to attract foreign investment and bolster the real estate sector. This programme has become one of the world’s most popular, naturalising nearly 19,000 individuals and being recognised as the fastest-growing Citizenship by Investment Programme globally.
Benefits of the programme include visa-free or visa-on-arrival access to over 110 destinations, citizenship for the applicant and family members, and potential eligibility for an E-2 Investor Visa in the USA after three years. Türkiye’s strategic location at the crossroads of Europe and Asia enhances its appeal.
To qualify, applicants must meet one of several investment criteria, such as purchasing real estate, making fixed capital contributions, depositing funds in a Turkish bank, investing in government bonds, or contributing to investment funds or a private pension system. Investment costs typically start at USD 400,000 for real estate or USD 500,000 for other options.
The application process involves selecting an investment option, obtaining a residence permit, opening a Turkish bank account, preparing required documents, making the investment in Turkish lira equivalent to the USD amount, and submitting biometrics. Approval is generally granted within three to five months, after which applicants can apply for citizenship and a passport.
If you’re interested in other IMGW News articles focusing on Türkiye, you may find the following features of interest:
- Turkish Delights
- Prime Property Picks: Europe’s Best and Worst Real Estate Markets for Investment in 2024
