Türkiye: A Transcontinental Center for Wealth Migration Amid the Confluences of War, Politics, and Global Economic Turmoil

The post-pandemic world is relentlessly shifting toward a new order that revolves around robust capital flows across the globe. Türkiye’s historic role as a transcontinental powerhouse has become ever important for private wealth migration during this time. Alongside the country’s leading citizenship by investment program, the rising tensions surrounding its borders have led to a surge in the inflow of funds from high-net-worth and ultra-high-net-worth investors into the country. The precipitous decline of the Turkish lira has paved the way for note-worthy acquisitions of Turkish companies offering foreign investors opportunities to diversify their assets.

Accessibility is driving growth in private wealth advisory

In the past year, we have seen more ultra-high-net-worth individuals and families alike making Türkiye, particularly Istanbul, their home base than ever before. What distinguishes Türkiye among other countries is its accessibility. Istanbul is on a par with most European cities for ease of doing business and economic freedom and offers a highly qualified skill pool. The rapid growth spurt in the advisory market has attracted several of the largest international specialists, indicating a trend that is poised to continue in the years to come.

The government’s tax and citizenship incentives continue to draw the attention of investors from the Middle East, and most recently China and Russia. Buying real estate has been the driving force behind the success of the Türkiye’s Citizenship by Investment Program until now. However, we are seeing this trend shift towards more complex and efficient financial tools such as Real Estate Investment Funds (REIFs), which not only allow for ease of liquidation but also for tax optimization in ways that direct property investments never can.

Diversification and risk mitigation come to the fore 

In terms of Turkish private wealth, our clients are seeking to diversify and invest in euro or US dollar denominated opportunities abroad, to hedge against the decline of the Turkish lira. The top goal of our foreign private wealth clients investing in Türkiye, and for local clients seeking to invest abroad, has been risk mitigation. Our clients, especially billionaires, have prioritized succession planning, setting up trust funds, and including family members in more wealth decisions.

This indicates a growing need for more complex and liquid investment tools rather than the traditional fixed assets offered by the Turkish investment market. To meet this demand, together with our counterparts in banking and Türkiye’s Capital Markets Board, the regulatory and supervisory authority in charge of the securities markets in the country, UP Capital & Strategy has been introducing and implementing REIFs, trust funds, and similar arrangements for our foreign and local investors alike.

A new era for wealth advisory

The pandemic has redefined ultra-high-net-worth investors’ views, relationships, and behaviors. We are seeing ultra-high-net-worth individuals and family offices becoming more reliant on professional investment advisors and more comfortable with video calls and digital tools. They are far more willing to pay fees for professional advice rather than depend on their acquaintances, as they did in the past when it came to investing in or out of Türkiye.