Turkish real-estate companies led by Emlak Konut Gayrimenkul Ortakligi AS (EKGYO) slid the most this year after the government said it’s considering extending a value- added-tax on property sales.
A gauge of property companies declined for a second day, dropping 3.4 percent to 32,385.42, the biggest one-day decline since Dec. 12. Emlak Konut fell the most since August, losing 5.8 percent to 2.10 liras. Sinpas Gayrimenkul Yatirim Ortakligi AS (SNGYO) fell 5.7 percent to 1.15 liras, the lowest since Jan. 31.
The Cabinet will decide on imposing the value-added-tax, currently levied only on sales of units of 150 square meters (1,615 square feet) or more, on smaller units depending on property value, construction costs and the industry’s needs, Finance Minister Mehmet Simsek said yesterday during a debate on the measure in parliament.
The increase “could cause a three percentage point decline in gross margin for all of the upcoming projects for a company like Sinpas that bears all the costs,” according to Gulhan Ovalioglu, an analyst at Istanbul-based brokerage BGC Partners. “The bill could be passed before the parliament’s summer recess on July 1.”
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