Turkish real estate investment trusts slumped after the government raised value-added taxes on sales of new homes.
Emlak Konut Gayrimenkul Yatirim Ortakligi AS led declines on the Istanbul Stock Exchange National Reits Index, dropping 3.5 percent to 3.01 liras at the close in Istanbul, its biggest loss since May. The index dropped 2.1 percent, the only of 21 Turkey industry gauges tracked by Bloomberg to fall on the day. The Istanbul Stock Exchange National 100 added 1.8 percent to 79,642.06, a record high.
The new legislation raises taxes on sales of homes with appraisal values of less than 1,000 liras ($560) per square meter to 8 percent from 1 percent and for homes appraised at more than that to 18 percent. That replaces a size-based tax in which homes larger than 150 square meters were taxed at 18 percent while smaller homes were taxed at 1 percent. The taxes apply to construction permits issued from this year.
“Overall this is bad news for the sector,” Selim Cakir, an analyst at Turk Ekonomi Bankasi AS in Istanbul, said in an e-mailed report today. “New projects will be impacted negatively.”
Sinpas Gayrimenkul Yatirim Ortakligi AS fell 3.6 percent to 1.36 liras. Torunlar Gayrimenkul Yatirim Ortakligi AS fell 1.9 percent to 3.16 liras. Alarko Gayrimenkul Ortakligi AS dropped 2.4 percent to 22.25 liras.
The Reits Index gained 38 percent last year, compared with a 53 percent increase on the main stock measure.