Real estate sector draws big foreign investments

ANKARA - Anatolia News Agency

This Nov 8 photo shows a recently opened shoping mall in central Ankara. A report by Turkey’s Association of Real Estate Investment Companies say that the foreign interest in Turkey’s growing shopping mall market will continue. AA photo

Foreign direct investment in Turkey’s real estate sector totaled $200 million in 2011’s second quarter, resulting in the highest amount of capital inflow in the past eight quarters.

Also, the total value of real estate sales to foreigners in the second quarter of 2011 was $781 million. This translated as the highest amount of sales in eight quarters.

According to data provided in the “Real Estate Sector in Turkey and the World Second Quarter 2011” report issued by The Association of Real Estate Investment Companies (GYODER), direct investment into the real estate sector has more than doubled in the second quarter compared to the first quarter of the year. Foreign direct investment into the real estate sector in total of the first half of the year has reached $292 million. Total value of real estate sales to foreigners has reached $1,242,000.

Industrial buildings and warehouses

During the second quarter, business investments also increased. In the commercial real estate sector, the rapid expansion in economic activities has sustained positive growth. The supply in the office and shopping center market has met with sufficient demand.

While construction permits obtained for industrial buildings and warehouses had reached a record level of 3.56 million square meters in the fourth quarter of 2010, this fell to 775,000 square meters in the first quarter of 2011. There was a significant increase in construction permits obtained in the second quarter.

Meanwhile, the logistics spaces market remained stagnant. The Istanbul logistics market was as stagnant in the second quarter of 2011 as it was during the first quarter. Despite the rapid pace of economic, industrial and commercial growth observed, logistics spaces activities remained limited in the second quarter. Although there was relative improvement in tenant demand, new rentals were weak. Logistics warehouse rentals remained at their first quarter levels. An increase in demand for logistics spaces is projected for the second half of the year, particularly as a result of regulations in the retail sector.

All time high in office buildings

During the second quarter of 2011, office buildings obtaining occupancy permits reached an all time high of 1.07 million square meters. As a result of the recent increase in office-workplace investments, occupancy permits were at record levels in the second quarter.

Construction licenses obtained for office buildings demonstrated a significant increase over the first quarter, totaling 1.05 million square meters. Investments and occupancy of completed investments in the office sector are also expanding.

Shopping center investments continue

As a result of the dynamism within the domestic consumer and retail sectors, shopping center investments continued in the second and third quarters of the year. Shopping center investments are progressing both in the major cities and in other cities nationwide.

The expansion in purchasing power and the consumer preferences of the new middle class are prompting shopping center investments to expand into other cities and whereby facilitating the increase in the share of organized retail.

An important development in the shopping center sector is the significant rise in tenants’ foreign currency cost of rent due to an increase in foreign exchange rates. This development will have negative effects both on existing tenants and rental demand. A search for a new pricing equilibrium is underway.

A total of six new shopping centers were opened by Sept. 16 in the third quarter of 2011. The amount of space available to lease in the six new shopping centers totals 249,550 square meters. Three of these new shopping centers are in Istanbul. As a result, the total number of shopping centers has reached 284 and the total amount of space available to lease nationwide has increased to 7.12 million square meters.