Turkey to attract more real estate investors despite setbacks: Report

ISTANBUL- Hürriyet Daily News

Turkey’s real estate investment market has gained significant liquidity with a few major transactions completed in the past six to eight months. The market is expected to attract more local and global players in the near future. AA photo

Turkey’s real estate sector will continue to attract more local and global players in the near future from the retail market to the office market and hotel market despite the countrywide protests, according to a latest report by the global real estate services firm Jones Lang LaSalle.

The real estate investment market has gained significant liquidity with a few major transactions completed in the past six to eight months, the report titled “Turkey Real Estate Overview – August 2013” said.

Although Turkey received investment-grade credit ratings from several agencies for the last months and construction is booming, international capital from real estate investors has been thin on the ground, sector representatives noted.

“Despite the fact that the recent protests against the government by some segments of the public led to concern amongst investors, we expect this to be temporary with limited impact on investor demand, particularly from those with experience in the market and have largely remained confident about Turkey’s future,” the Jones Lang LaSalle report said, but also warned about a temporary pullback from some potential newcomers.

The Gezi protests have triggered many questions about whether Turkey, especially Turkey’s big cities, would need more malls or not. As of the first half of 2013, the total shopping center gross leasable area (GLA) in Turkey reached 8.9 million square meters over 336 centers, with an increase of 581,000 square meters over 22 shopping centers compared to end-2012, the report said. With the completion of the projected projects, the total shopping center supply is projected to reach 12 million square meters over 424 shopping centers.

Gezi effect on hotels

Arrivals to Istanbul increased by 16.8 percent in June compared to the same period last year, according to the Ministry of Tourism figures. Istanbul hosted 34 percent of total arrivals, followed by Antalya with 29.4 percent in June.

While the revenue per available room (in euros) of hotels in Istanbul increased by 2.4 percent compared to the same period last year, the hotels saw a 23 percent decrease in June, according to the report.

Hoteliers are cautious about the second half of the year due to the nationwide Gezi Park demonstrations, the report said, adding that Istanbul’s hotel market recorded some major openings in the first half of the year, with more major developments expected to enter the market by the end of 2013.

“There are various challenges – for example, the requirement of a lease contract in Turkey’s hotel market. The majority of hotel contracts in Turkey are either management or franchise, excluding some limited brand agreements. German and some Middle Eastern funds especially would like to invest on a purely lease contract,” the report said.