Shopping center sector growth ‘may slowdown’ in Turkey

ISTANBUL

The gross shopping center space per 1,000 in Turkey increased to 122 m2 as of the end of 2013, Cushman & Wake field has said. DHA photo

The Turkish shopping center market has continued its growth from last year, particularly across Anatolia, but some risks that could give some headaches to the sector this year have emerged, according to Cushman & Wakefield’s annual review.

The report says the total shopping center supply has recorded a remarkable growth rate of 10 percent, in terms of space, and has revealed that the total volume of investment in shopping centers reached almost $310 million over the year.

According to the report published by one of the world’s leading property consultancy firms, the gross shopping center space per 1,000 in Turkey increased to 122 m2 as of the end of 2013. Ankara became the city with the largest shopping center space per 1,000 with its 260 m2, while Istanbul followed the capital with 243 m2.  

However, Istanbul, the main receiver of the lion share of investments, will dominate the market with a share of 58 percent in total pipeline development, followed by Ankara and İzmir with a share of 9 percent and 8 percent respectively, the report also read.  The total shopping center supply is estimated to exceed 12 million m2 with 440 retail centers in the next five years, including planning stage developments, the consultancy firm also predicted.

Lira devaluation and installment limits

However, Cushman & Wakefield’s warned the sector about the factors that pose downward risks on the expansion of the market.

“Although demand remained strong during the year, the latest restrictive laws on credit cards may affect the retail sector in the short to medium term,” the report stated.

With the aim of raising the domestic savings rate and reducing the nation’s dependence on foreign capital to finance consumption, the Banking Regulation and Supervision Agency have imposed restrictions on installment payments with credit cards in several types of goods, in a move that have begun to curb domestic spending.

“Another potential impact is the increase in exchange rates, which puts additional pressure on retailers in terms of rental values,” according to the review.

“Lease agreement restructuring from fixed to turnover rent or applying a fixed-exchange rate were already offered to retailers,” it said.

The Turkish Lira has dropped almost 30 percent against the dollar over the past nine months, which strained brands that usually pay shopping centers in the dollar.