Turkey Real Estate Report Q4 2011
Includes 3 FREE quarterly updates
Turkey’s real estate market is in a highly advantageous position. The sector’s fundamentals are sound owing to a high-performing economy, the strength of the banking system, high employment, industrialisation, rapid population growth, urbanisation, foreign direct investment and social housing investment by the government’s Housing Development Administration.
Additionally, the economy’s growth rate has been spectacular, with Q111 real GDP growing 11% yearon- year (y-o-y) and our real GDP growth forecast for 2011 set at 7%. However, we note that leading indicators are already showing signs of moderation, and we forecast a slowdown in GDP growth to 4.5% in 2012. Overheating pressures also remain a concern, with consumer price inflation hitting 6.7% y-o-y in August, and the central bank is likely to keep interest rates at 5.75% to the end of the year. There is a risk of a new global downturn, which would lead to falling business and consumer confidence and would threaten real estate market fundamentals.
Demand for office space, especially in Istanbul, is growing and is generally likely to continue doing so. In the city, especially in premium areas, increasing demand combined with limited supply is lowering vacancy rates and leading to rent increases.
In the retail sub-sector, high consumer demand for retail products – owing to sustained high consumer purchasing power at a time of low unemployment – has tended to push up retail rents, especially in prime areas. Although the market was flat in 2009 and early 2010, the sector has revived. Retail projects are being completed throughout the country – not just the main cities of Istanbul, Ankara and Izmir – and are trading successfully.
Industrial production is in good shape, and the industrial sub-sector is expected to maintain its momentum throughout 2011. Industrial vacancy rates in Istanbul are among the lowest of any of the countries whose real estate sectors are profiled by BMI. This is largely a reflection of the country’s highly favourable economic fundamentals. Logistics is the leading industrial sub-sector, driven by increasing industrial production and growing export-import and retail markets, with increased outsourcing to third-party logistics companies.
Key Opportunities/Drivers
Turkey’s real estate market is in a highly advantageous position. The sector’s fundamentals are sound owing to a high-performing economy, the strength of the banking system, high employment, industrialisation, rapid population growth, urbanisation, foreign direct investment and social housing investment by the government’s Housing Development Administration.
Additionally, the economy’s growth rate has been spectacular, with Q111 real GDP growing 11% yearon- year (y-o-y) and our real GDP growth forecast for 2011 set at 7%. However, we note that leading indicators are already showing signs of moderation, and we forecast a slowdown in GDP growth to 4.5% in 2012. Overheating pressures also remain a concern, with consumer price inflation hitting 6.7% y-o-y in August, and the central bank is likely to keep interest rates at 5.75% to the end of the year. There is a risk of a new global downturn, which would lead to falling business and consumer confidence and would threaten real estate market fundamentals.
Demand for office space, especially in Istanbul, is growing and is generally likely to continue doing so. In the city, especially in premium areas, increasing demand combined with limited supply is lowering vacancy rates and leading to rent increases.
In the retail sub-sector, high consumer demand for retail products – owing to sustained high consumer purchasing power at a time of low unemployment – has tended to push up retail rents, especially in prime areas. Although the market was flat in 2009 and early 2010, the sector has revived. Retail projects are being completed throughout the country – not just the main cities of Istanbul, Ankara and Izmir – and are trading successfully.
Industrial production is in good shape, and the industrial sub-sector is expected to maintain its momentum throughout 2011. Industrial vacancy rates in Istanbul are among the lowest of any of the countries whose real estate sectors are profiled by BMI. This is largely a reflection of the country’s highly favourable economic fundamentals. Logistics is the leading industrial sub-sector, driven by increasing industrial production and growing export-import and retail markets, with increased outsourcing to third-party logistics companies.
Key Opportunities/Drivers
- Real estate fundamentals are sound and favourable, based on a high-performing economy, among other factors.
- Demand for housing is very high and should remain so. Turkey requires an additional 3 million housing units from 2011-2015, and 500,000 extra housing units will be needed each year to 2027. The Turkish real estate investment trust (REIT) sector is increasingly active, affording financial opportunities in a relatively institutionalised and transparent area.
- Turkey’s banking regulator is considering increasing housing deposits from 25% to 40%, a move that would adversely affect REITs.
- If there is a new global downturn, falling business and consumer confidence would threaten real estate market fundamentals.
- Turkey’s real GDP growth is expected to slow in 2012, and the economy remains at risk of overheating. The central bank is likely to keep interest rates on hold throughout 2011.
- Turkey is facing increased security and political problems. There is instability in Syria, Israel and other Middle Eastern nations, and Turkey is in profound disagreement with Israel over attacks on a flotilla earlier in 2011. Internally, renewed military clashes with the Kurds and large street protests in Istanbul have further increased political pressure on the government over this long-standing issue.
Contents
Executive SummarySWOT Analysis
Turkey Real Estate/Construction SWOT
Turkey Economic SWOT
Turkey Business Environment SWOT
Real Estate Market Overview
Real Estate Market Analysis
Table: Turkey’s Real Estate Market – Historic Rents, 2010 And 2011 (m2/month, EUR)
Table: Turkey’s Real Estate Market – Net Yield, 2011 And 2012 (%)
Table: Turkey’s Real Estate Markets – Terms Of Rental Contract/Lease, Mid-2011
Table: Turkey’s Real Estate Market – Available And Vacant Space, Mid-2011
Industry Forecast Scenario
Real Estate Outlook
Table: Turkey’s Real Estate Market – Rentals, 2011-2012 (m?/month, EUR)
Table: Turkey’s Real Estate Market – Forecast Yield, 2008-2015 (%)
Construction Industry Outlook
Table: Turkey Construction And Infrastructure Industry Data, 2008-2015
Table: Turkey Construction And Infrastructure Industry Data, 2013-2020
Macroeconomic Outlook
Table: Economic Activity, 2008-2015
Business Environment
Turkey’s Business Environment
Table: BMI Business And Operation Risk Ratings
Table: BMI Legal Framework Rating
Table: Labour Force Quality
Table: Emerging Europe – Annual FDI Inflows
Table: Trade And Investment Ratings
Table: Top Export Destinations
Competitive Landscape
Company Monitor
Emlak Konut REIT
Sinpas Gayrimenkul Yatirim Ortakligi AS
BMI Methodology
How We Generate Our Industry Forecasts
Construction Industry
Bank Lending
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