Real estate market in Turkey eng

Turkish Economy and Real Estate Market : 

Turkish Economy and Real Estate Market

Turkey – Reminder : Growth Oriented Market : 

Turkey – Reminder : Growth Oriented Market Despite macroeconomic swings, Turkey is one of the world’s fastest growing countries. Since 1986, real GDP growth rate averages are around 4.4 % per year GDP growth in Turkey is higher than that of OECD (average of 2.8%) in the last 20 years… Source: OECD

Turkey : Growth Oriented Market : 

Turkey : Growth Oriented Market FDI needs change and growth numbers indicate change (past and future) Real GDP Growth, (Annual Avg., %) 2006-10 2011-20 2006-20 World 4.0 3.3 3.5 EU 25 2.2 2.0 2.1 EU 15 2.0 2.0 2.0 Turkey 4.9 4.1 4.4 Poland 4.1 3.0 3.3 Hungary 3.3 3.1 3.2 Russia 4.7 2.6 3.3 BRIC 5.7 4.0 4.6 Source EIU “Foresight 2020”

Transition – Improved Macro Trends : 

Transition – Improved Macro Trends Source: TURKSTAT and ATA Estimates Improved trends – Disinflation is successful

Transition – A New Playing Field : 

Transition – A New Playing Field Paradigm Shift : Inflation  Disinflation Switch from “Survival to Planning Mode”

Transition – Deficit Financing : 

Transition – Deficit Financing Source: Central Bank of Turkey Current Account deficit is heavily financed by portfolio inflows, the role of FDI is negligible until 2005 but improving.

Transition – Deficit Financing : 

Transition – Deficit Financing Source: Central Bank of Turkey Significant FDI inflow continues (4.5% of GDP), with real estate taking 15%

FDI into Turkey – Opportunities : 

FDI into Turkey – Opportunities Source: Turkish Treasury, Polish Information and Foreign Investment Agency, UNCTAD Database Global FDI follows GDP growth with a lag

FDI into Turkey– Opportunities – Affluence : 

Size also matters, GDP relatively large Source: IMF World Economic Outlook, Economist Intellegence Unit FDI into Turkey– Opportunities – Affluence

FDI into Turkey : 

FDI into Turkey 2006E: 17 Bn $ 2007E: 23 Bn $ 2008E: 16 Bn $

Turkish Real Estate Market / Investment Yields : 

Turkish Real Estate Market / Investment Yields According to the recent report published by PriceWaterhouseCoopers, Istanbul captures top ranking for development and total returns, 2nd place for supply & demand balance and fourth place for rental growth among 28 cities In comparison with investment yields, Istanbul is the second after Moscow with 10% yields in 2005. However the yields for the current deals showed a depression which is expected to remain at these levels for sometime. The current yields are around 6,5% - 7% for shopping centers, 8% for offices and 8.5% –9% for hotels. Top 20 Cities Yields’ Comparison (%, 2004-2005) PriceWaterhousCoopers Survey Results (2007) Source: PriceWaterhousCoppers Emerging Trends in Real Estate Europe Survey 2006

Turkish Real Estate Market / Residential : 

Turkish Real Estate Market / Residential Residential demand is triggred by population growth, household rate and high proportion of young population Total residential stock is ~16,3 million units (Building count in year 2000) Severe housing shortage, estimated around 500.000 units per annum The volume of housing loans in 2005 reached to 9.5 billion, covering 44% of all consumer loans Introduction of mortgage system by mid 2007, will further stimulate demand for housing and drive house prices upwards Increase in construction permits in recent years, rise in new stock Rising demand in İstanbul for luxury serviced apartments, priced at $3.500 - $5.500 / m2 New legislation was ratified in December 2005 permitting foreigners to own Turkish property Rising interest of Europeans for residential developments in Aegean and Mediterrenian coast. Total market size is estimated to be 20.000-30.000 units per annum ( 2-3 billion Euros) Construction Permits Source: SIS, ATA Invest Estimates Source: SIS

Turkish Real Estate Market / Office : 

Turkish Real Estate Market / Office İstanbul dominates Turkey’s office market as it has 80% of the total office stock The total office stock in İstanbul’s Central Business District (CBD) is 1.6 million square meters Vacancy rates are decrasing in İstanbul as the business is booming due to strong macroeconomic indicators. Multinational companies from diffrent industries are coming in to Turkish market, sitimulating demand for better quality A-class office buildings. Strong rental growth potential and high investment yields in a high-occupancy market Respondents of PWC’s Emerging Trends in Real Estate Europe 2006 Survey, give İstanbul a high buy rating for office market – 60% buy, 32%hold and 8% sell Prime Office Rents ($/Year/m2) Prime Office Yileds (%) Source: PWC, Emerging Trends in Europe 2007

Turkish Real Estate Market / Retail : 

Turkish Real Estate Market / Retail Rapid growth in the retail market due to the increasing consumer confidence and annual spendable incomes per capita Gross leasable area per 1000 inhabitants is still low compared to Europe The main retail business is concentrated in İstanbul with 27 shopping malls, of a total of 94 through out the Turkey. Total stock is ~1.8 million sq m Another 47 shopping centers are planned over the next 5 years mainly in İstanbul, İzmir and Ankara Rising interest of global retail brands and international retail property investors Prime Retail Property Yields (%) Source: PWC, Emerging Trends in Europe 2007 Gross Leasable Area (per 1000 inhibitant / m2) Source: WSJ