Turkey’s economic growth in 1Q 2011 will be second only to China. With an increasingly prosperous middle class and a young, dynamic population this country is very promising. The tourism sector alone has undergone huge development, as has retail, which has opened up many opportunities for foreign investments.
IN HOT DEMAND
Over the crisis period, the management of Istanbul’s prime Yapı Kredi Plaza experienced difficulties in renting office space for $14 per square meter. The rent has doubled since. After the crisis we have seen many developments, yet due to the continuing lack of space office prices have skyrocketed. Istanbul is number 17 in the table of occupancy cost worldwide.
Our nearest competitor is 50% below us in terms of revenue. We have been involved in many large deals recently. We give strategic advice as a one-stop shop for real estate to large multinationals. Our operations here are very important for the company as a whole, and that is because of the huge potential of the country.
FOREIGN CAPITAL FLOW
Commercial real estate took off in the second half of the 1980s, beginning in Istanbul. It was financed by local capital up until 2004-2005. When Turkey’s membership application to the EU was announced, a lot of foreign investment began to flow into Turkey and real estate.
During the crisis, office rental prices dropped around 20-25% overall. Some districts in Istanbul saw decreases of 40%. Existing building stock is also very old in Turkey. So, companies need new buildings in terms of infrastructure, security, and the earthquake issue. The regeneration of old buildings is now necessary, and companies have begun to allocate budgets to this. In that sense, the office market looks prominent.
There are sectors that are bound to grow. Hotels are one of them. The hotel industry is undersupplied in Turkey’s cities. Resort hotels, however, are oversupplied. The city hotel market is going to see major development. We saw this in the office market when we first began business in Turkey.
Istanbul is one of the region’s most important cities, and its location creates a uniqueness unseen elsewhere. For the last five years we have seen huge growth in the number of residential projects across the city. In the near future, we are anticipating large transport projects across Istanbul. This will lead to an expansion of type A and type A+ office developments.
A HARD BARGAIN
Sale prices in Turkey are generally considered higher than in other countries, and the balance between yield and sale price is slightly skewed. However, when you consider the strength of the sector in terms of risk, this picture changes considerably. The last two years of the crisis proved to foreign investors that Turkey
FRANCHISE IS THE WORD
A nationwide franchise network means we see first hand the investment opportunities present, and evaluate them using local know-how. This then benefits our clients. Reha Medin has franchise offices across Turkey, as well as in the US and Germany, allowing us the best access to information from America and Europe.
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