TBY talks to Osman Toprak, Member of the Board at Astay Yatırım, on trends in the real estate sector.
TBY How has 2011 been for the real estate sector and for your business in particular?
OSMAN TOPRAK The past year has been much harder than previous years mainly because we started OnaltıDokuz Istanbul, our first real estate project. Previously we had only operated in tourism; starting with the Four Seasons Hotel. We have two Four Seasons properties, one is in Sultanahmet and the other is on the shores of the Bosphorus. Both hotels have been voted among the best hotels in the world. The Sultanahmet property has been voted the best hotel in Europe by Condé Nast Traveler for the past four years. The Bosphorus hotel has also been voted the second best business hotel in the world.
Has Astay Yatırım’s move into residential real estate been successful?
OnaltıDokuz is our first residential project, located in Zeytinburnu. It contains 496 units, of which 40% will be apart hotel facilities. We have another project, Academia Apartments, in Avcılar, Istanbul, where we’re aiming to create housing solutions for students and academics, mainly. Our primary target for that area is university students, professors, and investors who would like to rent their apartments to students. It has several floor plans, including one-bedroom, one-living-room plans, and two-bedroom, one-living-room plans. It has been a great success; we started very slowly, finishing the construction first and only beginning to market the spaces afterward, which is unusual in Turkey. In three days we sold 70 apartments, which was surprising because it was the beginning of September, and no one was in the market, but we have sold about 95% of the spaces. We are not a construction company. We are developers working with specialized contractors, able to deliver the Academia Apartments two months prior to our promised date. We began delivering the apartments in August 2011. It was a great success in construction and marketing. The rough construction of OnaltıDokuz will be finished at the end of November 2011. So far we have sold 85% of the apartments, and if we are not mistaken, we will be finished with the interior and deliver the apartments at the end of March 2012.
What are your ambitions for 2012?
Our goal is not to exceed 1,000 units per year. Other companies will build 20,000 units per year, but we will not exceed 1,000. Astay has a reputation in the A+ market, which is very narrow. We wish to build the Four Seasons Residences in Istanbul, as the owners of the Four Seasons Hotels in Turkey. They will boast the well-known Four Seasons Hotel quality. We also announced in March 2011 that we had bought some land in Bodrum, which we will develop as a Four Seasons Hotel and Four Seasons Residences. There will also be a small area of non-branded villas at that location. Those two Four Seasons-branded projects are our projects for the next year, but we will never exceed more than 1,000 units a year.
How has the company become so flexible?
We are good at creating new markets. What we did with Academia was very unusual. The quality of the construction at Academia is unmatched in the region. When we announced our prices, most people said we were crazy, and that those prices would not work in this market, but we said we would try. The materials that we used to build Academia were the same that we used at the Four Seasons, and the prices are unmatched. When we began constructing the Bosphorus Four Seasons, we had a huge body of know-how to put into building a hotel. It took an extra year to finish it, but it was worth it. We delayed it a year, we took it at a slow pace, but the outcome is unparalleled even among Four Seasons Hotels. We used this as a springboard to inject our know-how from the Four Seasons into building OnaltıDokuz.
How do you approach marketing your properties?
The marketing department at OnaltıDokuz has a lot of toys to play with. Such toys include real 3D visuals, so you can enter an apartment with 3D glasses; we were the first in Turkey to do that. We also have 2D visuals and video; it took us six months to prepare everything. We worked with the best available marketing and design firm for this technology and also for other marketing pieces such as catalogs. Every level of our company is involved in marketing decisions—even our chairman gets involved.
You have been good at identifying and creating new markets. What can you identify for the future? What new types of foreign investors in real estate do you foresee coming into Turkey?
Istanbul is its own market. It’s like a country unto itself. And it’s not finished yet, it’s only just beginning—52% of construction in Istanbul isn’t even licensed. In light of the recent earthquake in Van, and the prime minister’s push to renovate and earthquake-proof buildings, a new market will open up in Istanbul. The resources to satisfy the construction market in Istanbul don’t exist locally; it will be necessary to import a lot of contractors, mainly from places like India and China. Now, people don’t want to park their cars on the streets, and they will need social areas, pools, fitness centers, and spas. Even if they don’t have the money for OnaltıDokuz, they will go to Academia Apartments instead. Both of those projects have the same infrastructure in these respects.
What will be the impact of the upcoming new reciprocity law, allowing more foreigners to purchase property in Turkey?
Even in the absence of this law, people who come to Turkey do have the right to establish a company and purchase property in the name of that company. That is how it has been done up until now, but it can be a hindrance. We have a potential backlog of a million requests from Europe, the Middle East, Europe, and Central Asia. Investors from the Middle East are especially interested in buying property in Turkey. I don’t know why it has been such a hot market for the past five years.
Due to the crisis in the US and Europe, I think people from there will not be as interested in investing in real estate, because they lost too much liquid capital that way. Our prime minister and Foreign Minister Davutoğlu have a great dialogue with Middle Eastern countries. They now have a new vision for Turkey. They have the capital, and we have know-how. Istanbul has the greatest body of know-how in terms of construction.
© The Business Year