TBY talks to Anthony Khoi, President of Ærium Turkey, on the shopping center sector and foreign investment appetite.

Anthony Khoi
Anthony Khoi is a graduate of the Harvard Business School and the leading European EM LYON Business School. He is also a French state-licensed architect and has completed the Real Estate Executive Program at the Harvard Graduate School of Design. Between 1988 and 1995, Khoi was Project Development Coordinator for Unibail-Rodamco, Director of Development Management for leading the French shopping center developer GRC, and Director of Development at the renowned French architectural firm JNEC. In 1995, he founded CENOR, and in 2003 he became a partner at Aerium. Since 2005, Khoi has been the President of Aerium Turkey.

What is your outlook for Turkey's retail real estate sector?

With an unprecedented 3.7 million sqm of shopping center space under construction, Turkey is currently Europe's most dynamic retail market and one of the world's most engaging real estate stories. Turkey was Europe's most active shopping center development market in 2012 and 2013, and is set to take the crown again, beating the likes of Russia, Spain, Ukraine, and Poland. The total size of the retail sector (organized and unorganized) in Turkey reached $320 billion in 2013 and is expected to grow annually by 10% between 2013 and 2017. In 2014, the Turkish shopping center sector represents, over 9.4 million sqm of gross leasable area (GLA), with 332 shopping centers and 1.5 billion visitors per year. Over 3.7 million sqm in GLA is also currently under development. This incredible story has a growing economy at its heat, but it is also a story of entrepreneurship, growth potential, and courage.

How would you assess the level of interest in Turkey's real estate sector from foreign investors?

From a macro-economic perspective, Turkey has strong fundamentals and a very dynamic outlook to become one of the top 10 economies in the world by 2023. Over the last 10 years, Turkey's government has taken a pro-active and strict stance on its budget deficit. From an unwieldy 11.9% of GDP in 2001, Turkey's budgetary deficit has been reduced to a healthy 1.2% in 2013, and is expected to stay in similar territory over the next five years. Bearing in mind that the Maastricht criterion is 3% of GDP, Turkey is way ahead of most of the European pack. The coming decade will be a very promising and exciting time for the Turkish retail and shopping center sectors as the growing stock of prime offices, quality hotels, and luxury residences help the country attract international firms and visitors. The quality and attractiveness of such assets, and particularly their management, will be key to distinguishing them from their competition.

How has Ærium's experience in opening new markets benefited its operations in Turkey?

A key factor of our success in Turkey and other markets lies in providing high standards and integrating all the different stages of asset, property, and development management from the bottom to the top, whilst creating high efficiency and, above all, value and results. You can't just be a foreign investor; you have to consider yourself as an active, local player in the country. Key factors of success include being close to the community, customers, and partners, and directly controlling your marketing, leasing, and management teams. Following the fallout from the financial crisis and the debt crunch, our industry has undergone a structural transformation, enabling Ærium to identify clear trends and opportunities in specific markets and sectors, into which we placed all of our efforts and focus. This has resulted in a very successful investment and development strategy over the past 10 years in Western Europe and also emerging and developing markets such as Central and Eastern Europe and Turkey.

With long-term experience and a proven track record, Ærium is one of the major foreign investors in the Turkish retail sector today. It is a pan-European real estate investment manager specialized in commercial properties with over $8 billion assets under management across 12 countries. When we started to invest in Turkey in 2005, our strategy was to become a long-term investor. We were one of the first global funds to enter the market, investing in the Carrefour malls portfolio as well as in CEFIC, a leader in Turkish property and leasing management activities since 1994, in a joint venture with Simon Property and Ivanhoe. With a team of over 100 people and over $800 million in assets under ownership and over $1 billion under management for third parties, we are one of the leaders of the shopping center sector in Turkey. Over 600,000 sqm of mixed-use projects, representing over $3 billion in asset value, are also under the development process for the next five to seven years.