Crisis hits Turkish real estate, but ‘green shoots’ emerge

The real estate market in Turkey has been heavily affected by the global crisis in the first half of the year, according to a report by Jones Lang LaSalle. But the report also notes rising consumer confidence and retail sales, the so-called ‘green shoots’ that hint at an improvement in the second half



'Due to a slowdown in retailer demand, a temporary drops in rents has occurred,' says Kıvanç Erman, capital markets research director of Jones Lang LaSalle.


There has been a visible slowdown in all components of Turkey’s real estate market, including retail, office, logistics and hotels, during the first half of the year, according to a new report from a real estate investment firm.

Revealed by Jones Lang LaSalle on Friday, the report, however, also noted data from the first half of the year showed that consumer confidence and retail turnover have increased.

The global crisis caused Turkish retailers to review their investments, the report said. This reviewing process led to “more feasible expansion plans” by retailers and a slowdown in shopping center development. Brands such as, Koton, Desa, Boyner and İpekyol used this period to explore different business markets in Eastern Europe, Middle East and Africa, according to the report.

“Due to a slowdown in retailer demand, a temporary drop in rent has occurred,” said Kıvanç Erman, capital markets research director of Jones Lang LaSalle. “Retail turnover has seen real growth, due to discount campaigns.”

While international brands such as Prada and Miu Miu used the period to launch their first stores, Harvey Nichols Turkey, of the Demsa Group, expanded its investments to other Turkish cities such as Ankara, according to the report. “In the first half of the year, individual stores saw a decrease in demand, but the demand for shopping centers remained even lower,” said Erman. The average monthly rent for street stores, which stood at 90 euros per square meter, decreased to 65-80 euros, the report showed.

“Compared to Central and Eastern Europe, Turkey still holds the highest retail potential. Turkey’s large retail market ranked ninth for retail potential in Europe,” added Erman.

Office market slowing down:

Regarding the office market in Turkey, the Jones Lang LaSalle report showed that strong occupant demand in Istanbul has significantly slowed in the first half. “The first key message here is that occupiers can take advantage of low demand and low rent rates,” said Alan Robertson, managing director of Jones Lang LaSalle.

Mentioning that districts such as Bakırköy, Ümraniye and Kavacık became important areas for office markets, Robertson said decentralized office locations are an advantage for the long run.

Apart from the Istanbul office market, Ankara and İzmir markets are growing too, according to the report.

The logistics market is the most affected from the crisis, the report noted. “As the logistics market is highly dependent on trade, it saw a big contraction,” said Erman. Despite the recession in logistics, Turkey has witnessed increasing numbers of international logistics companies entering the market such as DHL, Ceva Logistics, Kühne Nagel, Gefco, Serlog and Arkas-Schenker, said the report. “Turkey’s geostrategic importance significantly enhances the market potential,” said Erman.

Mentioning that Turkey’s hotel market is also affected by the global turmoil, Elif Egeli Nişancı, vice president of LaSalle Hotels Turkey, said room rates decreased by 9.2 percent compared to last year. In the first five months of 2009, over 1.5 million tourists visited Turkey, according to the report.

Noting that the global turmoil has affected the Europe more than Turkey, Avi Alkaş, chairman of Jones Lang LaSalle Turkey, said, “In Britain and Spain spending is slowing down. There are fewer purchase and sale activities.” Currently, the Turkish retail market is an important model for Europe and the Middle East because of its huge potential, according to Alkaş