Turkish economy, which performed below expectations with a 2.2% growth rate in 2012, grew 3% in the first quarter of 2013 compared to the same period last year. Overall, economic indicators show that the economy improved in the first half of 2013 compared with 2012. Even though a recovery on the current account deficit and inflation was observed as a result of the precautionary measures applied in 2012, the decline in the consumption had led to a slowdown in economic growth for
2012. The increase of the domestic consumption revived the economic activities and contributed to growth in the first quarter of 2013. In addition to the domestic consumption, the 80% increase in public investment expenditures has contributed to growth despite the decline in the private investment spending.
The recent optimism about the future of Turkish real estate investment market initially started in late 2012 with the latest upgrading of Turkey to investment-grade by Fitch; and solidified further by the recent upgrade by Moody’s. This optimism, also fueled by both the dropping interest rates in the fourth quarter of 2012 and the recent interest rate cut is expected to revive the long stagnated demand in the housing sector.
Since Fitch’s decision was published in November 2012, we also observe an increasing interest from foreign institutional investors into
fixed income assets in Turkey. This interest mainly concentrates to Istanbul and few other major submarkets
for quality commercial buildings with ready income secured by strong covenants. With no doubt, this interest will continue as the credit rating of the country continues to ameliorate.
No significant variations in the average asking rents and vacancy rates in the Istanbul A Class office market were observed
during the first three quarters of 2013. Compared to the second quarter of 2013, the A Class office space in Istanbul increased by 2% and reached 1,628,565 m² while B Class office stock reached to 723,067 m², during the third quarter of 2013. An analysis of the regional breakdown of office stocks indicates that the regions with the highest A Class office stock are: the Airport area on the European side (18%), Ümraniye (17%), Levent (16%) and Maslak (14%). The total office stock offered in these regions represents 65% of the overall office stock in Istanbul. We observe an increase in the office vacancy rates in the European Side and a decrease in the Asian side. An office supply of 1,566,890 m² will be added to Istanbul’s existing office stock during the next three years, 40% of which will be constructed in Maslak-Levent line, 20% in Şişli Kağıthane, 24% in Kozyatağı,
7% in Gayrettepe, 7% in Ümraniye, 1% in Taksim and 1% in Kavacık.
Istanbul Metropolitan Area holds 94 shopping malls with its 13.7 million population. While the rentable area of the shopping malls in Istanbul is 3,260,175 m² as of second half
of 2013, it is expected to reach 3.5 million m² by the end of the year. While throughout Istanbul, the rentable m² /1,000 people is 237 m², it is only 106 m² in Turkey and 259 m² in Europe. Taking into consideration the space of the shopping malls that will be added to stock and the population increase rate, in Istanbul by the end of 2014 the rentable m²/1,000 people is forecasted
as 329 m². Emaar Square Istabul, Ancora, Akasya Shopping Mall, and Zorlu Center are among the large scale shopping mall projects that will be added to the stock in 2013 and 2014.
There was no significant change in industrial rental rates during first half
of 2013. As shown in the following map, the region comprising Samandıra and Kartal still has the highest asking rental rates. An analysis of the average asking prices for vacant plots and asking rents for warehouses shows that the İkitelli-Yenibosna region on the European side and the Samandıra-Kartal region on the Asian side have the highest rates per m². The lowest average asking prices and asking rents are observed
in the regions of Çerkezköy and Silivri.
In the first 6 months of 2013, the number of visitors coming to Istanbul increased by 16.8% compared to 2012 and reached 4,941,118. In
the first half of the year, the highest shares of foreigners who visited Istanbul are from Germany with 11% and Russia with 6%. In the first half of 2013, Istanbul performed below the previous year’s rates with 64% average occupancy rate and €157 average daily room rate.
Along with the city’s cultural and historical values, Bosphorus is considered as the most important tourism potential of the city. The majority of the available tourism premises located in Bosphorus line are
historic mansions, waterside mansions and palaces that are purchased or leased to be restored and converted into hotels. The leading hotels in this category are Çırağan Palace Kempinski (Ortaköy), Les Ottomans (Kuruçeşme), Four Seasons Atik Paşa (Beşiktaş), Ajia Hotel (Kanlıca), Bosphorus Palace Hotel (Beylerbeyi).
In addition, Hatice Sultan & Fehime Sultan Mansions (Ortaköy) to be converted into a hotel operated by Turkish Do&Co are currently under restoration. The hotel which will have approximately 100 rooms will be operated by Turkish Do&Co and is planned to be opened at the end of 2014. One of the prominent hotels located in Bosphorus is the Grand Tarabya Hotel. This hotel with 268 rooms was sold to Bayraktar Holding in 2006 and after going through renovation it was re-launched in 2013 with 248 room capacity. Another newly opened hotel on the Bosphorus line is Shangri- La Bosphorus. Developed by Tanriverdi Holding where the old tobacco warehouse was formerly located, the hotel, is opened
in May 2013 and has 186 rooms mainly appealing to upper income group. This is the first investment of Shangri-La Group in Turkey.