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NEWS & REPORTS

Delight in Turkey

Why wait idly and lose money in the property crash in UK US & EU - invest in Turkey now where the only way is up?…

UK WEAK RETAIL & RENTAL GROWTH SLOWDOWN

There is widespread pessimism in the UK property market, with a fall in tenant demand. Reports indicate a weak and declining retail sector as one of the driving factors, and demand for office space is on the decrease.

The Property investment market is also undergoing a downturn according to market indicators with sector witnessing a huge change in the amount of surveyors reporting a fall in capital values of property.

Such pessimism could be attributable to recent events and turmoil in the US Sub Prime Mortgage Crisis, Credit availability and the sudden drop in the US Dollar. Consequently, the ordinary consumer on the street prepares for a property market crash and recession with concerns over interest rates, rising oil prices and a general lack of confidence in the economy, leading to penny pinching which impacts consumer spending, but ultimately hitting the retail sector and the demand for retail space.

UK & EU IN THE WAKE OF US CRISIS

The initial wave of the US Credit Crunch became a major public concern in August. The wake hit the United Kingdom within a matter of a few weeks in September causing pessimism and scepticism amongst savers and potential first time homebuyers. One example of consumer confidence in the UK economy affecting credit, mortgages and savings in the UK alone, was the crisis with Northern Rock when savers and customers all rushed to withdraw all their savings and funds of £2 Billion in one day alone, over once uncertainty over the bank’s stability started in September and is still unresolved. Northern Rock is one of the smaller banks in the United Kingdom based in the North East of England.

The Financial Markets in the US and EU have taken serious plunges throughout 2007, with minimal impact on the Turkish Market where economic growth is stable and continuing to grow. Financial Analysts and Property Surveyors are already concerned about the long-term impacts of the US Sub-Prime Mortgage Crisis and are anticipating a crash in the US, UK and EU property markets in February 2008, followed by another bigger crash in property markets in all developed countries. Another factor affecting the UK Property Market is the Over-Supply of property, especially outside London where there is a 15% over-supply of newly built empty 2-Bedroom apartments.

Turkey is now an essential axis point for regional economic and political stability, where Turkey provides critical regional strategic cooperation to the USA and European Union for Bilateral Economic and Trade Relations and Partnerships, Trade Diplomacy, Bilateral Energy Cooperation, more importantly acting as a bridge for Energy with the Middle East and Eurasia. In short, Turkey is acting as an international integration point in the European, Eurasian and Middle East regions.

TURKEY: STRONG ECONOMIC GROWTH

+ STRONG CONSUMER SPENDING

+ STRONG RETAIL GROWTH

Turkey however, is quite the contrary with an increasing importance and increasing profile in the global economy especially as a bridge for trade between the EU, , Middle East, Eurasia and Far East. Some indicators and reasons for this are:

1. Massive & Ever Increasing Consumer Base

1,600,000 People Getting Married Annually
400,000 + University Graduates Annually
71,158,647 Total Population (July 2007 est.)
0 - 14 years 17,738,35524.9% (Male 9,034,731 / Female 8,703,624)
15 - 64 years 48,484,77768.1% (Male 24,627,270 / Female 23,857,507)
65 + years 4,935,5156.9% (Male 2,253,383 / Female 2,682,132)
Median Age Total: 28.6 years
Female: 28.8 years
Male: 28.4 years

2. Decreasing Inflation
3. Strong Rapidly Developing Tourism Industry
4. Strong Rapidly Developing Agricultural Industry
5. Strong & Rapidly Developing Automotive Industry
6. Rapidly Developing Banking & Financial Services Industry
7. Rapidly Developing Mining & Minerals Industry
8. Rapidly Developing Energy Sector
9. Strong & Rapidly Developing Strategic Logistics Centre between Asia, Middle East & EU
10. Strong & Rapidly Developing Construction Industry

All of the above factors are due to a growing population and resulting in increasing consumer spending which growing at a rapid rate.

POPULATION FORECASTS IN TURKEY 2000-2040 (figures x 1,000)
year	2000	2005	2010	2015	2020	2025	2030	2035	2040
total	67,804	72,844	77,919	82,340	86,402	90,183	93,695	96,749	99,114
growth	-	5,040	5,075	4,421	4,062	3,781	3,512	3,054	2,365
women	33,457	36,101	38,671	40,931	43,027	44,999	46,854	48,493	49,784
men	34,347	36,743	39,248	41,409	43,375	45,184	46,841	48,256	49,330
SOURCE: United Nations, World Population Prospects

SOURCE: United Nations, W

The PEAK Year will be 2010 as that is when maximum growth in Turkey’s population will be derived at meaning homes and facilities for another 9,496,000 by the year 2015 which means approximately 3,165,333 NEW HOMES in Turkey. Just a few of the Cities and Regions ideal for this Growth and Expansion from European, US, Middle East and Asian Investment Perspectives in order of priorities and opportunities are:

1. Edirne
2. Tekirdag
3. Mersin
4. Iskenderun
5. Gaziantep

NEW WAVE IN TURKEY

The current situation is that the early bird catches worm so foreign investors have to strike whilst the iron is hot to catch and develop the right opportunities. There is a huge wave of investments hoped for Turkey and asset and development opportunities are being sold on a First-Come First-Serve Best-Offer basis in a market where prices are increasing due to high demand. Turkey has seen a significant boom in construction in recent years, especially in Istanbul in 2005 where there were over 22,000 ongoing construction projects alone, ranging from luxury residential projects, business plazas, hotels, and of course shopping and lifestyle centres.

Nevertheless, demand out strips supply in Istanbul, where there is limited space and land to develop and with recent planning permission laws the Metropolitan Municipality Administration will only permit projects that will keep the integrity and beauty of Istanbul’s Seven Hills of Istanbul, especially by the Bosphorous Straits and waterfront areas of the Marmara Sea and Black Sea.

As a result, there are extensive and monumental land reclamation, infrastructure and urban regeneration projects underway that will change the face of Istanbul and raise its profile, the only city in the World that spans two continents. Istanbul is also the 2010 European Capital of Culture as 2010 will be a landmark year for Istanbul.

RETAIL BOOM

Turkish people love to shop; for hundreds of years, even when Istanbul was called Constantinople inhabitants of the city and merchants from Europe, Africa the Middle East all did their shopping and trading at the Grand Bazaar. Istanbul’s Grand Bazaar is known Worldwide and can be regarded as the World’s first Shopping Centre. Throughout history, the Grand Bazaar has been known as a centre of International trade. In recent years this gone one-step further with new modern hi-tech Grand Bazaars being built throughout Turkey in the form of Shopping & Lifestyle Centres and this boom in the construction of colossal retail centres continues.

Two examples of the kind of boom that Istanbul has seen are the Kanyon Shopping Centre in the Central Business District of Levent, which opened in 2005, then Istinye Park further up the road from Kanyon in Maslak, which opened in September 2007. The design concepts and standards of architecture and construction of Kanyon and Itstinye Park are revolutionary as well as to a high standard. Furthermore both projects have added considerable value to the surrounding areas attracting more foreign and local companies to establish offices as well as attracting foreign brands to the Turkish market for the first time or greater visibility and accessibility such as Harvey Nicholls, Dolce & Gabbana, DKNY, Fendi, The Gap, Chloe, Luis Vuitton and more. Turkish people have an obsession and fascination for all brands foreign and in Turkey, there is always the case of keeping up appearances, image and status.

BOSCH and SIEMENS are two companies that are finding great success in the Turkish Market and are competing comfortably with local Turkish brands such Arcelik, BEKO and VESTEL for the White Goods market such as Fridges, Cookers and many other household appliances. Moreover BOSCH and SIEMENS merged under BSH see huge potential for growth and are manufacturing in Turkey not only for the Turkish Market but for the Euro-Zone also.

ARCHITECTURAL INNOVATIONS

Since 2000, a strong trend has started in luxury gated villa communities in Istanbul; however, the trend is to move out of the city centre. Architectural standards and styles have changed to meet the expectations of the Turk who was fortunate enough to study in the United States, as progressively, there are more houses being designed and constructed that are similar to houses in Orange County in California and Miami Florida. With such developments, gated communities are being given foreign names in Italian Spanish or English to capture the attention of potential homeowner with an impression of superiority and exclusivity.

Nevertheless, homes can still be designed and built to a higher standard and more modern specifications with smart homes, as current architectural designs are still aesthetic.

In addition, with the amount of extensive period of sunshine in Turkey, homes can be designed with more energy efficiency taking advantage of the Sun for electricity and heating of water from Solar Energy, especially on the South Coast of Turkey. TESCO / KIPA the British Turkish Joint Venture has already launched a pilot program to power an entire supermarket on the South Coast of Turkey by means of Solar Panels on the roof of the supermarket.

EMERGING & DEVELOPED MARKET

All other European Union Countries are seeing a rapid decline in population growth, therefore a decreasing Consumer Base and demand for services and housing. Therefore, that is why Turkey is the only feasible country to invest in. Turkey benefits from being both a developed market, as until 1985 Turkey was a self-sufficient economy not relying on imports, as well as being an emerging market and experiencing the same boom as other emerging markets such as India and China.

Regardless of the boom and opportunities, many foreign companies are still relatively new to Turkey and lose out on many lucrative investment and development opportunities. Many foreign companies that send representatives to Turkey to scout for investment, properties and development opportunities are not prepared to deal with the various aspects such as demographics, facts, figures, needs, modus operandi and business culture of the Turkish Market. It is essential that all foreign companies send representatives to Turkey that will solely focus on the Turkish market, which has its own unique decisive factors where many tactics, strategies, formulas and methods applied in other markets cannot always be applied in Turkey.

On the other hand, many property owners in Turkey are not familiar with procedures and methods used in European and US property and investment markets. There is no such body as RICS or the Royal Institute of Chartered Surveyors in the United Kingdom. Furthermore, many Turkish property owners are not aware of the complexity of International Capital and Investment Markets and the mechanism of how foreign funds such as REITs, Emerging Market Funds, Hedge Funds, Pension Funds, Offshore Funds and Credit are invested, over a relatively lengthy process. Most property owners see the sale of their properties in Black and White and want to see investors with immediately available funds to pay on the spot. Prices of property in Turkey, especially land, vary drastically, even within a 1km radius. In addition, the Turkish Market can be a very emotive one, as in many cases plots of land have been held on to by families for many generations.

BENCHMARKING & COMPARITIVE ANALYSIS

When attempting to compare the Turkish with other markets, Turkey within itself is very diverse with seven very distinct regions. If trying to compare Istanbul in the Marmara and Thrace regions, with cities in other countries, then an investment analyst can compare Istanbul to San Francisco, Los Angeles, New York, Seattle, London, Barcelona, Rome and Hong Kong; Izmir in the Aegean Region on the South West of Turkey, can be compared to San Diego in California, and again Barcelona. Ankara, Turkey’s capitol city, in some aspects is comparable to Berlin or Chicago; and Mersin on Turkey’s eastern Mediterranean coast can be compared to Marseilles in the south of France. Regardless of comparison, it is important to work with Turkish partners with a solid understanding and familiarity of markets, developments, trends and business cultures worldwide as well as of the local Turkish Market.

Friday 23 November 2007

Coming Soon...

Securing the Deal in Turkey

We Examine Best Common Practices & Business Culture in the Turkish Property Market as well as the Dos and Dont's…


	Coming Soon

	PRE-EMERGING CITIES The current trend is for Foreign Investment Firms looking to invest in and develop new satellite cities. We look at new, attractive and strategic investment locations.. SHOPPING MALL FEVER Istanbul now has over 80 Shopping and Lifestyle Centres with a pipeline of 1,651,242 metres square of further retail space under construction throughout Turkey..