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What awaits the Turkish real estate market in 2009. Turkey 2009.

04.12.2008
Yucel Ersoz

The General Director
of “Yapy Kredi Koray” Yudzhel Ersez gave his prediction on what will happen in the Turkish real estate market in 2009.  
In the end of 2007 Ersez also made prediction about 2008, which were among others the most plausible.

1) Turkey's residential property market.

I do not think it will be a significant decline in prices in the secondary market. Approximately 70% of residential property is owned by 25% of households. These families have acquired property with a view to investing and so far they have not offered an acceptable price, they will not sell real estate. However  there may be exceptions. Caught in a difficult position businessmen can sell their property for slightly undervalued price. But I do not think that such isolated cases can affect the whole secondary housing market.

In addition to the decrease in the number of available credit, banks also reduced the repayment dates. The result was an increase in monthly payments on loans. In this regard, considering the Turkish system of income distribution, we can say that apart from the social stratum, receiving the highest incomes, the middle class and below will not be able to buy property on the basis of housing credit.

I think that the developer company will limit the number of development projects. There may be discounts up to 20% in projects requiring rapid inflow of funds.

I think that in 2009 the most successful projects are those that focus on rich social stratum. Prices for such real estate will be acceptable. I don’t think that come true the predictions on the increase in prices per square meter of the property to the level 15-20 thousand dollars. Istanbul still does not attract millionaires from around the world, as did Moscow, New York, London or Dubai. After all, most people who buy property for astronomical prices - are not local people but foreigners.

2) Shopping Centers Turkey

According to the results of research conducted GYODER (Association of Investment Companies) the ratio of the potential annual volume of retail trade to the total area of the Turkish shopping centers is 48 000 USD / sq.m., while in developed European countries the ratio is 30 000 dollars / sq. m. This means that even in case of absence of growth in retail trade it is necessary to increase the number of shopping centers by 50% for fully use of Turkish potential.

Not once was built predictions based on false statistics like the ratio of the population of Turkey to the total area of shopping centers. The ratio I mentioned above, I think is the most plausible because, along with population, it also includes the purchasing power of the population. But there are misconceptions. Consistently explain them:

65-70% of the costs carried out either at the markets or in the street stores because their prices are generally lower than in shopping centers. To get rid of the habit of buying on the street or at the bazaar will be very difficult.

30% of the population of Turkey lives in cart-areas. It is very difficult to attract the purchasing potential of this category of people in shopping malls.

There must be highly developed public transport services. But on these two criteria, our country is “giving way” to European countries so it will not be easy to bring people in shopping malls.

The indexes of buyer’s confidence have already dropped to a minimum level over the past few years. If Turkey is in crisis threshold - I believe in that – than 2009 will not be easy for the retail market in Turkey.

From the totality of the reasons set above, I think that in 2009 will be significant changes in the market shopping centers in Turkey. First of all, shopping centers rents will reduce and business income will be lower than it was expected. This does not affect shopping centers, of the most successful location.

Also exception to this pessimism forecasts are malls, which are aimed at the rich of the population and have skillfully built management system. Also assume that in 2009 the significance of firms to manage shopping centers and integrated building service will increase.

3) Turkish market of office real estate

I think that in the secondary market of office real estate in the well-located office demand will not decline. Entrepreneurs earned money on the difference of exchange rates understand that this is temporary and they must find alternative ways for earnings, and therefore assume that they will invest money in the offices of Class A.

I assume that in 2009 the number of office projects will reduce. However, the lack of free Class A office properties in areas such as Zincirlikuyu, Levent, Esentepe should not be examined as a sufficient condition for the development of new projects. We must not forget that in those areas there are little or no free land for such projects. I think that in these areas in the secondary market of office real estate prices will not fall.

Yudzhel Ersez forecast for 2008

At the end of 2007, Yucel Ersez made a forecast for 2008:
In 2008, will take place a significant exchange rates change in connection with this increase interest rates. At the end of 2008, interest rates on housing loans will reach a level of 2-3% per month. Because of the disappearance from the market of cheap imported goods consumption will stop declining inflation. There will be an increase in inflation. The price of housing will not change, the annual growth in this area will not exceed 3%. Works on existing shopping malls projects will continue, but will not be new investment projects. At the office real estate market will experience a shortage of office space.

News was edited by "VESTA Estate".
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