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Turkey Real Estate Report Q1 2011
Business Monitor International, Dec 2010, Pages: 58
Turkey Real Estate Report provides industry professionals and strategists, corporate analysts, real estate associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Turkey's Real Estate industry.
At first glance, Turkey’s commercial real estate market looks similar to many others across Central and Eastern Europe. The global financial crisis exacerbated macroeconomic imbalances, demand for rental space fell and rents dropped by around one-fifth over the course of 2009. Conditions became more challenging for many players.
In fact, it is the differences between the commercial real estate sector of Turkey and its counterparts in nearby countries that are much more important. Unlike the US, UK and certain parts of Western Europe (and, indeed, Central and Eastern Europe), Turkish banks have been restrained, and non-financial enterprises and households are under-geared. The building boom in Istanbul was not funded by aggressive lending. One implication of this is that distress selling of property by over-extended investors and developers is far less likely in Turkey than it is in other countries. Another implication is that Turkey will likely sustain significantly higher economic growth rates through 2011-2015 than most of the EU.
In early 2010, we were concerned that commercial real estate protagonists would have to deal with a massive over-supply of space in both the office and the retail sub-sectors. In actual fact, our interviews with in-country sources in the middle of the year indicated that the vacant space has been absorbed. Rental rates have been rising rapidly in the office sub-sector and tracking sideways in the retail subsector.
Dynamics in Ankara continue to be dominated by a gross under-supply of office space. As we anticipated, office rents have been rising rapidly in the city. retail and industrial rents in Ankara have been moving sideways.
It seems that yields in the office and retail sub-sectors have adjusted (ie fallen in the Istanbul office subsector and the retail sub-sectors in both cities) to equilibrium levels. Office and retail yields should, we believe, move sideways through the forecast period. By contrast, we expect that industrial yields will rise in the Istanbul industrial sub-sector and drift downwards in the Ankara industrial sub-sector.
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