WORDS | Sean Lightbown 56 | ISTANBUL


SNAPSHOT Market Snapshot


Istanbul T


here’s no denying that Turkish Prime Minister Recep Tayyip Erdogan is a man with a vision, and not just for his country, but for his native Istanbul. Six months into his party’s third term of offi ce, Erdogan


has gone some way towards transforming Istanbul - the Asian as well as the European side - into a fi nancial hub on a par with London, Frankfurt and Hong Kong. His timeframe for achieving this goal is 2023, the centenary of the formation of the Turkish Republic. In the last decade, a number of blue chip companies and banks have


recognised the benefi t of having a strategic base where - quite literally - East meets West. In 2000, Microsoft was one of the fi rst corporate heavyweights to locate its Middle Eastern and African headquarters there, while more recently the GE Healthcare branch of General Electric set up an Istanbul headquarters overseeing its operations in 85 countries. Internally too, there is a drive to relocate many of Turkey’s key fi nancial institutions to Istanbul from Ankara. This will be complemented next year by tax and regulatory changes geared towards making the city more attractive to foreign companies and ownership laws more favourable to foreigners. All this drives overseas property activity.


“An earthquake could hit the city so the government is trying to get rid of sub-standard buildings by 2013”


The city is ideally located, within four hours’ fl ying time of Moscow, the


Gulf cities of Doha and Dubai, and London. Business leaders can get in and out easily. And now Erdogan’s government has given the green light to the city’s third airport, which will be on the European side in the Silivri district. In March last year, Erdogan also inaugurated Istanbul’s and Europe’s tallest building, the 236-metre Sapphire tower. On the city’s European side in the established business district of Levent, the Sapphire’s mix of retail, commercial and residential space has been valued at around $400m. Perhaps symbolic of the grand master-plan for Istanbul though, something bigger is yet to come – the 270-metre Diamond building, under construction in the nearby business district of Maslak. Plans to create equally impressive business districts on the Asian side of the city are under way, with much of the focus currently on Ataşehir. All this has led to an inevitable surge in the city’s population. Swelling by


3% a year, this now stands at 15 million, making it Europe’s most populous city. At the same time, its residents have got wealthier, with average incomes tripling between 2002 and 2011. This increased spending power, coupled with the relatively recent introduction of mortgages, has led to a growing demand for suburban housing, which means investment opportunities. “The market is very active,” said Julian Walker of agent Spot Blue. “It is


a sellers’ market because of the short supply situation. Investors testing the market are attracted to modern lifestyle projects that are a mix of residential


and commercial. Typically they are purchasing between two and ten units, priced around £40,000-£80,000. Bank fi nancing options are available for locals but more diffi cult for foreign buyers. A large percentage of investors are currently coming from the Middle Eastern and Arabian Gulf countries.” And asking prices have grown consistently for the last seven years. The per


square foot price of a luxury apartment now stands at $4,572, while the asking price for a villa from 2004 to 2011 has almost doubled (from $849 to $1,542.) Areas currently popular with foreign investors include Bomonti, Beylikdüzü, Esenyurt, Halkalı and Bayrampaşa on the European side and Kartal, Pendik, Kurtköy and Tuzla on the Asian side. Typical new investment projects will range from 500 to 1,000 units, usually a mix of studios, one- and two-bedroom apartments as well as luxury three and four-bedroom penthouses, and include modern facilities, easy access to public transport and security. The city’s government has also accelerated efforts to remove industrial areas


from the centre of Istanbul, creating a swathe of new building opportunities for residential purposes. According to Colliers: “New developments in these districts target the upper middle/middle income group, with sales prices that make home credits feasible. Emerging urban regions such as Bomonti and Kagithane on the European side are popular for this type of end user.” Prices in these areas can range from $2,000 per square metre to $6,000 per square metre. International property portal Rightmove Overseas can see the results of all this


activity too, with a 177% year-on-year rise in searches for property in Istanbul in 2011. “Advertisers are telling us that buyers can achieve up to 15% capital growth year-on-year and rental yields of up to 10% on new developments,” said Tom Whale, Turkish account manager for Rightmove Overseas. “We have heard anecdotally of a defi cit of up to half a million homes in Istanbul, which alongside Turkey’s stable government, growing economy and the demand for both residential and student housing from the local market, makes Istanbul one of the worldwide investment hot spots for 2012.” According to the general manager at Sotheby’s International Realty in


Turkey, Arman Özver, Istanbul can compete on another level of the market too. Özver recently compared the attraction of desirable real estate in prime Istanbul neighbourhoods, notably Nişantaşı, as a safe asset option for wealthy foreign investors, typically from the Arab States, to similar properties in Knightsbridge in London, or Paris. Tourism in Istanbul as well as Turkey in general remains healthy too . Data from Colliers shows that Istanbul’s hotel occupancy rate rose by 2% year-on-year in 2010, with an average room rate of €155. Despite this, and despite an increase in overall tourist visits to Turkey, Istanbul saw a total of 6,960,000 visitors in 2010…a 7% decrease on the previous year. However, the latest figures for 2011 look more promising: 3,563,885 tourists went to Istanbul in the first half of the year, an increase of 15.2% on the same period in 2009. The Turkish Government forecasts GDP growth as slowing from 7.5 per


cent this year to 4 per cent in 2012 (the International Monetary Fund predicts 2.5 per cent).


www.opp.org.uk | FEBRUARY 2012


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