News / Europe

Property Investors Wary of Turkey Before Riots

A protester rests in a hammock hanging from a tree at Gezi Park in Istanbul,  June 4, 2013.
A protester rests in a hammock hanging from a tree at Gezi Park in Istanbul, June 4, 2013.
A protest against plans to fell trees for a development near Istanbul's Taksim Square, the precursor to five days of rioting, reflects the scarcity of open space in Turkey's largest city, thanks to rampant construction.
Broader anti-government sentiment has fuelled the violent protest after a police crackdown on the peaceful demonstration, which won't help Turkey's appeal to global property investors already wary of its chaotic planning system and unappealing leasing market.
Although Turkey received its second investment-grade credit rating last month and construction is booming, international capital from real estate investors has been thin on the ground, though transaction data is limited in what is still a relatively opaque property market.
“There have been riots in other countries, but Turkey is different because it comes on top of other issues,” said an investor at a fund with more than 5 billion euros [$6.5 billion] of European property under management.
The decision to bulldoze a handful of trees in Gezi Park is part of plans to pedestrianize the adjacent Taksim Square and build yet another shopping center and luxury flats.
Parts of Turkey are already “overbuilt”, said Murat Ergin, managing director of Istanbul real estate agent Kuzeybati.
Istanbul has 2 million square meters of mall space under construction, dwarfing the 1.3 million total mustered by 60 Western European cities tracked by consultants CBRE. Only Chinese cities Chengdu and Tianjin have more.
Lax controls have created a beggar-my-neighbor building spree as bigger new malls muscle out older rivals.
The Trump Towers, Sapphire and Carousel malls have all suffered as newer buildings sprouted up nearby, a trend that has contributed to the closure of 24 shopping centers in Turkey over the last two years.
“The thinking is if you can build a five-story mall that's worth more than a one-story car showroom, then you will always build the mall,” said a property expert at a global consultancy.

Brave pioneers
Foreign institutions looking for a secure rental income stream would also think twice before investing in Turkish office space, since there is not much of a local market base. Office blocks are a common investment for funds in major European cities, but in Turkey they are typically owned by the builder, sold off floor by floor or sold to the tenant.
“It's slightly chicken and egg, because with no buyers, local developers can't generate the profits needed to build investment grade assets,” said a second property source familiar with Turkish market.
Despite the obstacles, a few brave investors have led the way with mall investments, buoyed by a young population of consumers aspiring to European shopping habits, which has resulted in the number of Turkish malls growing from 46 to about 300 since 2000.
Investment yields, or the rental income as a percentage of the property's value, reflect the investment risks of Turkey and appeal to those seeking higher returns.
Yields are at a relatively attractive level of about 8 percent for the best retail properties in Istanbul versus 3 percent in London's West End, 4 percent in Paris or about 4.5 percent in the major German cities.
Investors that have bought Turkish retail property include the Singapore sovereign wealth fund GIC and U.S. private equity giant Blackstone, which bought three Turkish, malls from Dutch company Redevco last year.
Blackstone has also bought about half of the debt of Dutch mall developer Multi Corp in a move that could enable the private equity giant to take control of the company, which has a string of shopping centers across Turkey.
Time will tell if fortune favors the brave.
“Turkey is not easy to get into, but if Blackstone are there now it's for a good reason,”  the second source said.

You May Like

Video Egyptian Journalists Call for Freedom of Press

Despite release of al-Jazeera journalists and others, Egyptian Journalist Syndicate says some remain imprisoned More

Turkey Survey Indicates Traditional Distrusts, Shift to the West

Comprehensive public opinion survey also found a large majority of those interviewed distrust all countries other than country’s neighbor, Azerbaijan More

Pakistan Court Upholds Death Sentence in Blasphemy Killing

Highest court upholds sentence of Mumtaz Qadri convicted of 2011 killing a provincial governor for criticizing country’s controversial blasphemy law More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Making a Minti
October 07, 2015 4:17 AM
While apples, corn, and cranberries top the list of fall produce in the US, it’s also the time to harvest gum, candy, and toothpaste—or at least the oil that makes them minty fresh. Erika Celeste reports from South Bend, Indiana on the mint harvest.

Video Making a Mint

While apples, corn, and cranberries top the list of fall produce in the US, it’s also the time to harvest gum, candy, and toothpaste—or at least the oil that makes them minty fresh. Erika Celeste reports from South Bend, Indiana on the mint harvest.

Video Activists Decry Lagos Slum Demolition

Acting on a court order, authorities in Nigeria demolished a slum last month in the commercial capital, Lagos. But human rights activists say the order was illegal, and the community was razed to make way for a government housing project. Chris Stein has more from Lagos.

Video Self-Driving Cars Getting Closer

We are at the dawn of the robotic car age and should start getting used to seeing self-driving cars, at least on highways. Car and truck manufacturers are now running a tight race to see who will be the first to hit the street, while some taxicab companies are already planning to upgrade their fleets. VOA’s George Putic has more.

Video TPP Agreed, But Faces Stiff Opposition

President Barack Obama promoted the Trans-Pacific Partnership on Tuesday, one day after 12 Pacific Rim nations reached the free trade deal in Atlanta. The controversial pact that would involve about 40 percent of global trade still needs approval by lawmakers in respective countries. Zlatica Hoke reports Obama is facing strong opposition to the deal, including from members of his own party.

Video Clinton Seeks to Boost Image Before Upcoming Debate

The five announced Democratic party presidential contenders meet in their first debate next Tuesday in Las Vegas, Nevada. Former secretary of state Hillary Clinton continues to lead the Democratic field, but she is getting a stronger-than-expected challenge from Vermont Senator Bernie Sanders. VOA National correspondent Jim Malone has more from Washington.

Video Music Brings Generations Together

When musicians over the age of 50 headline a rock concert, you expect to see baby boomer fans in the audience. Boomer rock stars have boomer fans. Millennial rock stars have millennial fans. But this isn’t always the case. Take the Lockn’ Music festival which took place in mid-September in rural Arrington, Virginia. Here, Jacquelyn de Phillips discovered two generations of people who are considered quite different in the outside world, spending 4 days together in music-loving harmony.

Video Ukranian Artist Portrays Putin in an Unusual Way

As Russian President Vladimir Putin was addressing the United Nations in New York last month, he was also being featured in an art exhibition in Washington. It’s not a flattering exhibit. It’s done by a Ukrainian artist in a unique medium. And its creator says it’s not only a work of art - it’s a political statement. VOA’s Tetiana Kharchenko has more.

Video South Carolina Reels Under Worst-ever Flooding

South Carolina is reeling from the worst flooding in recorded history that forced residents from their homes and left thousands without drinking water and electricity. Parts of the state, including the capital, Columbia, received about 60 centimeters of rain in just a couple of days. Authorities warn that the end of rain does not mean the end of danger, as it will take days for the water to recede. Zlatica Hoke reports.

Video Russia’s Syria Involvement Raising Concerns in Europe

European nations are joining the United States in demanding that Russia stop targeting opposition groups other than the Islamic State militants as Russian warplanes continue to conduct raids in Syria. The demand came in a statement from Britain, France, Germany, Qatar, Saudi Arabia, Turkey and the United States Friday. VOA Europe correspondent Luis Ramirez reports.

Video Nano-tech Filter Cleans Dirty Water

Access to clean water is a problem for hundreds of millions of people around the world. Now, a scientist and chemical engineer in Tanzania (in East Africa) is working to change that by creating an innovative water filter that makes dirty water safe. VOA’s Deborah Block has the story.

Video Demand Rising for Organic Produce in Cambodia

In Cambodia, where rice has long been the main cash crop, farmers are being encouraged to turn to vegetables to satisfy the growing demand for locally produced organic farm products. Daniel de Carteret has more from Phnom Penh.

Video Botanists Grow Furniture, with Pruning Shears

For something a bit out of the ordinary to furnish your home, why not consider wooden chairs, crafted by nature, with a little help from some British botanists with an eye for design. VOA’s Jessica Berman reports.

VOA Blogs