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.
Reuters
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

Lesotho Faces New Round of Violence, Political Crisis

Brutal killing of military officer has sent former leaders back into S. Africa where they're watching anxiously as regional officials head in to try to restore peace More

Video US Diplomat Expects Adoption of Bosnian Massacre Anniversary Resolution

Samantha Power says there's broad consensus about killings in Bosnia's war, but Russia calls resolution 'divisive,' backs UN countermeasure More

UN Report Exposes Widespread Boko Haram Atrocities

Damning report graphically details pattern of vicious, widespread atrocities committed by Islamist militants More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Olympics Construction Scars Sacred Korean Mountaini
X
July 02, 2015 4:10 AM
Environmentalists in South Korea are protesting a Winter Olympics construction project to build a ski slope through a 500-year-old protected forest. Brian Padden reports that although there is strong national support for hosting the 2018 Pyeongchang Winter Olympics, there are growing public concerns over the costs and possible ecological damage at the revered mountain.
Video

Video Olympics Construction Scars Sacred Korean Mountain

Environmentalists in South Korea are protesting a Winter Olympics construction project to build a ski slope through a 500-year-old protected forest. Brian Padden reports that although there is strong national support for hosting the 2018 Pyeongchang Winter Olympics, there are growing public concerns over the costs and possible ecological damage at the revered mountain.
Video

Video Xenophobia Victims in South Africa Flee Violence, Then Return

Many Malawians fled South Africa early this year after xenophobic attacks on African immigrants. But many quickly found life was no better at home and have returned to South Africa – often illegally and without jobs, and facing the tough task of having to start over. Lameck Masina and Anita Powell file from Johannesburg.
Video

Video Family of American Marine Calls for Release From Iranian Prison

As the crowd of journalists covering the Iran talks swells, so too do the opportunities for media coverage.  Hoping to catch the attention of high-level diplomats, the family of American-Iranian marine Amir Hekmati is in Vienna, pleading for his release from an Iranian prison after nearly 4 years.  VOA’s Heather Murdock reports from Vienna.
Video

Video UK Holds Terror Drill as MPs Mull Tunisia Response

After pledging a tough response to last Friday’s terror attack in Tunisia, which came just days before the 10th anniversary of the bomb attacks on London’s transport network, British security services are shifting their focus to overseas counter-terror operations. VOA's Henry Ridgwell has more.
Video

Video Obama on Cuba: This is What Change Looks Like

President Barack Obama says the United States will soon reopen its embassy in Cuba for the first time since 1961, ending a half-century of isolation. VOA White House correspondent Luis Ramirez reports.
Video

Video Hate Groups Spread Influence Via Internet

Hate groups of various kinds are using the Internet for propaganda and recruitment, and a Jewish human rights organization that monitors these groups, the Simon Wiesenthal Center, says their influence is growing. The messages are different, but the calls to hatred or violence are similar. VOA's Mike O’Sullivan reports.
Video

Video US Silica Sand Mining Surge Worries Illinois Residents, Businesses

Increased domestic U.S. oil and gas production, thanks to advances known as “fracking,” has created a boom for other industries supporting that extraction. Demand for silica sand, used in fracking, could triple over the next five years. In the Midwest state of Illinois, people living near the mines are worried about how increased silica sand mining will affect their businesses and their health. VOA’s Kane Farabaugh has more in this first of a series of reports.
Video

Video Blind Somali Journalist Defies Odds in Mogadishu

Despite improving security in the last few years, Somalia remains one of the most dangerous countries to be a journalist – even more so for someone who cannot see. Abdulaziz Billow has the story of journalist Abdifatah Hassan Kalgacal, who has been reporting from the Somali capital for the last decade despite being blind.
Video

Video Texas Defies Same-Sex Marriage Ruling

Texas state officials have criticized the US Supreme Court decision giving same-sex couples the right to marry nationwide. The attorney general of Texas says last week's decision did not overrule constitutional "rights of religious liberty," and therefore officials performing wedding services can refuse to perform them for same-sex couples if it is against their religious beliefs. Zlatica Hoke reports on the controversy.
Video

Video Rabbi Hits Road to Heal Jewish-Muslim Relations in France

France is on high alert after last week's terrorist attack near the city Lyon, just six months after deadly Paris shootings. The attack have added new tensions to relations between French Jews and Muslims. France’s Jewish and Muslim communities also share a common heritage, though, and as far as one French rabbi is concerned, they are destined to be friends. From the Paris suburb of La Courneuve, Lisa Bryant reports about Rabbi Michel Serfaty and his friendship bus.
Video

Video Saudi Leaks Expose ‘Checkbook Diplomacy’ In Battle With Iran

Saudi Arabia’s willingness to wield its oil money on the global diplomatic stage appears to have been laid bare, after the website WikiLeaks published tens of thousands of leaked cables from Riyadh’s Ministry of Foreign Affairs. VOA's Henry Ridgwell reports.
Video

Video In Kenya, Police Said to Shoot First, Ask Questions Later

An organization that documents torture and extrajudicial killings says Kenyan police were responsible for 1,252 shooting deaths in five cities, including Nairobi, between 2009 and 2014, representing 67 percent of all gun deaths in the areas reviewed. Gabe Joselow has more from Nairobi.

VOA Blogs