EVA Real Estate Appraisal Consultancy - comments and trends on the Commercial Real Estate Sector in Turkey - April-Mai-June.

What has happened in connection with the VAT issue has disturbed developers as well as - maybe even more - end consumers. We have crossed our fingers and hope no hurried decisions will be taken that could damage our sector.

Let's first take look at the mortgage loans market. Rising interest rates have lead to increasing costs and decreasing number of users. Average mortgage loan term is 84 months. Total loan volume is growing relatively slowly compared to previous year. On the other hand, there are quite interesting facts about loans. For instance, mortgage loan amount per capita in our three biggest provinces namely Istanbul, Ankara, Izmir is nearly four times higher than the average of other provinces. In the year 2011, the loan amount per capita has increased by 18% in 3 biggest provinces and 24% in other provinces. Mortgage loans encouraging household savings constitute 5.6% of GDP, at considerably lower levels than developed countries.

Now let's examine some other facts. The dynamics of developing and changing world lead also to changes in the demographic indicators, characteristics and expectations of the population. These are presented soundly in the recent study prepared by the Association of Real Estate Investment Companies about the real estate vision in year 2023. Now let's have a quick look what the future will bring and its effect on housing as an investment.

Depending on the economic growth in coming years, an upwards shift is foreseen in the income levels of the distribution of income. A part of the medium income level group, which is anticipated grow further, will move into income level group, according to income projections. On the other hand, the population is anticipated to be subject to an accelerated growth in coming years. Another very significant fact is that Turkish population is 'getting older'.

Recently, the number of people elder than 65 as 5 millions is estimated to reach to 7.82 millions in 10 years. Regarding the fact that currently the working class population maintaining the pensioners within the social security system, we anticipate that Turkey with an elder population after the year 2023 will be encountered with the same problem as that experienced recently in Europe with a higher average age.

Then again, a new generation is being raised, that is in concert with global development. Life styles resemble each other all over the world more and more, and online working patterns promote concepts bringing houses and offices closer. Indeed, 4 major factors have a considerable impact on housing demand in Turkey: Ownership conditions, changing
household population, the tendency to invest, increase in income. The size of household population, currently 4.12, however is expected to drop to 3.79 level in year 2023. As the number of households is increasing, the size of household population is decreasing.

The number of people, such as students and elder people, sharing the same house without being married is increasing as well. The trend of shift towards smaller dwelling sizes seem to last, due to different needs that will be arising and sought in future. According to statistics, the average dwelling area being 161,8 sqm in the year 2003 has already decreased to 144.,8 sqm as of 2011. All such research, in summary, indicate actually a potential demand primarily to 2+1 and 3+1 rooms dwelling types in a range of 110-125 sqm, followed by 75-90 sqm flats with 1+1 and 2+1 rooms. Mortgage loans are envisaged again as the major source for the finance housing purchase and primarily for first hand housing. However, the VAT issue for first hand housing is will be a determinant factor in such trend, that might even change preferences. This study can serve housing developers and long term investors as a useful reference. The study also includes data about hotel and logistics sectors beneath housing.

Further information www.evagyd.com

Commercial Real Estate & Investment Market in Turkey - explore

09.07.2012