Turkish Real Estate Sector's revival due to demand from the Gulf; and the Office Sector in Turkey needs to get more settled. Read the exclusive interview with Ms. Isli Dincer ... about new Turkish legal code, hot-spots in Turkey and the role of an appraisal company in the growing demand for Green Buildings.
save-more-energy.com: Could you briefly introduce your company and the services you are offering?
Ms. Isil Dincer: TSKB Gayrimenkul Degerleme, by its powerful and professional staff; provides independent and impartial reporting services, in compliance with international standards, to individuals, domestic and foreign companies, public institutions, domestic and foreign banks, funds, real property investment associations, real property development companies, law offices, financial leasing companies, insurance and reassurance companies, municipalities, independent audit companies, intermediary firms, foundations and especially companies subject to CMB legislations.
save-more-energy.com: The new Turkish legal code is going to attract more foreign investments, transactions and also open for new companies (at least this is the idea). What are your expectations and in the same time what is your advice to a foreign investor, company.
Ms. Isil Dincer: According to the official data; 125 thousand 455 foreigners have a total number of 116 thousand 456 real properties, of total 89 million 359 thousand 349 square meters in Turkey. While the 10 provinces where the area of the real property owned by foreigners are largest rank as; Konya, Antalya, Mugla, Ankara, Aydin, Hatay, Istanbul, Izmir, Kirsehir, Mardin, the 10 provinces where the number of real properties are highest are Antalya, Mugla, Aydin, Istanbul, Izmir, Bursa, Ankara, Mersin, Hatay and Kayseri. The province where the number of foreigners owning real property is highest is Antalya.
Even by the expectations that the law will be passed, we observe that the interest of foreigners has increased over the last 3 months. When the results of the first days are observed; it can be seen clearly that activity has begun in projects which have been static for a long time. Especially the demands from the Gulf countries have been the major reason for the revival in the sector. In this sense, also considering the opinions of the sector representatives, the belief is that investors would prefer to use their money in more reliable markets especially following the chaos experienced in the Middle East. We believe that Turkey will be a center of attraction by the law of reciprocity and that the processes will maintain their initial dynamism for a long time.
save-more-energy.com: As an independent appraisal company, you have an excellent overview about the market. Which region(s) will develop to 'hot-spots' within the next 3-4 years?
Ms. Isil Dincer: It is possible to say that in the Istanbul province in general, the 2012 housing market has started slower as compared to the previous years. The number of projects launched since the beginning of 2012 is lower as compared to last year. It is believed that the increase made in the loan interest rates near the end of last year has been effective as the most important factor behind this relative slowness in the housing market. When we look at the new projects and those that are under construction throughout the city, it is observed that some regions are quite active. If we are to examine these regions briefly;
KAGITHANE - AYAZAGA - SEYRANTEPE REGION
This triangle, both by its close location to the transportation connection roads and its location in the city center, has lately become an area that attracts the interest of all real property developers. The Agaoglu My Home Maslak project put out for sale in July 2011 is a project of 786 units, earthwork activities have been started on the Maslak land where agreement has been made with Emlak GYO by the Revenue Sharing model. With the project, which is foreseen to be put on sale soon, before the 2nd half of 2012, a considerable housing stock will become available in the region. Thus, the area right behind the Maslak region, which is a significant business center, will evolve into a qualified housing and living area.
Sariyer, observed as the most secure region on the Istanbul earthquake map, has become one of the most significant, preferred districts in Istanbul for those who are looking for security and luxury at the same time. The development which has started as mansion style residences, of very wide usage areas, at the Zekeriyakoy region, is now leaving its place to smaller housing types. It is observed that independent villa type houses and garden duplex and attic duplex apartment type homes are attracting interest recently. The villa areas in the housing projects in Zekeriyakoy vary in a wide range from gross 160 to 700 sqm. The number of villa projects of 160-400 sqm is higher, while mansions of gross 500 sqm and above, appealing to a limited group are available in the region in limited numbers.
In Kartal district, the Kartal Justice Palace under construction, the metro, the urban transformation project, upon the movement of the marina and the available industrial areas which have remained in the city to outside the city and the transformation of their areas into service sector and housing area, have changed the district into an area of attraction. The location of the Justice Palace in this region has caused many lawyers to invest in this area. In addition, the owners buying flats aimed for use, in new housing projects are primarily lawyers. The increase in the number of state and private hospitals in Kartal is also causing a demand for the area by nurses and doctors.
It would not be wrong to say that throughout Istanbul, Kartal on the Anatolian side, and the Basin Ekspres Road and surroundings on the European side look like a construction site city. As the major advantages of the Basin Ekspres Road, the closeness to the Ataturk Airport and its being one of the CBD areas on the European side may be cited. While there are investors who have plots and also investors looking for plots in the area, it is observed that the initiated projects are primarily housing projects.
WEST ATASEHIR AND TUZLA REGIONS
It seems that the dynamism of the region will continue to increase, especially with the Finance Center project. Among the project areas where earthworks have already started, in addition to major public institutions, there also are plots owned by a limited number or real property developers. In the region where development will be observed primarily as office projects, it is also presumed that housing function will also be available, although limited. The Saruhan Finanspark currently under construction, for which license has been received before the master plan of the Ministry of Environment and Urban Affairs, emerges as the first project started in the region. The sales of offices and homes within the scope of the project are still in progress. By the materialization of the Finance Center project, a revival has been observed in the housing and office sector in the area which was believed to have reached saturation. Since the plot area remaining in the Finance Center project area will be limited, it is foreseen that the prices in projects to be built in this region will be relatively higher than the other projects in West Atasehir.
Although their geographies, climates and job opportunities are different, Bursa, Adana and Antalya are among Turkey's provinces receiving highest immigration. These attract the attention as three exemplary provinces, where Bursa has reinforced its economy as an industrial city, Antalya has based the foundations of its economy on tourism and Adana has developed economically by the combination of industry and agriculture. They therefore are among the attractive cities to live in. People prefer these cities, which are offering both job opportunities and quality living standards, over more complicated metropolises such as Ankara, Istanbul, Izmir. The fact that living conditions are easier in these cities, where they are able to find the quality living standards and social means of the big metropolises, has also led to an increase in the investments in the Bursa, Adana and Antalya provinces and these provinces have also emerged in housing investments.
The positive developments experienced in Anatolia, especially in the Bursa, Adana and Antalya provinces, have positively influenced the customary life in the cities, and have triggered the development of new regions, even new districts. While the occupancy rates at the newly formed qualified housing areas are also increasing by the immigrations from the outside of the city, they have also been supported by the migrations experienced in the city itself. The city textures and identities of the settlements have been reorganized by the newly formed regions.
In BCG's report titled 'Winning in Emerging-Market Cities: A Guide to the World's Largest Growth Opportunity', the other cities included among these world cities, in addition to Istanbul, Ankara, Izmir and Bursa, have been Antalya, Adana, Mersin, Kayseri and Konya, developing rapidly both in population and economic growth. The significance of these cities that are among the favorites of major construction companies has been demonstrated once more.
By the influence of the reciprocity law, for the investors coming from the Gulf countries, we foresee that developments will be observed in the Black Sea region also where the climate conditions are more favorable for the citizens of the Gulf countries, in addition to the city centers in the metropolises, and the Aegean and Mediterranean coasts that may be preferred as summer resorts.
save-more-energy.com: In some sectors, especially the Office Sector Turkey/Istanbul is not (yet) a developers' market. International investors/transactions are compared with other major cities 'underdeveloped'. What must be changed? Is there a need for foreign investors in Turkey?
Ms. Isil Dincer: In the office sector in Turkey, foreigners are not present as investors too much. If one were to ask what needs to be changed for this, we may possibly say that the office sector in Turkey needs to get more settled. When we look, we observe that there is no office-based GYO company available in Turkey. There are GYO's building offices also, along with other types of real properties, but there is no GYO working specifically on offices. In order to accelerate the development, a GYO may be established to work solely on offices. In the present system, foreign investors are able to be in Turkey by either management or by lease agreements. And the foreigners who want to make an investment are required to use a local partner. We may say that most of the foreigners in the office market in Turkey are currently operating as managers.
save-more-energy.com: Is the Green Building Sector an Economic Opportunity in Turkey? And which services do you provide within this context?
Ms. Isil Dincer: By the international BREEAM certificate we have received in 2012, we have become the first organization of Turkey authorized for the appraisal of Green Buildings. Because we believe that this business is an important investment for the differentiation of the sector.
We have carried the consultancy services, we had provided in 2005 on how a correct housing project could be transformed into an investment, over to green buildings now. We provide consultancy to the investors. Our primary objective is the emergence of green buildings in prominence by the investors and developers at the same time, along with urban transformation. And we believe that it will within the coming 5 years. The reason for this is unless environment friendly or green buildings are produced during urban transformation, you are forming neighborhoods of 5, 10 or 15 years. Meanwhile, you are contributing to a transformation of 50 years by green buildings. We want that to be included as a factor in the Urban Transformation Law.
The current demands are especially for the transformation of office buildings and shopping centers into green buildings. Because these buildings are leasable properties and provide to advantages to the lessee when they are being leased. It allows being included in a prestigious project (and this is the most significant feature that many international investors are looking for); and the reduction of the expenses they pay per square meter by the reduction in the overhead costs. And this means a cost reduction of nearly 20%. We believe that this trend will continue also in housing projects. Meridien is the biggest example. It has boosted its sales by the environment friendly concept. It has increased its sales rate even under the most difficult conditions. There is a need for differentiation in housing projects. Life style is being sold but these standards have to take shape according to the current circumstances also. Therefore, we believe that the green concept will also increase in housing projects in the coming period.
Despite the awareness that has started in Turkey over the past three years, and although there is a progress from the viewpoint of legislation by the 'Regulation on Energy Performance in Buildings' issued in December 2008, a step has not been taken yet in practice.
Meanwhile, in the world, by the 'Green Building Certification Systems' initiating this awareness, this awareness is also influencing the market. For example, in the 2011 Fannie Mae Selling Guide, the inclusion of the article 'The appraisal experts, in order to ensure the reflection of the total contribution of the subject real property's energy-efficient features to the market value, must definitely compare the energy-efficient features of the subject real property with comparable real properties, in the introduction of the (Fannie Mae appraisal form's) sales comparison analysis. (Fannie Mae Selling Guide, 2011)', is a sign that demonstrates that its influence on the market value can be measured in a place where sustainability awareness has developed.
In Turkey, as contractors, developers and investors realize that the market is demanding this due to environmental, social and economic factors; we will observe a rapid increase in buildings with 'Green Building Certification' in the coming 5 years' period. This will lead to differences in the market values of the buildings, and new products and services will emerge in the financial services, such as mortgage finance, etc. This will also be a significant factor in the revival of the economy, especially in adding new products to the construction sector and the sub-sectors.
Thank you very much!
Ms. Isil Dincer, General Manager @ TSKB GD
Questions by Guenter Theuermann, save-more-energy.com
This interview is also featured in the 'Turkish Real Estate & Investment Section'
14.06.2012save-more-energy.com is an independent b2b platform for Green Investment & Sustainable Development. Green Buildings, Retrofit, Urban Transformation, Renewable Energy, Future Cities and Investment Opportunities in Europe incl. CEE/SEE and Middle East Area.
Ms. Isil Dincer, General Manager @ TSKB Real Estate Appraisal