1of2_report_investment opportunities in turkish property market_march 2016 issue
TRANSCRIPT
INVESTMENT OPPORTUNITIES IN TURKISH PROPERTY MARKET
& AN OFFER FOR COOPERATION
MARCH 2016
Copyright - This document is prepared to reach targeted audience of UNAPRO & KDC Group; investors It cannot be printed, copied and distributed for any purpose or intent other than Business Development activities of UNAPRO Co.& KDC Group without consent. Authorized Author can be contacted from [email protected] for any consent request.
www.unapro.com.tr, [email protected]
Dear Investor,
Turkey, a rapidly growing competitive free market economy with a relatively young population and significant dynamism attracts attention of both east and west in its very unique geographical and geo-political position. Factors like its strengthening Democracy, growing stable economy, and increasing foreign direct investment are important to create an environment of trust for new foreign investment. Once considered with the value-for-money price and ease of the process; investing in Turkish Property becomes a clear advantage for Foreigners for both living and investing purposes.
After the legal arrangements made in 2012, the acquisition of property by foreigners in Turkey is considerably simplified. Since the date statistics collected from 2013, to the most recent date until January 2016, whole residential home sales to foreigners reached total of 145,000 levels with 49% increase in comparison to the previous era. Residential sales to foreigners market have shown an average monthly growth of 2.7% and average annual growth as 37.3% in the last two-plus years. Total real estate sales to foreigners in last 12 years have been around $33 billion. Around $12.4 billion, 37.6% of sales have happened in last 3 years. For many reasons, Turkey is a country where foreign investors from various countries find it value for money to buy real estate. This interest is gaining momentum every year.
In this presentation we are outlining reasons and motives of foreign buyers, identifying current trends at the market, and presenting various development opportunities available, especially around Istanbul and Marmara region which we strongly believe to attract investors’ attention. Those investment project opportunities varies between several hundreds thousand dollars to several hundred million dollars investment cost with ~40-100% average annual return rate potential.
Our aim is to reach investors who are able to see such unique high return potential and would like to invest in those development projects -targeting a very niche market; foreign property buyers market in Turkey - , to turn those unmatched opportunities into reality in a joint investment & development organization by adding our professional knowledge and expertise, building a quality, trustable brand to achieve highest returns which is not very likely in other parts of the world. There is an opportunity; perfect match between possibility of a very strong product offering and an existing high demand in a high growth market for that. We are confident that It is right time at right location.
We hope that this presentation with decoded market information, interpreted timing signals and identified trends creates strong interest of yours to take action and results a start up of a life long cooperation between the parties. We are ready to make this happen.
Yours faithfully,
Kubilay Doğan President, KDC Group
Server Birkan Exec.Director, UNAPRO Co.
CONTENTS: I. WHY TURKEY? ............................................................................................................................... 7
A. KEY ECONOMIC INDICATORS ................................................................................................ 9
II. WHY TO INVEST IN TURKISH PROPERTY MARKET? .................................................................... 10A. OVERVIEW ............................................................................................................................... 10
B. TURKEY LATEST HOUSE SALES STATISTICS .............................................................................. 13
III. REAL ESTATE SALES TO FOREIGNERS ......................................................................................... 14A. FOREIGN BUYERS’ INTEREST IN TURKISH REAL ESTATE ......................................................... 14
B. GEOGRAPHICAL DISTRIBUTION OF PROPERTY SALES ........................................................ 15
C. MARKET TRENDS ...................................................................................................................... 16
D. LEGAL STATUS .......................................................................................................................... 20
E. INVESTMENT OF GCC COUNTRIES ....................................................................................... 20
IV. İSTANBUL & MARMARA REGION’S LOCATION, ADVANTAGES .............................................. 21A. MEGA PROJECTS UNDER CONSTRUCTION: ........................................................................ 22
1. ISTANBUL CANAL PROJECT ................................................................................................... 232. İSTANBUL 3. AIRPORT PROJECT ............................................................................................ 273. İSTANBUL NEW NORTH MOTORWAY AND 3RD BOSPHORUS BRIDGE PROJECT ............. 294. İSTANBUL NEWCITY PROJECT ................................................................................................ 335. İSTANBUL-İZMİR MOTORWAY İZMİT BAY CROSSING ........................................................... 356. İSTANBUL ATAŞEHİR INTERNATIONAL FINANCIAL CENTRE ................................................. 37
V. FACTORS SUPPORTING SUPPLY & DEMAND GROWTH ............................................................ 40
VI. POTENTIAL INVESTMENT PROJECTS & CURRENT OPPORTUNITIES ............................................ 41A. HIGH GROWTH ZONES PROPOSED DEVELOPMENT OPPORTUNITIES............................... 42 1. ATAŞEHİR HOME-OFFICE RESIDENTIAL PROJECTS- CITY HOTEL DEVELOPMENT ............ 422. KARTAL OFFICE SPACE-RESIDENTIAL-CITY HOTEL DEVELOPMENT ................................... 433. RİVA-ŞİLE-ÇEKMEKÖY LUXURIOUS VILLAS, ESTATES DEVELOPMENT ................................ 444. HIGH DEMAND REGION FOR GCC INVESTORS: ÇINARCIK -YALOVA, MUDANYA-BURSA ........ 45
VII. VARIOUS OTHER INVESTMENT GRADE PROPERTIES ................................................................. 56VIII. REFERENCES: .............................................................................................................................. 57IX. ATTACHMENTS ........................................................................................................................... 58
VARIOUS OTHER INVESTMENT GRADE PROPERTIES
• RESIDENTIAL - Lands & Building• MIXED USE (Residential & Commercial)-Lands• COMMERCIAL & TOURISM - Lands• COMMERCIAL & OFFICE – Buildings• FARMING (Residential Zoning expected)-Lands
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I. WHY TURKEY?1
• Turkey is the world’s 16th and Europe’s 6th largest economy. According to HSBC’s “TheWorld in 2050” report, Turkey will be the world’s 12th and Europe’s 5th biggest Economyby 2050. In September 2010, the FTSE Group promoted Turkey from ‘secondaryemerging’ status to ‘advanced emerging’ status.
• Turkey is currently the fastest emerging market of Europe and OECD. Turkish GDP grewby 8.8% in 2011, 2.2% in 2012 and 4% in 2013. The average growth rate in the lastdecade was 5%, the fastest among the OECD countries, which grew at an average of1.7%. OECD estimates that Turkey will be the third highest growing country after Chinaand India by 2017 and will surpass India after 2017 to become number two.
• Turkey’s GDP (current prices) for the year 2013 was $827bn, which rose from $231bn in2002. GDP per capita nearly tripled since 2002, from $3,500 to $10,815 in 2013. Turkey’sGDP per capita is greater than that of two EU countries, Romania and Bulgaria.
• Turkey is one of the world’s biggest markets with a population of 76 million and a labourforce of 28 million. Half of the population is below the age of 30. Turkey has the highestyouth population and 4th largest labour force compared to EU-27 countries.
• Turkey’s net debt to GDP ratio in 2012 is 36% in 2012, which is well below the MaastrichtCriterion of 60%. Turkey has been meeting the Maastricht Criterion on public debt since2004. Similarly, Turkey’s budget deficit/GDP ratio in 2012 is 2%, one of the lowest rates inEurope.
• In late 2012, Turkey’s sovereign credit rating was raised to “investment grade” by FitchRatings. In March 2013, Standard & Poor’s raised Turkey’s sovereign credit rating to (BB-), one level below investment grade. It was followed by Moody’s which raised Turkey’srating to investment level in May 2013.
• There are currently 145,000 Turkish entrepreneurs operating in Europe, employing627,000 people and running €63 billion worth of businesses.
• There are 32,000 foreign capital enterprises operating in Turkey.
• According to the Forbes list of World’s Billionaires 2014, there are 43 billionaires in Turkey,37 of which reside in Istanbul.
• Starting a business in Turkey takes an average of 6 days, compared to the worldaverage of 30.6 days, MENA average of 23 days and OECD average of 12 days.
• Turkey’s export volume was $152bn in 2013, more than quadrupling since 2002.
• According to Ernst & Young’s M&A (mergers and acquisitions) Barometer report,Turkey’s M&A market had the highest transaction number and volume (297 transactionswith $18 billion investment) in 2012 in the Central and South Eastern Europe Region.
• According to the World Economic Forum’s Global Competitiveness Report for 2012-2013, Turkey moved up 16 places in the global competitiveness rankings last yearreaching 43th place among 144 economies and becoming the most competitivecountry in south-eastern Europe.
1 ‘Turkey: latest killer facts about the economy’ Research & Analysis https://www.gov.uk/government/publications/turkey-latest-killer-facts-about-the-economy/turkey-latest-killer-facts-about-the-economy by U.K. Foreign & Commonwealth Office, 29.09.2014
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• 33% of big multinational companies use their offices in Turkey as their regionalheadquarters. Companies that use Turkey as a regional management hub includeBenetton, Bosch, BP, Citibank, Coca-Cola, General Electric, GlaxoSmithKline, Hewlett-Packard, Hyundai, Imperial Tobacco, Intel, LG, Mercedes-Benz, Microsoft, Pepsi, ProcterGamble, Samsung, Siemens and Unilever.
• Turkish banking sector is one of them most robust among Europe. Banking sector’sassets size is $800bn by June 2013, higher than the GDP of many EU countries; has oneof the highest capital adequacy ratios (16% compared to the minimum requirement of8%) and lowest non-performing loan ratios (3%) in Europe. There are 49 banks in Turkey,32 of them deposit banks, 16 of them foreign.
• Turkey is one of the fastest growing energy markets in the world. The demand forelectricity in the country is estimated to grow at an annual 6% between 2009 and 2023.The total amount of investments to be made to meet the energy demand in Turkeyover the next 10 years is estimated around USD 130 billion.
• Turkey is also playing an increasingly important role in the transit of oil and gas supplies.The Baku-Tbilisi-Ceyhan pipeline, the second longest oil pipeline in the world, deliverscrude oil from the Caspian Sea to Turkey’s Mediterranean coast, from where it isdistributed to the world’s markets. The Blue Stream, a major trans-Black Sea gaspipeline, delivers natural gas from Russia to Turkey. There are 2 other major pipelines,TANAP and Turk Stream (South Stream) waiting to be completed which will transmit oiland gas from the Caspian region, Russia and the Middle East routed westward toEurope
• The renewable energy sector has been injected with billions of dollars in recent years byleading Turkish banks and is expected to grow further. Turkey ranks 1st in the world interms of growth rate in wind energy plants and only 15% of its potential has beenutilized up until now. Turkey aims to increase the ratio of its renewable energy resourcesto 30% of its total energy production by 2023 from the current 20%.
• Turkey is the 8th largest textile and 7th largest clothing exporter in the world by 2011.Turkey is also the 3rd biggest producer of footwear in Europe.
• According to the leading international industry magazine “ENR Engineering NewsRecord”, with 33 companies among the top 225 contracting companies, Turkey rankedas the second country in the world in 2012 after China. Turkish contractors are veryactive in especially MENA, Central Asia and Sun-Sahara Africa. Since 1970, Turkishcontractors have completed about 6.500 projects in 93 countries with $205 billionproject value. The construction sector in Turkey is expected to be among the highestgrowing in the world with an expected growth rate of 8.5% between 2009 and 2014.
• Turkey is the largest commercial vehicle and second largest bus manufacturer ofEurope and the 16th biggest motor vehicle producer of the world. In 2012, 1.1 millionvehicles were produced in Turkey, 66% of which were exported. Today, there are 17companies including Fiat, Honda, Hyundai, Renault and Toyota, Mercedes-Benz andM.A.N manufacturing various types of vehicles in Turkey. Turkey also provides autopartsfor brands such as GM, Mercedes, BMW, Opel, Toyota, Fiat and Ford.
• Turkey has risen to become Europe’s largest home appliances manufacturer. Turkey’slargest white goods export market is Europe which is led by the UK, France andGermany. Turkish brand Beko is currently the leading white goods brand in the UK,
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becoming the number one selling brand in refrigeration, freezers, and washing machines and cooking devices. Turkey is the number one TV manufacturer in Europe. Turkey’s Vestel and Beko account for over half of all TV sets manufactured in Europe.
• The Turkish ICT sector is a fast growing sector with an annual growth rate of 14% between 2005 and 2010. According to Business Monitor International predictions, Turkey will be the highest growing IT market in the period between 2009 and 2014.
• Supported by a young and tech-savvy population and over 20 million internet users, Turkey’s e-commerce market is set to grow exponentially. The $17 billion e-commerce volume registered in 2012 is expected to rise at an annual rate of 123% over the next 3 years to reach $140 billion.
• Turkey is one of the leading countries in the world in agriculture and related industries. Turkey is the world’s 7th largest producer of fruits and vegetables, Europe’s largest and the world’s 3rd largest frozen fruit exporter and has the largest milk and dairy production in its region.
• Turkey is Europe’s 2nd largest iron and steel maker and the world’s leading producer of construction iron.
• Turkey is the world’s 4th largest mega-yacht manufacturer and 5th largest shipbuilding country.
• Turkey has the second largest army in NATO, after USA.
A. KEY ECONOMIC INDICATORS
Table 1- Key Economic Indicators by The Turkish Industry and Business Association (TÜSİAD)
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II. WHY TO INVEST IN TURKISH PROPERTY MARKET? A. OVERVIEW “Buy Land, They are not making it anymore!” Mark Twain
This famous quote is often quoted when an investor asked where to invest. Property is slow but steady, and much more profitable in the long run. Given the weak performance of financial markets in the past few years, real estate investments is definitely much more attractive and less risky option. Many fund managers in the world are gradually turning to the real estate market for sustainable earnings. Although there is no absolute guarantee that the property's value increases from year to year, for whom with the courage to keep their property for a while and it always turns out profitable.
Turkey's rapidly growing tourism industry looks set to continue to grow. In 2015, more than 39.8 million foreign tourists by providing $ 31.5 billion contribution to the economy have visited Turkey. In 2015, Turkey, the 6th most visited country in the world, while in Istanbul, the 6th most visited city in the world, was Europe's 3rd most visited city after London and Paris. Britain, with 2.4 million visitors last year, is among the top three countries visiting Turkey. 32,000 Britons already own property in Turkey. Besides Istanbul, Antalya with great beaches, plenty of sunshine and pristine sea has surpassed Europe's most popular vacation destinations and has become a very attractive place for investors especially from Scandinavian countries and Russia for both reasons: a perfect living destination and a profitable property investment.
Real estate prices in Turkey are very cheap compared to its peers. All indicators shows that in case of a mature mortgage market with European standards of real estate adopted, property in Turkey will be appreciated quickly to the level of its European peers. In the course of Turkey's accession to EU, harmonization process of real estate standards supports this expectation. Turkey’s prospective membership to EU will further increase the demand for quality accommodation in the favourite locations.
Another appeal to foreign investors for Turkish Property Market is that Turkey's 70 million populations, estimated to reach 80 million within the next 10 years, creates an enormous demand for real estate in the country.
Turkish Construction Industry's architectural, engineering and labourship experience in domestic and international markets over the last few decades is capable enough to fulfil design, material and quality expectations of the foreign customer base to ensure satisfaction over the product sold.
Continued since the 2000s, massive urban transformation projects have been started, technical regulations and controls have been raised to top level in this way technical standards of structures produced have been drastically improved.
Turkey, especially in the last 10 year, with the contribution of economic and political stability in its neighborhood, became a safe haven for investors sought refuge and was able to provide an ever-increasing foreign capital inflow2. During 2009-2013 compared to the 2004-2008 period, foreign direct investments to Turkey increased 238% compared to the growth rate in Europe and became 3rd in ranking after Germany and the United Kingdom3. Over the last 10 years, Turkey attracted more than $100 billion of FDI and ranked as the 13th most attractive FDI destination in 2012.
2 Attractiveness Survey Turkey 2013- The Shift, The Growth and The Promise, Ernst & Young 3 Attractiveness Survey Europe 2014 - Back in the Game, Ernst & Young
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78% of Turkey’s overall FDI comes from the EU. Turkey has become an investment base for European businesses with increasing integration into the EU’s supply and production chain.
Turkey has significantly liberalised its FDI regime. According to the OECD’s Regulatory Restrictiveness Index, Turkey is less restrictive than the OECD average and far less restrictive than the non-OECD average (ranked 27th out of 58 countries in 2013).
Turkey has huge growth potential in the real estate sector. According to the 2012 publication of “Emerging Trends in Real Estate Europe”, prepared by PwC and ULI, Istanbul is the most attractive investment market in Europe in the “Existing Property Performance”, “New Property Acquisitions”, and “Development Prospects” categories. Ernst and Young rates Turkey as the second most attractive market in Europe for real estate investors. 2016 Wealth Report of Knight Frank, PIRI (Prime International Residential Index) ranks Istanbul #4 in the world by 13% property appreciation in $ terms after Vancouver (Kanada), Sydney(Australia), Shanghai(China). Istanbul ranked #1 both in Europe and Middle East Classification.
Global Property Guide4 states that during the year to end-Q2 2015, Turkey's nationwide house price index surged 18.96% (10.95% inflation-adjusted), according to the Central Bank of the Republic of Turkey (CBRT) while In Istanbul, house prices skyrocketed 27.6% (19% inflation-adjusted). In Q1 2015, Turkish Property Market average capital gain was 7.86% for the year left behind -a rise from previous year figure 7.16%-, the 4th best performer in Europe after Ireland, Estonia and Sweden. With such rates Turkish Property Market proved to be a reliable source for consistent earnings of investors.
After easing conditions of property ownership for foreigners in 2012, There has been a property sales boom especially by investors from Middle East and Arabian Gulf Countries (Saudi Arabia, Iran, Qatar, Bahrain, United Arab Emirates, Kuwait and others), Europe (UK, Germany and Scandinavian Countries) and Russia and other CIS Members (like Kazaksthan, Azerbaijan). Strong sales momentum does still exist in existing increasing sales trend.
Within 4 hours of flying distance, Turkey has access to 1.5 billion customers in Europe, Eurasia, the Middle East and North Africa and to markets with a total $25 trillion GDP. Either being in such a key location as a competitive advantage or having a wonderful climate, pristine sea, unique lakes, colorful rivers, almighty mountains and all natural beauties eiher for living or for investing, Turkey is packed with priceless opportunities.
As illustrated in Figure 2- Share of Property Investments in Foreign Direct Investments (x Million USD), Foreigners’ Property Investments which did not reach $1 billion in 2003, increased regularly in the following years and peaked in 2014 at $4.3 billion. The annual average between 2003 and 2015 in real estate purchase was around $1.7 billion. This means that between 2002 and 2015, among the total of direct investments reaching $130 billion, property sales were $33 billion. Currently, Property Investments of Foreign Nationals makes ~25% of overall Capital Inflow to Turkey5 as per latest Central (Reserve) Bank Datas published by the end of 2015.
4 http://www.globalpropertyguide.com/Europe/Turkey 5 http://www.hurriyetdailynews.com
-8.0%Buenos Aires
Currency and affordability issues
+2.5%São Paulo
Economic slowdown, rate hikes
+1.1%Aspen
Sale volumes at 8-year high
+24.5%Vancouver
Record-breaking demand+2.4%
New York
Currency impact slows growth
-2.0%Barbados
Prices reaching their floor
+3.2%Chamonix
Infrastructure investment
+10.0%Monaco
Top tax destination
+5.0%Madrid
Recovery continuing
+2.1%Provence
Market on the move
+1.0%London
Wealth taxes bite
+9.0%Berlin
Investment boom
+2.3%Moscow
Capital outflow, weak rouble
+13.0%Istanbul
Foreign and domestic demand
+2.9%Nairobi
Muted, geopolitical issues
+6.9%Cape Town
Limited supply, weak rand
+14.8%Sydney
Tight supply, low rates
+4.1%Phuket
Condos outperform villas
-2.1%Singapore
Demand recovering
+14.1%Shanghai
Buying restrictions eased
Latin America& Caribbean
Australasia
Asia Pacific
Europe
NorthAmerica
Russia & CIS
Africa
MiddleEast
PIRI HighlightsA closer look at 20 of the locations in the PIRI 100 that saw interesting shifts in the price of prime residential property in 2015 PIRI (PRIME INTERNATIONAL RESIDENTIAL INDEX)
The value of the world’s leading prime residential property markets rose on average by 1.8% in 2015, according to the latest results of our unique Prime Inter-national Residential Index (PIRI).
This was similar to the 2% growth seen a year earlier. However, in 2015 over 66% of the PIRI 100 locations recorded flat or positive price growth, compared with 62% in 2014.
The gap between the strongest and weakest-performing luxury residential markets in the PIRI 100 has shrunk considerably from 97 percentage points during the tumultuous times of 2009, to 45 points in 2015.
Despite this convergence, the index still saw some significant outper-formance last year. Vancouver leads the rankings by some margin, with prices accelerating 25% during 2015. A lack of
supply, coupled with foreign demand, spurred on by a weaker Canadian dollar explain the city’s stellar performance.
Antipodean markets also performed strongly. Sydney, Melbourne and Auckland all recorded double-digit annual price growth, up 15%, 12% and 10%, respectively.
Of the 34 locations where prime
prices slipped in 2015, 22 were located in Europe. Yet there is renewed optimism that prices in the region’s most popular second-home destinations, particularlySpain, Italy, the Algarve and parts of the Côte d’Azur, are close to bottoming out.
Munich, Amsterdam, Monaco and Berlin are Europe’s standout performers, recording price growth of 12%, 10%, 10% and 9% respectively in 2015. Even the global financial crisis hardly affected the upward trajectory of key German cities. Amsterdam conversely is bouncing back from a fall of 18% in peak-to-trough terms.
The prime central London market remained in positive territory during the year (+1%) despite a raft of new property taxes, many of which were aimed at for-eign buyers, being introduced.
The relaxation of cooling measures in some Chinese cities has had an immedi-ate impact on performance, with luxury prices in Shanghai ending 2015 14% higher. Given price falls in Singapore and Hong Kong, it will be interesting to see if policymakers in these markets follow suitand loosen their grip on cooling measures.
Despite areas of growth, the world’semerging markets are not the shining bea-cons they were two to three years ago. The US Federal Reserve’s recent rate rise, the resulting strong dollar and the collapse in commodity prices all help to explain whyBuenos Aires (-8%) and Lagos (-20%) are located at the foot of the PIRI 100.
Vancouver’s prime property value outperformed during 2015
Vancouver sets the paceThe winners and losers in our annual round-up of prime market performance
KATE EVERETT-ALLEN,HEAD OF INTERNATIONAL RESIDENTIAL RESEARCH
Monaco is still one of Europe’s property hotspots
40 PIRI (PRIME INTERNATIONAL RESIDENTIAL INDEX)
Figure 1 Knight Frank Wealth Report 2016 PIRI (Prime International Residential Index) Highlights
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Figure 2 - Share of Property Investments in Foreign Direct Investments (x Million USD)
B. TURKEY LATEST HOUSE SALES STATISTICS According to the latest statistics, In 2015, Overall house sales in Turkey increased by 11% and became 1,289,320 compared to the previous year. Istanbul has the highest share (18.6% with 239,767 sale transactions) in residential sales followed by Ankara with 11.4% share and 146,537 transactions, Izmir with 6% share and 77,996 transactions.
Overall mortgage sales (33.7% of overall sales) have increased by 11.5% to 434,388 transactions compared to the previous year. Istanbul took first place with 93,564 transactions corresponding 21.5% share followed by Ankara with 13.3% share and 57,609 transactions, Izmir with 6.6% share and 28,701 transactions.
First-time-sold house sales (46.4% of overall sales) have increased by 10.5% to 598,667, compared to the previous year. Istanbul ranks first with a share of 18.8% with 112,491 transactions followed by Ankara with 10.3% share and 61,435 transactions and Izmir with 5.2% share and 31,065 transactions.
House Sales to Foreigners (1.8% of overall sales) in 2015 has increased by 20.4% annually to 22,830 transactions- compared to the the previous year. Sales happened in 2015, Istanbul ranked first by 7,493 sales with 33% share followed by 6,072 sales in Antalya with 27% share, 1,501 sales in Bursa & 1,425 sales in Yalova with 6% share of each.
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Monthly House Sales to Foreigners (no.s)
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III. REAL ESTATE SALES TO FOREIGNERS A. FOREIGN BUYERS’ INTEREST IN TURKISH REAL ESTATE Foreign purchases of real estate in Turkey are increasing at a rapid pace. In the past six years, foreign real estate purchases amounted to $16.29 billion compared to ~$33 billion since 2003. Last year in 2014, foreigners bought properties worth $4.32 billion, reaching an all-time annual high.
Respectively, Properties bought by foreigners was $1.78 billion in 2009, $2.49 billion in 2010, $2.01 billion in 2011, $2.64 billion in 2012, $3.05 billion in 2013 and $4.32 billion in 2014. In the first ten months of 2015, the figure stood at $3.7 billion.
An important factor behind the increase is the amendment of a law that set reciprocity rules between Turkey and other countries. Earlier, a foreigner interested in buying a home in Turkey was subject to the same restrictions that his or her country applied to Turkish citizens. This reciprocity condition was lifted in August 2012, opening the door for citizens of 183 countries to buy homes in Turkey. The amendment led to a boom in sales in 2013 and 2014. Last year, foreign real estate purchases accounted for 33% of the $12.1 billion foreign direct investments in Turkey.
According to figures obtained from the Environment and Urban Affairs Ministry, foreigners owned 118,784 properties in Turkey as of the end of 2014. The figure had stood at 111,579 in August 2014. The number of foreign-owned properties in Turkey stands at 47,912 as of early 2005. Greeks own 12,535 properties, Germans 12,053, Britons 6,983, Syrians 4,607 and Dutch 1,833. Citizens of other countries own [almost 10,000 more properties.]
Property Sales to Foreigners is rising. According to the Turkish Statistics Institute, 37,255 homes were sold to foreigners from January 2013 to May 2015. In 2013 alone, the figure stood at 12,181. That figure rose to 18,259 in 2014, 22,830 in 2015. Sales are estimated as 29,000 for 2016.
Real Estate Agents we interviewed stated that foreign companies were buying mostly business offices in big cities like Istanbul and Ankara, while individual buyers, overwhelmingly Europeans, preferred the coastal regions. Arab Buyers from Gulf region, meanwhile, have focused on the Marmara region, including Yalova,Bursa and Sakarya, as well as the Black Sea such as Trabzon. Foreigners bought property for direct use and as an investment, adding that part of the foreign-owned summer homes were being rented to others.
Turkey’s larger constructions companies have sought to attract foreign buyers to luxury residential projects, known as “brand” projects. According to a survey conducted jointly by the real estate information network Reidin.com and Turkey’s Real Estate Investment Partnerships Association, the share of foreign buyers in brand projects outstripped the local one in April, reaching 54%. Foreigners purchased mostly two-bedroom, 95-square-meter apartments. While small & medium sized apartments preferred by European buyers, buyers from Middle East and Gulf region prefer bigger size apartments.
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Iraq18%
Saudi Arabia
12%
Kuwait9%
Russia9%UK
5%Germany
4%Azerbaijan
4%
Iran3%
Afghanistan3%
Ukraine3%
Sweden2%
Kazakhstan2%
Norway2%
Libya2%
UAE1%
Egypt1%
Qatar1%
China1% Jordan
1% Yemen1%
Others15%
Nationality of Foreign Buyers 2015 House Sales
Figure 3 House Sales Numbers to Foreigners by Nationalities - 2015 Source: General Directorate of Land Registry and Cadastre (GDLRC)
B. GEOGRAPHICAL DISTRIBUTION OF PROPERTY SALES According to the records of Environment and Urban Affairs Ministry UK citizens have the highest number of property in Turkey and then followed by Russia, Germany, Norway, Ireland, Denmark, Holand, Sweden, and Iraq.
The Britons are concentrated in popular vacation areas such as Didim, Kuşadası, Bodrum, Marmaris, Milas, Fethiye, Göcek, Dalyan, Öludeniz and Dalaman. Similarly, the Alanya, Belek, Kemer, Kaş and Side districts in the holiday hub of Antalya are the favorites of nationals of cold-climate countries, especially Russia and Norway, as well as Germany, Britain, Denmark, the Netherlands and Sweden.
Arabs have also emerged as popular buyers in recent years. As of June 2013, Saudis owned 345 pieces of property totalling 306,063 square meters, while 121 UAE nationals had acquired 147 properties with a total of 90,709 square meters. In addition, 381 Kuwaitis, 20 Qataris, 38 Libyans and seven Palestinians bought real estate in Turkey after the reciprocity law was amended.
Composition of 2015 Sales according to nationality of buyers is shown above, in figure 3. Top Buyer in 2015 was Iraq and followed by S.Arabia, Kuwait, Russia and U.K. Top 20 list includes Iran, UAE, and Qatar as well from Gulf Region apart from significant amount of purchases by Germany, Ukraine, Sweden, and Norway from Europe. It is apparent that interest to Turkish property market is from all over the world including China, Egypt, Libya, and Afghanistan. Two Oil & Gas rich, growing nations from CIS countries such as Azerbaijan and Kazakhstan as well do worth to pay attention.
6 House sales numbers to foreigners by nationalities are higher than the total house sales to foreigners because different nationalities may buy the same houses.
Total 22 9916
Iraq 4 228
Saudi Arabia 2 704
Kuwait 2 130
Russia 2 036
UK 1 054
Germany 869
Azerbaijan 815
Iran 744
Afghanistan 656
Ukraine 608
Sweden 541
Kazakhstan 540
Norway 453
Libya 427
UAE 332
Egypt 318
Qatar 277
China 271
Jordan 243
Yemen 231Others 3 514
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Antalya33%
İstanbul29%
Aydın6%
Muğla5%
Bursa5%
Mersin4%
Yalova5%
Sakarya3%
Ankara2%
Trabzon2% İzmir
1%
Others5%
Total Sales 2013-2015
C. MARKET TRENDS According to datas issued by State Statistics Agency, after the legislative changes easing the acquisition of real estate to foreigners in 2012 until December 2015, total of 41,715 residential sales to foreigners took place. If all these sales figures are examined on an annual average basis total sales to foreigner grew 37% every year since 2013. Despite of the very high growth rate, whole market size of property sales to foreigners is just around 1.8% of overall Turkish Property market.
Despite of three elections in last one year (Local Governments Election, Presidential Election, Parliamentary Election) 2015 January – April period sales has increased 18% compared to the previous year same period. Despite of the restraining effect of the elections, growth in property sales to foreigners market was still 20.4 % in 2015. Growth rate for 2016 is estimated around 27-30% which foresees around 29,000 property to be sold to foreign investors.
When we look at the trends in last 2 years, first 4 regions where property sales to foreigners happened most are Istanbul, Antalya, Bursa and Yalova.
Istanbul’s 20% share in 2013 rose 29% in 2014, 33% in 2015. On the contrary, Antalya’s 46% share in 2013 dropped to 35% in 2014 27% in 2015. The Main reason for that looks decrease of sales to Russian investors in last 1-1.5 years most likely because of deterioration of Russian economy related to recent political developments in the world related to Russia, current political friction between Turkey and Russia due to Syria crisis.
Other regions where new trends are established are Bursa, Yalova, Sapanca (Sakarya)and (Uzunköprü) Trabzon areas . In 2013, Total Share of those regions combined was 6% in overall sales rose to 12% in 2014 and 17% in 2015.
According to index analysis -sales indexed to 100 in 2013 in all regions where sales took place- since 2013, overall sales in Turkey doubled, whereas sales in Istanbul quadrupled,
House Sales to Foreigners acc. To Location of Property
Region Total 2013 2014 2015 Jan'16 2016 Forecast
Antalya 18,477 5,548 6,542 6,072 315 6,474 İstanbul 16,018 2,447 5,580 7,493 498 9,542 Aydın 3,475 1,112 1,191 1,107 65 1,181 Muğla 2,959 1,053 1,051 830 25 827 Bursa 2,959 375 954 1,501 129 2,085 Mersin 2,081 545 783 717 36 760 Yalova 2,558 284 765 1,425 84 2,185 Sakarya 1,499 103 512 833 51 1,179 Ankara 1,211 175 369 599 68 847 Trabzon 1,141 84 225 778 54 1,814 İzmir 634 194 204 216 20 244 Kocaeli 73 0 20 22 31 124 Others 2,347 261 763 1,237 86 1,748 TOTAL 55,432 12,181 18,959 22,830 1,462 29,017
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and sales in Bursa&Yalova region combined rose 5.5 times and sales in Sapanca 7(Sakarya) region multiplied to 7.5 times –index set up to 100 in March 2014-.
Although, combined 11% share of sales in those regions in overall sales is less than half of 27% sales share in Istanbul, rising momentum of sales and share in those regions support the fact that apart from Istanbul; Bursa, Yalova, Sapanca(Sakarya) and Uzunköprü (Trabzon) regions are becoming extremely popular amongst foreign property investors, especially amongst Middle Eastern Investors. Therefore sales growth in those regions can simply be explained by increasing interest of those investors.
7 Sakarya in particular stood out for its record sales to Arab Investors. Last year, only 19 residential properties were sold in Sakarya; in just the first four months of this year, 179 properties were sold. Along with residential properties around Sapanca Lake, land sales are rising swiftly — and as a result, so are prices.
Antalya46%
İstanbul20%
Aydın9%
Muğla9%
Bursa3%
Mersin4%
Yalova2%
Sakarya1%
Ankara1% Trabzon
1%
İzmir2%
Others2%
Sales 2013
Antalya35%
İstanbul29%
Aydın6%
Muğla6%
Bursa5%
Mersin4%
Yalova4%
Sakarya3%
Ankara2%
Trabzon1%
İzmir1%
Others4%
Sales 2014
Antalya27%
İstanbul33%
Aydın5%
Muğla4%
Bursa6%
Mersin3%
Yalova6%
Sakarya4%
Ankara3%
Trabzon3% İzmir
1%
Others5%
Sales 2015
Antalya22%
İstanbul33%
Aydın4%
Muğla3%
Bursa7%
Mersin3%
Yalova8%
Sakarya4%
Ankara3%
Trabzon6%
İzmir1%
Others6%
Sales Forecast 2016
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500
1 000
1 500
2 000
2 500Ja
n-13
Feb
-13
Ma
r-13
Ap
r-13
Ma
y-13
Jun-
13Ju
l-13
Aug
-13
Sep-
13O
ct-1
3N
ov-1
3D
ec-1
3Ja
n-14
Feb
-14
Ma
r-14
Ap
r-14
Ma
y-14
Jun-
14Ju
l-14
Aug
-14
Sep-
14O
ct-1
4N
ov-1
4D
ec-1
4Ja
n-15
Feb
-15
Ma
r-15
Ap
r-15
Ma
y-15
Jun-
15
Jul-1
5
Aug
-15
Sep-
15
Oct
-15
Nov
-15
Dec
-15
Monthly House Sales to Foreigners (No.s)
Yalova Bursa Antalya İstanbul TOTAL
100
200
300
400
500
600
700
800
900
1 000
Jan-
13Fe
b-1
3M
ar-1
3A
pr-1
3M
ay-
13Ju
n-13
Jul-1
3A
ug-1
3Se
p-13
Oct
-13
Nov
-13
Dec
-13
Jan-
14Fe
b-1
4M
ar-1
4A
pr-1
4M
ay-
14Ju
n-14
Jul-1
4A
ug-1
4Se
p-14
Oct
-14
Nov
-14
Dec
-14
Jan-
15Fe
b-1
5M
ar-1
5A
pr-1
5M
ay-
15Ju
n-15
Jul-1
5A
ug-1
5Se
p-15
Oct
-15
Nov
-15
Dec
-15
Emerging Cities vs. Istanbul & AntalyaMonthly House Sales to Foreigners (no.s)
Yalova Bursa Sakarya Trabzon
Antalya İstanbul Linear (Antalya) Expon. (İstanbul)
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- 20
20
40
60
80
100
120
140
160
180
200
Jan-
13Fe
b-13
Mar
-13
Apr
-13
May
-13
Jun-
13Ju
l-13
Aug
-13
Sep-
13O
ct-1
3N
ov-1
3D
ec-1
3Ja
n-14
Feb-
14M
ar-1
4A
pr-1
4M
ay-1
4Ju
n-14
Jul-1
4A
ug-1
4Se
p-14
Oct
-14
Nov
-14
Dec
-14
Jan-
15Fe
b-15
Mar
-15
Apr
-15
May
-15
Jun-
15Ju
l-15
Aug
-15
Sep-
15O
ct-1
5N
ov-1
5D
ec-1
5
Emerging CitiesMonthly House Sales to Foreigners (no.s)
Yalova Bursa Sakarya Trabzon
Linear (Yalova) Linear (Bursa) Poly. (Sakarya) Power (Trabzon)
0
100
200
300
400
500
600
700
800
900
1000
1100
Jan-
13Fe
b-1
3M
ar-1
3A
pr-1
3M
ay-1
3Ju
n-13
Jul-1
3A
ug-1
3Se
p-1
3O
ct-1
3N
ov-1
3D
ec-1
3Ja
n-14
Feb
-14
Mar
-14
Apr
-14
May
-14
Jun-
14Ju
l-14
Aug
-14
Sep
-14
Oct
-14
Nov
-14
Dec
-14
Jan-
15Fe
b-1
5M
ar-1
5A
pr-1
5M
ay-1
5Ju
n-15
Jul-1
5A
ug-1
5Se
p-1
5O
ct-1
5N
ov-1
5D
ec-1
5
SALES INDEX (set 100 at Jan'13)Monthly House Sales to Foreigners Index
Yalova Bursa Sakarya Trabzon Antalya İstanbul TOTAL
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D. LEGAL STATUS
Foreigners’ purchase of property in Turkey is regulated by No2644 Title Deed Law and No3402 Cadastre Law. 18 May 2012 dated 28296 numbered Official Gazette has announced a decision to make changes in No.6302 Title Deed and Cadastre Law to make changes in laws related to acquisition of property for foreign nationals.
This new regulation lifted the reciprocity requirement for property sales and stated in which regions of Turkey and under what conditions citizens of 183 countries may purchase property. The law allows foreigners to buy residential property, plots of land and office space throughout Turkey up to 30 hectares (74 acres) per person. There is no limit for foreign companies in Turkey; commercial companies are allowed to purchase as much property as they wish. However, in the event of a purchase of plotted or unplotted land, approval must be obtained from the relevant ministry within two years of blueprints being drawn up for buildings to be constructed.
Foreign nationals can apply for a residency permit to be renewed every year if they own a property in Turkey.
E. INVESTMENT OF GCC COUNTRIES
According to latest data revealed, citizens of Arabian Gulf Countries invested 153% more in 2014 than in 2013 in terms of capital invested. Similarly, number of people invested increased 186% in 2014 in comparison to 2013. With those figures, overall share of Gulf Countries Investors rose from 26% in 2013 sales, to 35% in 2014, 45% in 2015 Sales.
Looking at the sales dynamics, in 2014, Citizens of Bahrain invested 666%, Citizens of Kuwait 291%, Citizens of UAE 181%, Iraqis 177%, Citizens of Saudi Arabia 135%, Citizens of Qatar 105% and Citizens of Oman 58% more than in 2013. Only Iranian Property investments stayed same level in 2014 as in 2013.
With respect to overall foreigners, total area of property bought increased 86% to 8.0million m2 in 2014 from 4.3million m2 in 2013. In the same time number of investors increased 55% to 27,000 in 2014 from 17,000 in 2013. Respectively, Arabian Investors total area of property bought increased 155% to 2.8million m2 in 2014 from 1.1million m2 in 2013
While square meter invested amongst overall foreign investor is 295sqm, this figure rises to 370sqm amongst buyers from Arabian Gulf Region. Such bigger area tells us Arabian Buyers prefer bigger space when investing in residential.
Figure 3 - House Sales Numbers to Foreigners by Nationalities in 2015 depicted above clearly shows that only in 2015, 45% of properties in Turkey purchased by GCC which equates to ~$2 billion direct investment in Turkish Property Market from the region.
In 2015, depreciation up to 5.5% in major Middle Eastern capitals such as Dubai, AbuDhabi, Doha, Riyadh while appreciation of average Turkish property around 11% in overall Turkey and 19%8 in Istanbul might hint magnified capital flow from those markets to Turkey for better returns in 2016 and onward.
8 Inflation-adjusted figures.
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IV. İSTANBUL & MARMARA REGION’S LOCATION, ADVANTAGES
Istanbul with a population of forectasted 14,562,000 in 2015 makes 18.7% of whole population of Turkey and becomes 5th largest metropolitan in whole world and 1st in Europe.According to GDP, İstanbul is amongst the top cities of the world. $180billion worth economy of Istanbul is bigger than some of European Union Member Countries like Romania, Hungary, Bulgaria, and Slovenia’s GDP. According to official numbers announced in 2013, Istanbul with 13.4 million population is the biggest in Europe.
Istanbul produces 55% of whole manufacturing in Turkey, 45% of whole commerce and 21.2% of GDP. Istanbul exports 45.2%, imports 52.2% of whole Turkey.
Being Turkey’s commercial and financial capital, having 3rd one, biggest in the world with 150 million passenger capacity to be completed in 2017 in addition to existing two airports, with all land, sea and airway connections, being a connection point between Asia and Europe, being capital of many empires in its 4000+ years old history and with all its cultural and historical treasures Investors will never stop investing in İstanbul.
At such a place where so much commercial, financial, touristic and industrial activities are happening, It is impossible not to have demand for properties & real estate to produce so much of activities. That’s why in the folklore it is told ‘Istanbul’s stone and dust is gold!’ Another fact is that after some point it will expand i.e. so much of activity obviously wont fit in the fixed boundries of the city, expand into the Marmara region starting from the areas in geographic proximity. That’s why astute investor has already understood that and started investing region around the Istanbul.
Current projects on going around Istanbul in Marmara Region will reduce farthest point to Istanbul less than 3-4 hrs of driving distance. Whole Marmara region will be connected via Istanbul to each other through a big transporation ring. Under planning & construction components of this ring are specifically, Yavuz Sultan Selim Bridge, 3rd Bosphorus crossing bridge in the north within Istanbul Metropolitan city boundaries -currently under construction- as part of İstanbul Northern Motorway project planned to be operational in 2017 in addition to the other existing two, First South Marble Sea Galipoli Strait Crossing bridge around Çanakkale region planned to start construction in 2016, Avrasya Tunnel another new undersea & underground tunnel crossing, -consisting of rail, private vehicle transportation and other public transportation means- in addition to existing Marmaray Tube Crossing which is only for rail transportion, connecting two sides of the city, Izmit Bay Crossing Bridge, part of Istanbul-İzmir Motorway which is reducing travel time by 2 hrs between Northern and Southern part of İzmit Bay
Due to those mega infrastructure projects Marmara region Land prices has started to rise. Despite of those first round price rise, still there are land pieces with reasonable price in order to develop real estate investment projects in the region. Those areas where such land exist has high potential and opportunities not to miss for seasoned investors.
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MEGA PROJECTS
A. MEGA PROJECTS UNDER CONSTRUCTION:
Specifically in and around of Istanbul and in Marmara Region, The total value of $200-$250 billion USD worth of infrastructure and superstructure projects has been implemented to ensure existing economical and industrial growth monentum of Istanbul and Marmara region ongoing. It is inevitable real estate prices increase and property values goes up by construction and completion of those projects. Whereever is going to be positively affected by those projects will be appreciated more in comparision to the areas where less benefited.
Most of those projects (3rd Bosphorus Crossing Bridge, Nothern Istanbul Motorway, 3rd Airport, Avrasya Tunnel Tube Crossing under the sea, Izmit Bay Crossing Bridge) has started to be constructed and planned to be complete within 1-2 years.
Some of those projects early stage construction works has already started, medium term planning & design works are soon going to be complete and long term stages are in planning and design stages and planned to be under construction in coming 2-4 years.
Projects like Istanbul NewCity “Yenişehir” and Istanbul Canal “Kanal İstanbul” and amongst not much publicized projects yet; Çanakkale Strait Crossing Bridge on the other strait of Marble Sea which has 1/100.000 scale urban plans ready are foreseen to start construction activities in coming 3-5 years.
In addition to Mega Projects on going in Istanbul and Marmara region, It is part of 2020 vision of Turkey to create another ‘Istanbul like’ port city as another economic hub to multiply economic growth. Agean city Izmir in Western Turkey Peninsula is being pronounced the strongest candidate by urban planners. So It wont be a big surprise to see major long term infrastructure projects announced; real estate and property properties in Izmir getting sky-rocketed in 3-5 years time.
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CANAL İSTANBUL
1. ISTANBUL CANAL PROJECT
Istanbul Canal Project is a ‘crazy magnificient’ plan to connect Marble Sea to the Black Sea via a man-made channel as an alternative route to currently one and only Bosphorus Strait. This project aims both building a new city along the canal corridor between the entrance point at south of Küçükçekmece Lake and exit point at north right next to the 3rd Airport and reducing risks and adverse affects of high shipping traffic volume in existing Bosphorus Strait.
Canal Istanbul, with approximately 48km length 25m depth and 250m width when it is complete, will beat Panama, Suez Channels in engineering success. After this project, Istanbul will be two peninsulas, one city and one island.
Canal Istanbul is a value adding project to the region for property market. Land prices in the vicinity of the project have already started rising since the announcement of the project concept.
Total Project worth is estimated 30 Billion USD and It is estimated project to be complete by 2023, 100th Anniversary of The Independence Day. It is expected land development of the project to be kicked off in second half of 2016 after passing related laws which are currently in the parliament.
ISTANBUL GRAND AIRPORT (IGA)
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2. İSTANBUL 3. AIRPORT PROJECT
Istanbul 3rd Airport is currently under construction in Arnavutköy district on the European side of İstanbul, Turkey. The airport is planned to be the largest airport in the world, with a 150 million passenger annual capacity, 6.5 million m2 area size of apron with 500 airplane capacity, 6 runways, 16 taxiways. It will be the third international airport to be built in Istanbul.
The total project cost is expected to be approximately EUR 7 billion, excluding financing costs. It has guaranteed 342 million passengers for 12 years. Planned opening date of first stage with 90 million passenger capacity was announced by Minister B. Yıldırım as February 2018 and full completion will happen in 2018.
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NORTHERN MOTORWAY & 3. BOSPHORUS BRIDGE
3. İSTANBUL NEW NORTHERN MOTORWAY and 3RD BOSPHORUS BRIDGE PROJECT
Construction of 3rd bosphorus strait crossing bridge a.k.a. ‘Yavuz Sultan Selim Bridge’ has started in 2013 and planned to be completed in 2015 and located between Odayeri – Paşaköy segment of 115 km long North Marmara Motorway’s first stage
Through rail transport integration with Marmaray Undersea tunnel/tube crossing and Istanbul Metro System; Atatürk Airport and Sabiha Gökçen Airport and Grand Airport currently under construction will be interconnected to each other. There will be 14 tunnel, 60 viaduct, 108 underpass & overhead pass in 115km long first stage of total 414km Northern Motorway. This project has been planned to meet transportation insfrastructure needs of the Istanbul which is foreseen to be expanded toward north, to reduce traffic loads of existing other two bosphorus bridges and reduce time wasted due to congestion caused by crossings between Asian and European sides.
New Bridge will have 10 lanes overall in both way of which 8 lanes for motorcars, and 2 lanes for rail transport. Yavuz Sultan Selim Bridge with 59m width will be the widest bridge on the world which exist a railway together with a motorway on it. 322m heigh bridge piers are the tallest in the world. When the bridge is complete it will be the first bridge on the world crossing 1875m length with a single span. Total Project cost is estimated as $3.5 billion.
NEWCITY
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4. İSTANBUL NEWCITY PROJECT
Istanbul Newcity Project, planned to be established on total 453 million sqm. land, consists of ‘Canal Istanbul’ covering 30million sqm, 78 million sqm 3rd (Grand) Airport , 33 million sqm Ispartakule & Bahçeşehir district, 108million sqm partial Northern Istanbul Motorway and connection roads with, 167million sqm other new residential districts, 37million sqm greenbelt recreational zone
Total population of 1.5 million will be residing in 10 residential districts planned in the project
New City will have following theme districts
• EcoCity: An Olimpic Village, • MagnetCity: 2 university campuses, colleges and educational facilities, • HealthCity Hospitals with treatment and rehabilitation centers, • Bioİstanbul BioTechnology Research Center, • KayaCity Residential and shopping centers • Finance Center financial district
3rd (Grand) Airport and Istanbul Northern Motorway partial construction activities has already started. Canal Istanbul project and others are in currently in planning and design phase.
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İZMİT BAY BRIDGE
5. İSTANBUL-İZMİR MOTORWAY İZMİT BAY CROSSING
İzmit Bay Crossing Suspension Bridge is an important component of İstanbul (Gebze) – İzmir Motorway Project.
With this project, cities at the northern side of the Izmit Bay in the Marmara Region like İstanbul, Kocaeli /İzmit and southern cities in the Marmara region where Arabian Property Investors from Middle East, Gulf region and S.Arabia are very much interested in like Yalova, Çınarcık, Bursa, Mudanya will be connected to each other with approximately 2hr less travel time instead of driving all around the Izmit Bay. This bridge will increase value of the properties in the southern side toward the similar levels at the northern side of the bridge. Land prices have already gone up 40-60% in comparison to the pre-launcing levels of the project.
Izmit Bay Bridge with 2682m total length, 1550m largest single span length between the 235m tall piers is the 4th suspension bridge in the world crossing the longest distance with a single span.
Bridge Construction has started in 2013 and planned to be complete in 2016.
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ATAŞEHİR FINANCIAL CENTRE
6. İSTANBUL INTERNATIONAL FINANCIAL CENTRE
İstanbul International Financial Centre is a macro scale finance themed Property Development Project to attract major public and private financial and banking Institutions and organizations providing support and direction to major Turkish commercial institutions and organizations and other foreign organization which provides consultancy to Foreign & Local Investors Business owners. There is 4.2 milyon sqm. Office, residental, commercial, conference, hotel and carpark spaces included in the project.
Developing such project is not accidental; it is strategically aligned with the period when Turkey is rising amongst the ranks of countries attracting most foreign investment and FDIs9. Project targets to create finance & banking hub or neighbourhood to result more synergies.
Construction of the Financial Center/District has started in 2009 and it is targeted to complete construction by late 2016, early 2017.
9 Foreign Direct Investment
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V. FACTORS SUPPORTING SUPPLY & DEMAND GROWTH
Turkey’s growing manufacturing industry, strengthening economy and management sytems getting integrated to Europe, reinforced democracy and much better stability in comparison to its surrounding neighbour countries in a geopolitically chaotic, equally very important region is another reason of attracting foreign investments especially from surrounding neighbour countries. Additionally, European and American Investors who see Turkey as a central gate to the markets in the Middle East, Central Asia and North Africa find investing in Turkey reasonable, profitable due to opportunities existing.
With full of archeological, historical and cultural values and heritage, opportunity to enjoy four seasons simultaneously in different regions in a wide, rich geography, quality touristical facilities, well developed service and hospitality industry, Turkey is found attractive to invest in Tourism and in many Industries by foreign investors.
Also, large and robust enough domestic demand resulting out of 76 million population acts as a kind of buffer to protect economy and investors for any capital loss due to any shocks or any external impact on external demand. That might be considered encouraging as a safety factor by foreign investors investing in property market.
Moreover, according to all growth potential outlined above, average sales price of above average class property 1.500-3.500 €/m2 in Istanbul is still much more competitive than other European capitals such as London (~12.000€/m2), Paris (~9.000€/m2), Münich (~6.000€/m2), Moscow (~4.000€/m2)10 and It will continue to attract foreign investors.
10 Emerging Trends in Real Estate Estate – Europe 2015 PwC & Urban Land Institute
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VI. POTENTIAL INVESTMENT PROJECTS & CURRENT OPPORTUNITIES
Details below given ‘Investment Opportunities in Turkish Property Market’ is an investment portfolio compiled based on our technical expertise, market knowledge, relationship with market actors. Our expectation is that attractive investment opportunities with high income prospects provided in this portfolio are appreciated by potential investors and results in long term cooperation in pursuit of realization of those projects.
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A. HIGH GROWTH ZONES PROPOSED DEVELOPMENT OPPORTUNITIES
1. ATAŞEHİR HOME-OFFICE RESIDENTIAL PROJECTS- CITY HOTEL DEVELOPMENT
Thanks to the several branded upscale residential development projects offered in the region in last 10 years, and ongoing International Financial Centre Development interest shown to Ataşehir by Investors is growing. Additionally, decrease in land supply exerting an upward pressure on current property prices is another factor for district to become a center of attraction amongst investors.
Due to anticipated surplus in business space/office projects supply, our recommendation to investors to develop elite projects which has high income opportunities in short-mid-long term such as branded residential projects which can be converted to office space planned as and City Hotel development projects. Current sale price of upscale residences in the region is around $3,500-$5,000/m2 range and expected to rise.
We are available to survey the area for existing lands with alternatives suiting investor needs and perform a pre-feasibility study to assess investment potential for investor within a short time, such as 6-8 weeks time.
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2. KARTAL OFFICE SPACE-RESIDENTIAL-CITY HOTEL DEVELOPMENT
Kartal Region has become one of the rising stars of Istanbul property market in last 5 years. Opening of The Regional Courthouse / The Palace of Justice three years ago has attracted many law offices & legal practitioners to the area. Relatively low cost of land development rates, increasing white collars’ interest shown to the area due to proximity to the major industrial zones existing in Gebze-Kocaeli axis, rise in the branded residential projects in last 5 years and related property rates rise in the area has made area one of the major centers for property investors.
Our recommendation to investors to develop A-Class Office Spaces and upper mid-class branded residential projects which can be offered to the market and easily sold at the price range of $1,500 – $3,500/m2. Ease of land acquisition, potential of achieveing early project finance from initial sales, and high sales volume due to existing demand makes the region very attractive for investors & developers.
We are available to survey the area for existing lands with alternatives suiting investor needs and perform a pre-feasibility study to assess investment potential for investor within a short time, such as 6-8 weeks time.
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3. RİVA-ŞİLE-ÇEKMEKÖY LUXURIOUS VILLAS, ESTATES DEVELOPMENT
As being Istanbul's gateway to the Black Sea region, Riva and Şile coastal region and Çekmeköy region inside is an ideal area to develop prestigious villa, summer estates or farm estates -especially of interest to Arab investors from the Gulf region- due to close proximity to both İstanbul and the northern resort area for the people inhabited in İstanbul, mild climate and lush vegetation. Although land prices are high in Riva, more economical land parcels can be found in Şile. Another reason makes the region more attractive is its proximity to the 3rd bridge and Northern Motorway which is due to open by late summer 2016 and connection roads. Especially white collars from upper income class, senior managers chose the area for living and investing.
The Third Airport known as IGA (Istanbul Grand Airport) İstanbul which is currently under construction at European Side of Istanbul and planned to be operational in 2018, The New City on access route to IGA from 3rd Bridge parallel to Black Sea coastline, and their connection link to Anatolian Side 3rd Bridge and Northern Motorway are part of urpan planning vision to expand Istanbul toward north by building new cities with well planned infrastructure and resolve traffic problem to distribute load on existing arteries toward new motorway and connection roads.
In next 5-10 years, It is foreseeable that land prices at the northern districts where close to Black Sea coastal area and which are currently less inhabited will increase up to 100-200%. Those new settlements with improved infrastructure and bigger land plots, single, semi-detached town houses or low rise apartments enjoying nature more will be highly in demand of middle to upper class white collar residents.
For all above reasons, our recommendation • in mid-term (3-5 years) is to buy land parcels at the areas next or near to black
sea coastline around Riva & Şile and Çekmeköy region inside which we strongly believe will appreciate 60-80% after opening of 3rd bosphorus bridge and Northern Marmara Motorway and develop luxurious villas / estates, time shared summer apartments or resort hotels,
• in long term (10-20 years) is to buy land parcels from the area between Istanbul’s current northern border and Black Sea coastal areas in order to devlop land for residential & commercial buildings.
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4. HIGH DEMAND REGION FOR GCC INVESTORS: ÇINARCIK -YALOVA, MUDANYA-BURSA
After easing property ownership legislation for foreign investors in 2013, highest momentum in property development and sales has been achieved at the region located south of Izmit Bay; namely Bursa, Yalova, Çınarcık area based on State Statistic Agency statistics. In last 2-3 years while property sales to foreign investors has increased by 2 times in overall Turkey, 4 times in istanbul, In Bursa-Yalova-Çınarcık region it has increased by 5.5 times
In part III, where we analysed profile of existing foreign investors and current market trends in detail, there is an exponential interest from Middle East, GCC Countries, Iran, Russia, Central Asian Countries especially since the beginning of 2015 both for investing and summer time own vacation housing.
Reasons for shown interest might be explained as following:
• Typical mild Mediterranean climate features; not very hot summer,moderate winters, • Fascinating nature and flora ( one of the richest endemic region in the world due to size
and variety), • One of the richest oxygen producing spots on the world thanks to rich &unique flora of Kaz
Mountains and unique air currents. International recognition and recommendation to asthma and other respiratory disease patients,
• World famous hot springs areas (Termal & Armutlu) for treatment of many illnesses ; nerve system to skin, rheumatism , gastro-intestinal system, gynaecological, heart & artery diseases ,and obesity. Chemistry &Physical Properties of Hot springs are superior to the ones existing in Europe,
• A region with historical significance for the one who is interested in Ottoman History and Islamic Culture as Bursa was once the first capital of Ottoman Empire before Istanbul,
• Proximity to other major touristic destinations such as Uludağ Ski & Resort Center, Aegean shoreline packed with numerous B.C. Ancient Greek and Roman archeological sites,
• Availability of both Land & Sea transportation means to Istanbul. Daily Ferries to istanbul • ~1-1.5hr reduced travelling time to Istanbul after opening of İzmit Bay Crossing Bridge in
March 2016, . • Relatively lower property price availing in comparison to Istanbul
Especially Investors from GCC Countries invested directly or developing villas single or duplex low rise apartments in areas such as Sapanca, Yalova, Çınarcık, Armutlu and Mudanya where forest and green meets with sea blue.
So far shaped by individual purchases only on buyers side, Property Market for foreigners in Turkey is now growing by joint ventures of foreign corporate investors’ -usually from buyers’ origin of countries- joint ventures with Turkish building firms on developing side as well. Beytepe Yalova with 165 residential units developed on 19.000m2 land in Yalova, Beyttürk Woods with 50 residential units developed on 5.000m2 Land in Çınarcık, and Mia Termal with 100 duplex residential units developed on 17.000m2 land in Termal, hotsprings area in joint ventures of Turkish Firms and corporate investors from Bahrain and Saudi Arabia are examples of such partnership (see http://www.beytturk.com/Projeler.aspx)
Due to the above mentioned reasons, our recommendation is to develop lands at areas which we believe will appreciate by ~50% in a year, identified nearby to seaside or with sea view and develop estates, single residential villas and/or timeshared low rise duplex apartment units and/or health tourism concentrated resort hotels in short term (~2 years) -to take advantage of early developers while margin is high-.
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a) LANDS AVAILABLE TO DEVELOP IN THE REGION
In Çınarcık-Yalova region, our group has invested in total 46.700m2 at three locations; one with tourism facility permit, others with residential housing (villa, apartments). Additionally, another piece of land in Mudanya-Bursa around ~8000m2 land which 12 number of 3-storey, single villa concept developed on it is in our group investment portfolio via an exclusivity agreement with the owner. All those 4 pieces of land in such a high growth potential area as explained section above are ready to be immediately developed with financial support of an investor interested.
Figure 4 Çınarcık/Yalova Land Portfolio
Figure 5 Mudanya/Bursa
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(1) LAND #1- 29,000M2 (17,641M2 nett) - TOURISM ZONED
Land -Tourism – 17,641m2 @Yalova-Çınarcık
About Ç narc k-Yalova, Bursa Region…• The fastest growing region in terms of attracting foreign investment for
property:– property sales to foreign investors grown ~5.5 times to ~2000 transaction
/year combined with Bursa since January 2013 – Total share in overall property sales in Turkey to foreign investors has tripled
to 15%• Typical mild Mediterranean climate features; not very hot summer,
moderate winter• Fascinating nature and flora ( one of the richest endemic region in the
world due to size and variety)• One of the richest oxygen producing spots on the world thanks to rich &
unique flora of Kaz Mountains and unique air currents. Internationalrecognition and recommendation to asthma and other respiratory diseasepatients,
• World famous hot springs areas (Termal & Armutlu) for treatment ofmany illnesses ; nerve system to skin, rheumatism , gastro-intestinalsystem, gynaecological, heart & artery diseases ,and obesity. Chemistry &Physical Properties of Hot springs are superior to the ones existing inEurope.
About Ç narc k-Yalova, Bursa Region…• around ~210-240 days long health tourism season.• A region with historical significance for the one who are
interested in Ottoman History and Islamic Culture as Bursa wasonce the first capital of Ottoman Empire before Istanbul .
• Proximity to other major touristic destinations such as UludaSki & Resort Center, Aegean shoreline packed with numerousB.C. Ancient Greek and Roman sites
• Availability of both Land & Sea transportation means to Istanbul.• Daily Ferries to istanbul• ~1-1.5hr reduced travelling time to Istanbul after opening of
zmit Bay Crossing Bridge in March 2016, .• Relatively lower property price availing in comparison to
Istanbul
Remarkable features of the Property• ~2km to sea, 7km to Termal Hot Springs, 14km to Yalova,
75km to Istanbul Sabiha Gokçen Int. Airport, 78km to BursaTown Center, 120km to Uluda Ski Center
• Having both sea & wonderful mountain view• Possibility to bring hot springs via pipeline• Tourism zoned Land allowing any kind of touristic facility
such as hotel, timeshared apartments with current totalbuildable area permit up to ~34,000m2 with possibility toincrease up to expected ~50,000m2 (due to ongoing zoningupgrade study at the region)
• A tranquil location for recuperation at one side beautiful seaview at the other side majestic mountain view close to allcenters of attraction such as Termal, Yalova, Bursa, Istanbul
Vision• Invest in land $7.1m (~$402.5/m2)• Option 1: Develop a 5-Star Hotel serviced by specialized Doctors,
Dieticians, healthcare personnel specialized in Beauty & HealthTourism with hot springs spa pools, zen gardens targetingsegment who are after staying young, beautiful, maintainingbetter health, in need of supportive & natural treatment ofdiseases
• Option 2: Develop a timeshared apartment complex– 160 no.s of 1+1 ~85m2 Units for time shared (30 yrs) sale ~$12,000 /
2-weeks in a year each and 90 no.s of 2+1- ~110m2 Units for timeshared sale ~14,000/2-weeks in a year.
Avg. Total Investment Period:~1 yr, Avg. Total return period:~3yrs .Expected ROI: ~120% Avg. Annual Return: ~30%
• Option 3: invest in land, do nothing. Enjoy min. avg ~15% annualcapital gain (i.e. price will get doubled in 5 yrs time) resultingfrom market appreciation
An Architectural Concept for Option 1 or 2 might look like..
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(2) LAND #2- 11,177M2 (~7,500M2 nett) – RESIDENTIAL ZONED
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Current zoning of the land allows ~9500m2 building area. Suggested alternatives are:
• Villas: ~19 no.s x ~500m2 nett area each • Low rise Duplex Apartments: ~50 no.s x ~200m2 nett area each
SIZE: 11.177 m2 (7.500m2 Net) residential zone
LOCATION: 40°38’20”N, 29°09’42”E Çınarcık / Yalova
DISTANCES: • Beach-Çınarcık • Hot Springs Facilities & Resorts • Yalova • İstanbul SAW Airport • Bursa • Uludağ Ski Centre
~ 2km ~ 7km ~14km ~75km ~78km ~120km
PERMITTED TOTAL BUILDING AREA: 9500m2
PROPOSED DEVELOPMENT: 50 no.s x ~200m2 duplex apartment units
MARKET SALE PRICE: ~$200.000 each
TOTAL LAND INVESTMENT COST: 1.000.000 USD
TOTAL CONSTRUCTION COST : 4.000.000 USD (~$400/m2)
TOPLAM INVESTMENT COST: 5.000.000 USD
TOTAL PROJECTED SALES: 9.500.000 USD ($1000/m2)
PROJECTED PROFIT: 4.500.000 USD
DEVELOPMENT&CONSTRUCTION PERIOD: 1-1.5 YEARS
BREAKEVEN DURATION: 2-2.5 YEARS
Avg. DURATION OF TOTAL INVESTMENT : ~1 YEAR
Avg. DURATION OF TOTAL RETURN: ~3 YEARS
Return On TOTAL Investment (ROI11): ~90%
Annualized Return (CAGR12): ~38%
11 ROI= Return/Investment 12 Compounded Annual Growth Rate= ((Total Expected Sales/Total Investment Cost)1/ΔDuration-1) ≈ IRR
Δduration= Average Duration for Total RETURN-Average Duration for Total INVESTMENT
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(3) LAND #3- 6,519 M2 – RESIDENTIAL ZONED
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SIZE: 6,519m2 (RESIDENTIAL ZONE)
LOCATION: 40°38’22”N,29°06’32”E Çınarcık / Yalova
DISTANCES: • Beach-Çınarcık • Hot Springs Facilities & Resorts • Yalova • Bursa • İstanbul SAW Airport • Uludağ Ski Centre
~ 450m ~ 9km ~16km ~82km ~85km ~115km
PERMITTED TOTAL BUILDING AREA: ~9,800m2
PROPOSED DEVELOPMENT: 50 adet x ~200m2 Duplex Apartment units
MARKET SALE PRICE: ~$220.000 each
TOTAL LAND INVESTMENT COST: $1.350.000
TOTAL CONSTRUCTION COST : $4.000.000
TOPLAM INVESTMENT COST: $5.350.000
TOTAL PROJECTED SALES: ~$10.800.000
PROJECTED PROFIT: ~$5.450.000
DEVELOPMENT&CONSTRUCTION PERIOD: 1.5-2 years
BREAKEVEN DURATION: 2 years
Avg. DURATION OF TOTAL INVESTMENT: 1 year
Avg. DURATION OF TOTAL RETURN: 2 years
Return On TOTAL Investment (ROI13): ~102%
Annualized Return (CAGR14): ~102%
13 ROI= Return/Investment 14 Compounded Annual Growth Rate= ((Total Expected Sales/Total Investment Cost)1/ΔDuration-1) ≈ IRR
Δduration= Average Duration for Total RETURN-Average Duration for Total INVESTMENT
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(4) LAND #4- 8,065 M2 – RESIDENTIAL ZONED
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Land is located on a hill, surrounded by olive orchards, 9 km away from Mudanya town centre, 4 km away from the Mudanya shore, on the axis of Mudanya-Bursa highway, the region is known for elite projects and it is expected that region will grow drastically in the next 2-3 years, thanks to the interest of foreign property buyers. According to existing permit a total size of nett 5000m2 residential building area allowed. Our Group has exclusivity agreement with The Owner15 to sell and/or develop land for an investor.
Originally, this boutique project has limited number of detached villas and therefore is very convenient for large families from the Gulf region who prefer to spend vacation time in the region and look for more privacy. Recommended options for best value are:
• Develop existing project with 40-50% ROI potential
• Develop another concept consisting of low rise garden duplex and roof duplex residential apartments to target another segment of customer
15 Owner Company had initially planned to initiate a boutique residential project consisting of 12 pieces of nett. 350 m2, 3 storeys (ground, entrance and upper floor) detached houses, fit for all year round but especially summer time villa residences concept. After finishing concrete carcass of some buildings, Company has changes in ownership structure and decided to put this valuable land with high capital gain potential on sale.
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SIZE: 8,065 m2 (residential zone)
LOCATION: 40°19’09”N,28°56’15”E Mudanya, Bursa
DISTANCES: • Uludağ Ski Centre • Yalova – Centre • Hot Springs Facilities & Resorts • Bursa Airport • İstanbul (via Ferry)
~ 55km ~ 65km ~ 70km ~ 78km ~103km
PERMITTED TOTAL BUILDING AREA: 5000m2
PROPOSED DEVELOPMENT: 12 x 380m2 nett villas
MARKET SALE PRICE: ~$500.000 /Villa
TOTAL LAND INVESTMENT COST: $1.5 million
TOTAL CONSTRUCTION COST : ~$2.25 million
TOPLAM INVESTMENT COST: ~$3.75 million
TOTAL PROJECTED SALES: ~$6.0 million
PROJECTED PROFIT: ~$2.25 million
DEVELOPMENT&CONSTRUCTION PERIOD: 12-18 months
BREAKEVEN DURATION: ~12-18 months
Avg. DURATION OF TOTAL INVESTMENT : 9 months
Avg. DURATION OF TOTAL RETURN: 1~8 months
Return On TOTAL Investment (ROI16): ~60%
Annualized Return (CAGR17): ~60% min.
16 ROI= Return/Investment 17 Compounded Annual Growth Rate= ((Total Expected Sales/Total Investment Cost)1/ΔDuration-1) ≈ IRR
Δduration= Average Duration for Total RETURN-Average Duration for Total INVESTMENT
Land - Residential – 8,065m2 @Mudanya-Bursa
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VII. VARIOUS OTHER INVESTMENT GRADE PROPERTIES
As development is our core competency, we always monitor one step back in supply chain; seach for properties listed at the market and evaluate them in terms of their development potential. Accrodingly, we present all those (including the ones owned by us) to investors who might be interested in investing just as an investment property or investing to develop land / buildings for further income prospects.
In enclosures, Section IX - Attachments, you will find such properties available in our existing presentation portfolio. Few of those properties are directly owned by our group; rest owned by others–commercial investment firms, individuals etc.- who gave us authorization to present their property for potential buyers on their behalf and clearly acknowledges our role in such collaboration that we are interested in development cycle activities such as
• adding further value to the property by investigating potential of zoning status upgrade/change and allowed total building area ratios,
• planning type of development, recommending best value added option, • designing & engineering, • building, • maintaining and • operating -if required- those properties developed on behalf of our clients.
Above mentioned properties are classified according to their dominant type and zoning permits as following:
• RESIDENTIAL - Buildings & Lands • COMMERCIAL & OFFICE– Buildings • MIXED USE (Residential & Commercial)-Lands • COMMERCIAL & TOURISM - Lands • FARMING (Residential Zoning expected)-Lands
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VIII. REFERENCES:
1. https://www.gov.uk/government/publications/turkey-latest-killer-facts-about-the-economy/turkey-latest-killer-facts-about-the-economy
2. Turkey Real Estate Market Review - 2016 First Half, Colliers International, http://www.colliers.com/-/media/files/emea/turkey/research/reviews/2016-1-turkey-review.pdf
3. Turkey Real Estate Market Review - 2015 Second Half, Colliers International, http://www.colliers.com/-/media/files/emea/turkey/research/reviews/2015-2-turkey-review-web2.pdf
4. Attractivenes Survey Turkey 2013 The Shift, The Growth and The promise Ernst & Young http://www.ey.com/TR/en/Issues/Business-environment/Turkey-attractiveness-survey
5. The Wealth Report 2016- The Global Perspective On Prime Property And Investment, Knight Frank http://content.knightfrank.com/research/83/documents/en/wealth-report-2016-3579.pdf
6. Turkish Statistical Agency- House Sales to Foreigners Statistics http://www.tuik.gov.tr/PreIstatistikTablo.do?istab_id=2121 (Sales according to cities) http://www.tuik.gov.tr/PreIstatistikTablo.do?istab_id=2339 (Sales as per nationalities)
7. Emerging Trends in Real Estate – Europe 2016 PwC & Urban Land Institute http://www.pwc.com/gx/en/asset-management/emerging-trends-real-estate/europe/emerging-trends-in-real-estate-europe-2016.pdf
8. ‘Q1 2016: global property markets:Turkey-collapsing currency, booming house prices http://www.globalpropertyguide.com/Europe/Turkey
9. Rapid Growth Market Forecasts – July 2014 Ernst & Young http://www.ey.com/GL/en/Issues/Driving-growth/EY-Rapid-growth-markets-forecast-july-2014
10. Attractiveness Survey Europe 2014 - Back in the Game Ernst & Young http://www.ey.com/GL/en/Issues/Business-environment/european-attractiveness-survey,
11. http://en.wikipedia.org/wiki/Kanal_%C4%B0stanbul
12. http://en.wikipedia.org/wiki/%C4%B0zmit_Bay_Bridge
13. http://en.wikipedia.org/wiki/Istanbul_New_Airport
14. http://en.wikipedia.org/wiki/Yavuz_Sultan_Selim_Bridge
15. http://en.wikipedia.org/wiki/Eurasia_Tunnel
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IX. ATTACHMENTS
• RESIDENTIAL - Lands & Building • MIXED USE (Residential & Commercial)-Lands • COMMERCIAL & TOURISM - Lands • COMMERCIAL & OFFICE – Buildings • FARMING (Residential Zoning expected)-Lands
