Foundations shake in economic quake

Some said the crisis would just be a tangent for the Turkish economy, but first the lay offs began, then real estate projects valued at billions of dollars where put on hold. Most of the developments that have been put on the back burner are residential or shopping center projects. Developers say they are postponing the projects until the dust settles.

Torunlar Holding has postponed several development projects, according to the Torunlar Holding Board of Directors President Aziz Torun. Some projects that they planned on starting in 2009 such as the estimated $880 million shopping center to be built in Kütahya, called Kütahya AVM, as well as two projects in Istanbul, Garden Tower and the Mall of Istanbul, have been postponed pending better economic conditions, said Torun.

Developments
"We have completed the $35 million construction stage of our $250 million Beylikdüzü," said the Kiler Holding Board of Directors president, Nahit Kiler. "We are going to assess the rest of the project according to market conditions. We have indefinitely postponed the $80 million Kütahya Shopping Center and the $40 million Zonguldak Shopping Center."

"The project we have taken on in partnership with Kier Holding, Kütahya AVM, is an $80 million project," said Torun. "Mall of Istanbul, encompassing a shopping center, residences and hotels, is a $600 million project. The Garden Towers project in Zincirlikuyu is a $200 million investment. We were planning to start all three projects in 2009, we have postponed them for an indefinite time period. ,

The investment schedule will be determined by market conditions, said Torun. "Because banks and other financial institutions are waiting for clarity of the crisis, we are waiting as well. The initial land investments for the project were made with capital resources, so the construction that will take place on top of them needs to be financed. We need the investment to be able to go forward with the projects. The banks need to look favorably on these investments for us to be able to do anything."

The pending global crisis has hit real estate markets the hardest and it will continue to cause stagnation in property markets, according to Torun. This is the reason his company has chosen to wait out the crisis, he noted. Because of the crisis, land stocks are piling up and prices for plots have retreated considerably, almost to value levels last seen in 2005, according to Torun.

The crisis has not impacted real estate developments aimed at high-income groups, said Kiler. The sales of units at the Istanbul Sapphire project, of which 40 percent of the available apartments have been sold, sales are going according the expectations, noted Kiler. Sales aimed at more middle-income buyers, such as the Beylikdüzü residential development have suffered, he said.

The crisis has also put other plans on hold. The Torunlar Real Estate Investment Partnership had plans to become a publicly traded company by the middle of 2009. The company has decided to indefinitely postponed going public.