GYODER projections

A real estate industry leader has outlined, blow by blow, the problems the market is facing in this financial crisis and given ideas for potential solutions.

The Association of Real Estate Investment Companies, or GYODER, reviewed the situation in the Turkish real estate markets in 2008 and the expected forecast for the next year alongside an overview of the necessary actions the real estate industry and its governing bodies need to take to avoid a further downturn in the real estate markets, in a press conference held yesterday.

GYODER Board President Bekir Cumurcu outlined a general assessment of the economic landscape within the context of the global crisis. In terms of real estate, he noted that global real estate markets were dropping in five categories; a slowdown in real estate projects and investments, a decrease in demand for real estate, a shortening of real estate financing, a drop in real estate prices, as well as a decrease in profits from real estate investments.

Five factors
These five factors will affect the Turkish real estate markets by limiting the growth rate, limiting the availability and increasing the cost of both domestic and foreign financing options as well decreasing the amount of foreign investments coming in to the Turkish real estate industry, Cumurcu said.

In numbers the GYODER received from Central Bank of the Republic of Turkey, the growth in gross national product is 3 percent for 2008 with a 1.1 percent negative growth rate in real estate. Projections for the next period are also low. The global slowdown in projects and a decrease in demand in real estate as both an investment vehicle and on a need basis are affecting the Turkish real estate markets as well, Cumurcu said.

The slowdown in Turkish real estate will be more pronounced in the shopping center and housing development compared to the office space, logistical center and hotel developments, he said. "It is inevitable that there will be a slowdown in the new period," Cumurcu said, but that the real estate industry is the best option for Turkey to forge ahead during the crisis due to its large market presence in the Turkish economy.

250 sub industries
He said the real estate industry, along with construction and tourism and more than 250 sub industries, are in the top bracket for contributions to the gross national product and employment. "For the Turkish economy to get over the crisis with minimal damage, the real estate industry tops the list of industries that need to be supported."

Cumurcu said the government would need to take action. "There needs to be an agency dedicated to coordinating, regulating and financing national housing policy, " he said, adding that the Mass Housing Administration, or TOKI, is good for low income housing, but it is not the most efficient way to develop affordable housing. He said the private sector should be building low-income housing with TOKI serving as a coordinator and regulator role.

On the supply side, precautions should be taken on "incentivized land development and a decrease in value, removing added tax on land, rehabilitating the building and permit bureaucracy, pulling in long term foreign investors, eliminating unfair tax practices, making sure that financed projects are protected from risk, lifting the obstacles for alternative financing options, training qualified personnel, and eliminating regulation that limit the scope of foreign investment," Cumurcu said. "What we need is that Anakara lift all of the bureaucratic hurdles facing foreign investors," he said.