Reasonable rewards for foreign investors
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Hürriyet Daily News
Oluşturulma Tarihi: Mart 17, 2009 00:00
ISTANBUL - An international property consultant believes that despite the usual risks of investing in emerging markets, Turkey appears to offer investors reasonable rewards. The banking system, a regulatory environment and political stability all contribute
Throughout 2008, Turkey’s economy proved to be resilient enough to cope with the challenges of the global economic crisis, according to Feroze Bundhun, the managing director of International Property Consultants in the CB Richard Ellis Group.
Institutional reforms, export growth, a vigorous privatization program and the EU accession talks all helped Turkey perform strongly compared to many other countries in the world, Bundhun said.
In the second half of last year, however, the pace of economic growth slowed following contractions in domestic demand, export markets and foreign investment. In the third quarter the economy grew by only 0.5 percent compared to a growth rate of 4.25 percent in the first half of 2008, according to a report from CB Richard Ellis Group’s Istanbul Office.
Turkey’s banking system does not have the same exposure to toxic assets compared to its European counterparts, the report said. Most Turkish banks have a Capital Adequacy Ratio of 13 percent or above and the sector’s average stands at 18.9 percent. The banks are maintaining high liquidity levels and are only marginally handicapped by the non-availability of the wholesale banking market. Reports have said Turkish banks continue to lend to their traditional customer base.
Bundhun said a strong banking sector is probably the biggest advantage Turkey has over other emerging economies. Banks are healthy, liquid and still lending to the real estate market. On the whole, Turkey benefits from a reasonable infrastructure, a healthy regulatory environment and transparent bureaucracy.
He said another advantage is the relative ease with which investment channels operate. Turkey enjoys relative political and economic stability and the outcome of local elections to be held in March 2009 is likely to be in the governing party’s favor.
Bundhun said the country offers attractive returns for prudent investors despite its high level of national debt and its current account deficit estimated at 6.4 percent of GDP, which stands at some $750 billion, equal to more than $10,000 per capita.
Real estate market
Although the economic downturn has had a negative impact on new projects, most sectors in the real estate market continue to perform satisfactorily. Equilibrium exists in the office sector in terms of supply and demand and, as a result, the rent levels remain stable at around $30 square meter. Capital values for good quality office space are in the region of $3,500 square meter. Many international companies are still entering the Turkish market, enabling rental and capital values to remain at a high level.
The logistics sector continues to expand in the industrial heartlands of Gebze, Bundhun said, adding that the sector has grown rapidly in the last few years with many international and local players involved. Significant investment in light manufacturing has fuelled demand for industrial space. As a result, the Organized Industrial Zones are almost always fully occupied, he said, adding that speculative developments in warehouse facilities are absorbed almost immediately upon completion.
Institutional reforms, export growth, a vigorous privatization program and the EU accession talks all helped Turkey perform strongly compared to many other countries in the world, Bundhun said.
In the second half of last year, however, the pace of economic growth slowed following contractions in domestic demand, export markets and foreign investment. In the third quarter the economy grew by only 0.5 percent compared to a growth rate of 4.25 percent in the first half of 2008, according to a report from CB Richard Ellis Group’s Istanbul Office.
Turkey’s banking system does not have the same exposure to toxic assets compared to its European counterparts, the report said. Most Turkish banks have a Capital Adequacy Ratio of 13 percent or above and the sector’s average stands at 18.9 percent. The banks are maintaining high liquidity levels and are only marginally handicapped by the non-availability of the wholesale banking market. Reports have said Turkish banks continue to lend to their traditional customer base.
Bundhun said a strong banking sector is probably the biggest advantage Turkey has over other emerging economies. Banks are healthy, liquid and still lending to the real estate market. On the whole, Turkey benefits from a reasonable infrastructure, a healthy regulatory environment and transparent bureaucracy.
He said another advantage is the relative ease with which investment channels operate. Turkey enjoys relative political and economic stability and the outcome of local elections to be held in March 2009 is likely to be in the governing party’s favor.
Bundhun said the country offers attractive returns for prudent investors despite its high level of national debt and its current account deficit estimated at 6.4 percent of GDP, which stands at some $750 billion, equal to more than $10,000 per capita.
Real estate market
Although the economic downturn has had a negative impact on new projects, most sectors in the real estate market continue to perform satisfactorily. Equilibrium exists in the office sector in terms of supply and demand and, as a result, the rent levels remain stable at around $30 square meter. Capital values for good quality office space are in the region of $3,500 square meter. Many international companies are still entering the Turkish market, enabling rental and capital values to remain at a high level.
The logistics sector continues to expand in the industrial heartlands of Gebze, Bundhun said, adding that the sector has grown rapidly in the last few years with many international and local players involved. Significant investment in light manufacturing has fuelled demand for industrial space. As a result, the Organized Industrial Zones are almost always fully occupied, he said, adding that speculative developments in warehouse facilities are absorbed almost immediately upon completion.