Turkey

Turkey's convergence process with the European Union and macroeconomic stability should boost foreign interest in Turkish real estate, Akın Tüzün, head of Turkish equity research at Citigroup, said yesterday.

Speaking at the Turkish Real Estate Summit organized by The Association of Real Estate Investment Companies (GYODER) in Istanbul, Tüzün noted Turkey currently attracts around $3 billion foreign investment into the local real estate sector. “This is less than 0.5 percent of Gross Domestic Product (GDP) – a low figure as such if compared to Eastern Europe, and particularly to Spain, Portugal and Greece.” With close to $50 billion in current account deficit, Turkey needs substantial foreign capital inflow. As portfolio inflows and major privatizations slow down this year, Turkey has to attract foreign capital particularly in real estate,” Tüzün added.



Energy, tourism and real estate to drive FDI

The majority of all FDI inflow to Turkey since 2003 has consisted of privatizations and asset sales, mainly in the banking sector. So far real estate investments have made some 17 percent of all FDI into Turkey. “However, over the next decades energy, tourism and real estate will be the main areas of FDI inflow into Turkey,” Tüzün said. “The sustainability of foreign direct investment (FDI) is the key for Turkey's balance of payment dynamics and real estate FDI should play an important role in this.”



Turmoil boosts real estate investments

The global economic slowdown has not had as notable impact on capital FDI and real estate as much as was feared, noted Tüzün. “In fact, whereas since 2003 real estate investments made 11 percent of all FDI, in the first three months of 2008, they made 21 percent of all FDI into Turkey. […] On the other hand, portfolio inflows, mainly consisting of so-called ‘hot money,' have slowed down considerably in 2008,” Tüzün explained.

Despite the global turmoil, appetite for mergers and acquisitions (M&A) and real estate seem strong. “This is because investor profile for these assets, are not bothered by the short-term risk factors. In fact, the short-term turmoil provides a good opportunity for them.”The two day summit continues today with sessions on residential property, real estate opportunities in tourism, offices and logistics, urban regeneration and investment potential of Turks.