Zorlu buys KGM land with record $800 million bid
Posted by meb at March 8th, 2007
Zorlu Holding, one of Turkey’s leading industry groups, has become the new owner of General Directorate of Highways (KGM) land in Zincirlikuyu, İstanbul, with a record $800 million bid.
Zorlu Real Estate, a subsidiary of the group, won the 96,505-square-meter piece of property, which is located in one of the most expensive districts of the city. Zorlu Group’s chairman, Ahmet Nazif Zorlu, said they are planning to invest as much as $400 million in the property.
Zorlu responded to reporters’ questions after the tender and said: “We have now entered into a sector that is totally new for us. We want to contribute to our country with a new value by producing a project that is worthy of Turkey.” Zorlu stated that they are willing to pay the money all at once, in cash. “Either we will use our own resources or we will use loans.” The payment may either be in cash or in installments. If the company choses the installment option, it still has to pay half of the price in cash anyway.
Dubai International Properties, which has recently changed its name to Sama Dubai, had agreed with the İstanbul Metropolitan Municipality to take over the land and construct two artistic skyscrapers to be known as the Dubai Towers of İstanbul. The Dubai groups would give the municipality half of the property there in return. But as public opinion strongly objected to the deal on grounds that a tender process should have taken place, the municipality had to step back and called interested parties to offer their bids in an open auction for the land.
It is estimated that the 96,505-square-meter property will come down to 84,500 square meters after open-space area and a ring road have been separated. A structure of 237,000-square-meter could be built on the land. Thirty-five percent of the land is allocated for residences, 10 percent for offices, 15 percent for shops, 30 percent for tourism and 10 percent for socio-cultural facilities. Privatization Administration (ÖİB) President Metin Kilci said, “I believe the ÖİB contributed significantly to the tender of one of the most valuable plots of land in İstanbul, which is taking big strides to become a magnetic world city.”
Speaking to reporters following the tender at Swissotel The Bosphorus, Kilci said: “We once again displayed our professional approach regarding the sale and use of public properties and holding competitive tenders.” Kilci stated they made the necessary preparation for the tender with relevant bodies in İstanbul and expressed confidence that the project that to be carried out on the land in question would fit with the image of İstanbul.
Kilci responded to reporters’ questions about the revenue earned from the sale and how it would be used. “I don’t want to say whether the price was low or high. This figure is the highest revenue gained over the sale of one piece of land. I believe this is a significant property sale not only nationwide but also throughout Europe and the Middle East. The Supreme Privatization Board decisions stipulate a Cabinet decision regarding distribution of the accrued revenue. However, the revenue will probably be spent for KGM investments since the land was owned by the KGM. We will have fulfilled our responsibility in the process after collecting the price for the land and handing it over to the Treasury.”
The participants in the tender for the KGM’s land were Zorlu Real Estate Development and Investment, Emaar Real Estate, Astay Real Estate Construction Investment, Akfen-Osmanlı Joint Venture Group, Sama Dubai İstanbul Real Estate, Toray and Eren Talu Joint Venture Group, Nurol-Fiba Joint Venture Group, Limak Construction and Tourism-MSREF VI Living Daylights BV Joint Venture Group, Taşyapı Construction and Global-Boğaziçi Joint Venture Group.
At the end of the initial round of the tender, which was presided over by Hasan Köktaş, the deputy president of the ÖİB, the highest bid was $505 million. In the first leg of the elimination round Taşyapı Construction was disqualified and the highest bid realized at $650 million. Astay Real Estate Construction Investment and Tourism was also eliminated in the second round with the lowest offer, and the highest bid climbed to $691 million. In the final leg of the elimination round the Akfen-Osmanlı Joint Venture Group was dropped for bidding the lowest offer.
Sama Dubai İstanbul Real Estate, owned by Dubai crown Prince Al-Maktum, and the Global-Boğaziçi Joint Venture Group withdrew from the tender in the opening round. The highest bid during the first leg of open bididng reached $727 million. Nurol-Fiba Joint Venture Group and Toray and Eren Talu Joint Venture Group also withdrew from tender in the second leg, while the bidding reached $730 million. Emaar Real Estate Development raised its bid to $751 million in the third leg and $776 million in the fourth. At the opening of the fifth leg, the Limak Construction and Tourism-MSREF VI Living Daylights BV Joint Venture Group withdrew from the tender.
The remaining rounds saw competition between Emaar Real Estate Development Corp. and Zorlu Real Estate Development and Investment Corp. In the eighth leg, Zorlu responded to Emaar’s $799-million bid with $800 million. Zorlu Real Estate Development and Investment Corp. won the tender when Emaar Real Estate Development Corp. withdrew at the opening of the ninth leg. The tender has technically been completed but will be finalized after approval of the Supreme Privatization Board.
The price of the land could be paid in full or in 24 installments. If paid by installment, 25 percent of the price has to be paid on the day of the contract, another 25 percent within the first year and the remainder the following year. Payment by installment is subjected to a 10 percent rate of interest.
source: Today’s Zaman
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