Turkey, new rising star for shopping malls
Posted by meb at March 24th, 2007
While property developers, bankers, insurance firms and economists all welcomed the passage of Turkey’s mortgage law and the impact it will have on the residential real estate market, shopping mall development is experiencing an impressive — though less documented — expansion in Turkey.
This has been reflected in the number of new shopping centers that have emerged in İstanbul in recent years, the number of mall development projects that continue apace and the level of foreign investment flowing into the segment of commercial real estate.Investors have certainly taken note of the business opportunities at hand. America’s Merrill Lynch, along with its Turkish partner Krea Real Estate, owns a 50 percent share of Eskisehir’s Neo Shopping Mall in Istanbul and is looking to take full ownership of a mall that took $35 million to construct. This comes as part of Merrill Lynch’s broader plan to buy into real estate in Turkey, with $649.3 million reserved to that end.
The biggest acquisition has been that of St. Martins, the UK-based property developer owned by the Kuwait Investment Authority, which offered $421.7 million for a 50 percent share in Şişli’s Cevahir Mall in November 2006. After acquiring the initial stake, St. Martins bought the entire complex for a reported total of $750 million. This came as a strong reflection of the perceived value of the entity, originally owned by the İstanbul Municipality and Turkey’s Cevahir family. As Europe’s largest and the world’s second-largest mall, Cevahir Shopping Centre testifies to the potential of consumption and retail in Turkey.
Local players have followed the trend, pouring capital into mall development projects. Avrupa Construction is managing the building of the 25,000-square-meter Verde Molino Residential and Shopping Centre in Bahçesehir. Larger projects continue to emerge in the city centre of İstanbul. In January 2007 Turkish construction company Garanti Koza hooked up with the founding partner of Istanbul’s Akmerkez shopping center — the Dinçkök family — for plans to construct a second Akmerkez on an 80,000-square-meter plot. Meanwhile, leading shopping centre development company Multi Turkmall — a joint venture between the Netherlands-based Multi Development and Turkey’s Turkmall — is developing a range of slick shopping centers across the country, including Trabzon, Aydin, Antalya, Mersin, not to mention Istanbul and Ankara.
Such an expansion should come as no surprise. Turkey’s per capita Gross National Product (GNP) continues to grow, with Prime Minister Recep Erdoğan expecting the figure to increase to $11,000 by 2013, compared to $5,341 today. Mall developers rub their hands in anticipation, with more income implying more consumption amongst city dwellers.
Mall development has also been spurred by retailers, anxious as they are to secure themselves a shop in Turkey’s top malls. As such, retailers and consumers are there, as are investors, to buy large stakes if not full ownership of local shopping malls. As Ali Pamir, managing partner of advisory firm DTZ Pamir & Soyuer, pointed out, retail developers don’t have to finish the buildings under construction to find a buyer these days. The difficult task of locating and acquiring a site and acquiring permissions has already been taken care of.
Though shoppers happily embrace new retail hubs, city commuters are non-plussed by the additional congestion that mall development implies, with Kanyon, MetroCity, Cevahir and Akmerkez aggravating chokepoints to Istanbul’s congested streets. City planning, one analyst comments, has not factored sufficiently in some of these developments. Such considerations, though, are unlikely to figure too heavily in the calculations of mall developers and owners who see Turkey’s large consumer potential as a primary determinant of investment.
source: Today’s Zaman
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