International retailers continue to open in Turkey, says Savills

Decreasing income and economic uncertainty are anticipated to keep visitor numbers and turnover rents below expectations for many Turkish shopping centres but the modernisation of the market continues to attract international retailers to Turkey, according to international property advisor Savills. Further to the arrival of key fashion brands such as C&A, Tommy Hilfiger, Accessorize, Zara, Mango and Gap, Best Buy and French DIY retailer Leroy Merlin are preparing to enter the market whilst IKEA has recently opened its fourth store in Turkey's Bursa.

Growing demand for western-style products is one of the main factors of demand driving international retailer entrants and this combined with an increase in domestic car ownership has led to a transition from traditional high-street locations to out-of-town formats and large-scale formats. Visitor numbers and turnover will likely fall given that consumer confidence was down by 22.3% in January 2009 (compared year on year to January 2008), but the economy’s strong growth in previous years coupled with an increase in supermarket and fast food spending should lessen the negative impact on this market, Savills said.

In terms of the investment market, akin to the rest of the globe, volumes are down and yields have increased by 25 basis points on a quarterly basis in Q1 2009. Prime retail yields are at 7.75% and up to 8.75% for secondary product. With developments of new centres being postponed or delayed, the stronger schemes that do get realised will see renewed investor interest when the economic situation improves, Savills predicts. Given that many existing international investor and local developer joint ventures have completed schemes, Savills anticipates that these parties may seek an exit to raise capital for new developments, which will provide buying opportunities.