Istanbul office rents rose 19% in 2008: Savills

Istanbul's office rental market has seen a 19% growth over the past 12 months, with the average rent in the city reaching $21.90 m2/month, according to a report issued on Tuesday by Savills' Turkish associate Kuzey Bati.

International companies have driven office demand in the city over the past five years. On the European side of the city, financial and business services sectors account for 66% of the total space, and are located in the prestigious CBD office buildings especially on Buyukdere Street. Office stock supply in this areas has increased by 6% or 2.6 million m² over the past twelve months. On the Asian side of the city, manufacturing and transport firms accounted for 42% of occupiers activity in 2008.

Despite the increase in rent levels, the global economic crisis has begun to have an impact on office take up, and rental activity stood at 230,000 m² in the third quarter of 2008. This represents a drop of 15% on the same period a year earlier. Savills expects that average rents will fall to $20 in 2009, down from $23,20 at mid 2008. It also forecasts a steady increase over 2010 to reach $28 in 2012.

Murat Ergin, managing director of Savills associate Kuzey Bati, said: 'Investment turnover has decreased due to the international credit crisis, however the prospects for positive prime rental growth should sustain prime yields at their current levels.'

In response to the global economic crisis, investment yields have moved out to 7.5% from 7% a year ago. Yields are forecast to move out further during the first half of 2009.