Lack of investment grade retail centres in Turkey - DTZ

Turkey is one of the most attractive markets for global real estate funds, but the lack of investment grade retail assets remains a major concern to retail investors, according to DTZ. In its Turkish retail market overview for 2007, the global property adviser notes that the number and value of retail centre transactions accelerated considerably last year to a record EUR 800m. Volumes are lower this year, however, with a total of EUR 338 mln in deals recorded up to October.

Published in conjunction with Pamir and Soyuer, the report says that Turkish retail market has been performing relatively well due to the high levels of consumer spending and the increasing level of disposable income. Initial yields are averaging 7% and 8% in the main cities and between 10% and 11% for new development schemes in the Anatolian region. Yield compression is expected to continue for the next years due to the expectation of rental growth.

There are 142 retail malls in Turkey, most of which are in Istanbul, Ankara and Izmir. The total supply of retail space in the country reached three million m² by the end of October 2007, with a further 2.5 million m² in the pipeline and due to open before the end of 2010. Fast-growing cities with populations of more than 30,000 such as Manisa, Erzurum and Kutahya look promising for potential development opportunities, the report says.