Retail investment volume in Turkey increased threefold last year to EUR 770 mln compared with 2005, according to a report by Jones Lang LaSalle (JLL). Turkey's EU accession plans, a stabilising economy, increasing transparency and retailer demand are fuelling the boom in real estate foreign investment, which accounted for EUR 2.12 bn in 2006.
Retail investment volume in Turkey increased threefold last year to EUR 770 mln compared with 2005, according to a report by Jones Lang LaSalle (JLL). Turkey's EU accession plans, a stabilising economy, increasing transparency and retailer demand are fuelling the boom in real estate foreign investment, which accounted for EUR 2.12 bn in 2006.
'A growing number of investors are putting Turkey on their shopping list, attracted by a stable economic environment and one of the fastest growing economies in Europe. A key factor driving the investment market in 2007 is that investors are seeking rental and income growth through active asset management. Investment yields are expected to remain stable or decline as the market matures and shows signs of greater transparency and long-term stability. By 2009, we forecast that Turkey will be one of the largest retail investment markets in Europe,' said Jeremy Eddy of the European Retail Capital Markets team at JLL.
Significant yield compression has already been experienced in Turkey with prime yields decreasing to 7% by the end of 2006, with further decreases likely in the first half of 2007. This new level is comparable with prime shopping centre yields in Eastern Europe, where the yields vary between 7.5% (Bulgaria) and 6.0% (Slovakia).
Neville Moss, head of European Retail Research at JLL added: 'Although in Turkey you will find some of the most innovative design concepts in Europe, the shopping centre market is still emerging and Turkey remains very undersupplied. Over 60 new shopping centres are due for completion before the end of 2008; the second highest development pipeline after Russia. Jones Lang LaSalle believes that there is potential for another 300 new shopping centres in Turkey over the next 10-15 years, substantially increasing the availability of high-quality product to investors.'
Over 100 international retailers are already in Turkey including recent entrants such as Ikea in 2005 and Harvey Nichols in 2006. Retail sales are being driven by a young, increasingly urban population that is growing richer and embracing Western shopping habits. More than 30% of the population is under 20 and 70% is under 35, compared with less than 50% in Western Europe.
