Istanbul Real Estate High on ambition by the Financial Times

  Date posted: 18th of November 2011

Istanbuls taste for the high life grows with the planned construction of the citys tallest tower.

Construction is scheduled to begin early next year on what its developers are billing as Europes tallest tower. The plans highlight the scope of Istanbuls ambitions as Turkeys commercial capital and as a growing power within the region. However, the exact height of the mixed use building, including super high rise apartments, is not yet clear, and the tower will not stand in Europe.

An online vote to name the building and decide its height is planned for next month. It is designed to capture public imagination and rally domestic support for a project that the developers, Turkish construction companies Varyap and GAP Insaat, are pitching as a symbol of Turkeys ambitions to become a global economic powerhouse.

The scale of the project is clearly intended to impress an international audience. Erdinc Varlibas, Varyaps chief executive, is confident that the public vote will support a building significantly taller than Londons Shard, which will reach 310m when it is completed next year, though it would still be dwarfed by the UAEs Burj Khalifa at 829m. The design allows for a tower up to 400m tall, consisting of a main 300m structure and a flexible crown of up to 100m.

Cartographers have good cause to quibble about the continental height record: the tower will be located in the Asian half of Istanbul, an area traditionally regarded as the poor relation of the citys west side. Its planned location is in the new Istanbul International Financial Centre, a zone within the district of Atasehir accorded special status by the Turkish government to promote the development of the city as a new financial hub.

A feasibility study by Deloitte Consulting for the Banks Association of Turkey in 2007 concluded that Istanbul would achieve critical mass as a financial centre before Moscow could compete, and would thereby join London, New York, Shanghai and Tokyo as one of the five leading global financial centres by 2035

The Varyap-GAP tower would set a new height mark in a building boom that has transformed the Istanbul skyline in the past decade: the citys 12 tallest skyscrapers have all been completed since the turn of the millennium, with the majority concentrated in European Istanbul around Levent, the traditional financial centre.

Australian-based engineering firm Hyder Consulting (which also consulted on the Burj project) is advising Varyap and GAP on earthquake proofing. Istanbul is on a seismic fault line and there is a 60 per cent chance of a 7.6 magnitude earthquake by 2030.

The Atasehir district is planned to provide housing for 80,000 high income residents in 18,000 apartments, many of them in high rise buildings. Until recently, its best known building has been the Uphill Court, a 2005 development with twin 31 storey towers joined by a walkway near the top. Atasehir is close to the main Ankara highway through Asian Istanbul, so is easily accessible by road from Levent to the west and from Istanbuls second airport and the citys new industrial and distribution zones to the east.

The building boom has been driven in part by the citys rapidly expanding population; in the 30 years to 2010, the official population jumped from 2.7m to 13m as Turks migrated from poorer parts of the country, with many settling in shanty towns around the citys fringes, where the unofficial population is much higher still. Turkeys economic growth in the past decade, barely affected so far by the global economic crisis, has fuelled demand for better quality accommodation for the new middle and wealthy classes.

Cameron Deggin, of London-based Turkey specialist estate agent Place Overseas, says high rise apartments have become fashionable: "Luxury Manhattan-style apartments are relatively recent and very trendy. There is a real love of luxury and modern high-tech living in terms of intelligent building systems and automation."

Tourism has also propelled development, with the 30m visitors to Turkey recorded in 2009 expected to double by the end of the decade. The Arab uprising has prompted a further influx, with bookings from Saudi Arabia and Kuwait up by 75 per cent this year, according to the Turkish ministry of culture and tourism.

In the past 18 months, Deggin has noted that ultra high net worth Middle Eastern buyers are turning their attention to Istanbul for the first time. "It used to be just New York, London and Paris for the Middle Eastern elite, now it is New York, London, Paris and Istanbul," he says. "Last year, we helped a Saudi prince look for a yali (a traditional Ottoman mansion) on the Bosphorus for USD20m-USD30m."

Varyap and GAP plan to market the new tower internationally, and expect corporate and individual investors from abroad to buy up to 40 per cent of the residential units. Varlibas says his companys nearby Meridian development, a complex of five residential towers now close to completion, has so far attracted 72 buyers from 20 countries, including 10 from Russia.

Plans for the new tower include offices, serviced apartments, a hotel, a sky lobby and a 750m public shopping area. A separate residential only block would be 30 to 40 storeys tall. The entire scheme would deliver 750,000 sq m of sellable or rentable property that is set to open at GBP2,315 per sq m. These are ambitious claims for Atasehir, a district new to the international residential market.

Buying guide

Pros
- Istanbuls spectacular historical sights, including the Aya Sophia and the Topkapi Palace, many of which are within walking distance of each other

- Turkeys long summer, the weather is warm for much of the year

- Istanbuls position as the geographical gateway between Europe and Asia

Cons
- Buying in a marginal area of the city on the promise of gentrification can be risky

- Istanbul is high pressure, busy, noisy and crowded, so not what most European second homebuyers are looking for

- Uncertainty over Turkeys future entry into the EU has been rendered more uncertain still by the euro debt crisis

What you can buy for ...
GBP 100,000 A 10 year old two or three bedroom apartment in Atasehir

GBP 1m A new five bedroom apartment on the 45th floor of the Varyap Meridian Grand Tower in Atasehir