A new study by the Real Estate Investing Partners Association (GYODER) has assessed the current situation and future projections of the Turkey property sector in comparison with the markets of 17 developing countries selected from Europe, Asia, the Middle East and America
The study, titled “Real Estate in Developing Countries and Turkey; Assessments and Prognoses,” looks into parts of the Turkey market more specifically its housing sector, retail sector and shopping centers, office market, industrial spaces, tourism sector and hotel market and investments, all of which show similar growth signs as other developing economies such as Russia, China, India, Indonesia, Brazil and Qatar.
According to the study, the housing sector of each country is steered by domestic investors and project developers based on demographic trends and needs, the central and local public housing policies and the presence and effectiveness of the housing finance system.
According to the UN’s World Population 2010 data, the countries likely to have high housing needs are China, India, Indonesia, Brazil, Mexico, Turkey and Saudi Arabia. It is expected that Turkey’s urban population will increase from the current figure of 56 million to 68 million by 2025 while the rise in China over the same period will be from 215 million up to 822 million.
Turkey’s housing demand based on the increase in the number of households, renovation requirements and urban transformation projects throughout the period between 2011 and 2015 is projected to be 2.9 million units. Noting that the Housing Development Administration of Turkey (TOKI) will be building 500,000 new residences to meet the needs of low income households in the near future and the demand for the remaining 2.4 million units will have to be met by private investors in Turkey.
The study assessed office markets on the basis of existing office stock, ongoing office investments, office rents and sales prices, office vacancy rates and the office investment (acquisition) return ratios.
Moscow leads the way in this sector with a current office stock of 21.5 million square meters followed by Mumbai with 7.8 million square meters, and Brazil’s Sao Paulo, which has close to 6 million square meters of office stock.
Istanbul’s office stock, however, is relatively small compared to other cities from emerging economies, with a total office stock of 2.36 million square meters. As a major regional center of business, commerce, finance, tourism and culture; Istanbul offers a significant potential for office investments that can be tapped into.
The hotel market is another segment of the commercial real estate assessed in the report. The number of foreign tourists in last year’s global tourism sector was 932 million. This figure is estimated to reach 1.56 billion by 2020 while the total expenditures for accommodation by domestic and foreign tourists worldwide are expected to reach $8 trillion by 2020.
China and India will be among the top 10 countries in terms of the size their contribution to the tourism sector to the national income. China, India, Mexico, Brazil, Indonesia and Mexico will be among the top 10 countries in terms of the volume of the directly generated employment.
Turkey’s tourism on the other hand is booming, with Istanbul predicted to earn over $10.2 billion in 2011 making it the fastest growing tourism destination in the world. According to a city index developed by MasterCard Worldwide, tourism revenue in Istanbul is the fastest growing in the world surpassing even New York and Amsterdam in terms of the number of visitors.