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In 2014 the Turkish real estate market created investments worth $1.8 billion (Dh6.61 billion). Last year the number went up to around 5.5 billion, but the recent political turmoil have kept the numbers from growing this year. That is, however, no reason to panic, explains Ahmet Kayhan, CEO of RIEDIN.
''The winds keep changing direction in the political ring around Turkey, but business is usually not affected by it,'' says Kayhan. ''The stock market and the currency are already up since the coup attempt.''
The realty market has seen 2.3 million transactions last year and more than 2 million yearly over the last decade. Around 1.1 million were residential transactions, and of that 30 per cent, around 350,000, were new housing developments, says Kayhan. Thanks to a new construction law passed in 2008, which supports the regeneration of cities around the country, demanding earthquake-resilient homes, sufficient parking, green areas, lifestyle spaces, etc., development has been spurred on since 2010.
''There are 22 million households in Turkey. Of that around one-third, 6.8 million homes, need be demolished and rebuilt by 2030. Our urban regeneration is one of the biggest in the world right now — a $480-billion project,'' adds Kayhan.
The future demand in the realty market is guaranteed by the Turks, currently numbering 80 million, of which around 53 per cent are under 35-years-old, and 49 per cent under 30-years-old.
''So around 96 per cent of those people, 40 million, don't have their own house. They live with family and friends. There is a direct correlation between marriages and supply of new homes. Around 600,000 couples got married alone last year,'' Kayhan explains. ''We also have a $52-billion mortgage market, which is growing very rapidly — one of the strongest in the world in terms of default rates. The biggest demand drivers are the young wanting new houses with facilities such as gym, retail, car parks, play areas for their kids, etc. This is changing the Turkish real estate landscape.''
Turkey has been making construction, whether infrastructure, or real estate, the backbone of its economy, taking a 6 per cent share of the GDP and growing, according to Kayhan.
The building actors
''Starting 15 years ago contractors turned into construction companies and then into developers. Turkey is the second-biggest contracting country.''
While a decade ago, a big construction company would have built 1,000 units a year, they are building 15,000 today — and these are often multibillion-dollar listed companies. ''They converted their international know-how and applied it on the local scene. The 2008 mortgage law was also driving construction companies to become developers,'' explains Kayhan. ''We have one of the oldest Real Estate Investment Trust laws. It's a great way for the public to own shares in real estate and to finance projects other than with banks.''
Today, around 300,000 units are under construction. ''If units are priced correctly with a healthy, not greedy, margin, there is no project in Turkey that cannot be sold,'' says Kayhan. ''The government is subsidising listed real estate companies to finance for 0.7 per cent a month, the lowest ever in the country's history. They want to boost investment.''
Source: Nicole Walter, Special to Property Weekly