Kyle takes Global Real Estate Dealmakers on the road, reporting from Phoenix, Arizona on breaking Turkish real estate news, key insights from his past guest (Firuz Soyuer), poll results and the upcoming poll, and commentary on the next guest.
Dealmaker Highlights
01:25 – BREAKING NEWS
01:47 – Residential Price Appreciation
Turkey posted the greatest growth in global residential prices from Q4 2019 to Q4 2020, increasing over 30%. By comparison, global residential prices rose an average of 5.6% based on data from 56 countries.
02:38 – Erdogan’s Kanal Istanbul Plan
President Erdoğan announced plan to proceed with the Kanal Istanbul plan, creating a second waterway to connect the Black and Marmara Seas.
03:09 – Reduction in Benchmark Interest Rate
Another one of Erdoğan’s goals is to slash the benchmark interest rate (one-week repo) to single digits from 19%, though early signs are that he may encounter resistance from other high-ranking officials.
03:39 – 2021 Summer Tourism in Turkey
As Turkey expects to receive 100 million vaccine doses before the end of May, the country is likely to represent a very low risk of infection for summer tourists. Tourism revenue is expected to reach 25 million visitors in 2021, 55% of the 2019 volume. This is welcome news given that quarterly tourism revenue fell 50% from October 2020 through December 2020 as a result of pandemic related lockdowns/restrictions.
04:54 – GUEST INSIGHTS
05:02 – Lack of Bank Financing for Real Estate
Firuz Soyuer, co-founder of Pamir & Soyuer, stated that little to no bank financing exists for real estate projects in Turkey because of the exorbitant interest rates. With this said, developers achieve quasi-financing from investors in condo units (especially on residential side) who place deposits at early stage of project construction. In this sense, developers often have little of their own equity invested.
05:48 – Non-Binding Entitlements
City government has the ability to grant a project full entitlements, but then revoke them at a later stage. As this power potentially represents a major setback to any given real estate development, it is advisable to engage a local partner if investing from outside of Turkey.
06:13 – Private vs. Institutional Investors
Most of the Turkish market is comprised of private buyers and not institutional ones. As private buyer tend to focus on factors such as location and architecture and less so on cap rate, IRR, cash-on-cash return, etc., it is important to identify the buyer profile when analyzing sales transaction data.
07:08 – POL RESULTS
07:16 – Last Poll Results
In response to the latest poll about the frequency of in-office vs. remote work post-COVID, the majority of participants indicated real estate professionals would be in the office: 1) similar to pre-COVID with slightly more flexibility or 2) on a hybrid basis with 2/3 days in the office and the remainder at home.
08:15 – Next Poll
How long will it take global hotel revenue to return to 2019 levels? (Total room revenue for 2019 was $550 billion)
- End of 2021
- End of 2022
- End of 2023
- End of 2024
- 2025 or later
09:18 – Next Guest
Kyle looks forward to welcoming another guest in the next episode from a country with a lower global profile, but one that has plenty of compelling dynamics.
