News Column

TURKEY - Istanbul trending

April 30, 2014

Zoya Malik

What is your interest in being present in the UAE?

"Our relations with Gulf investors has improved a lot in recent years and I see real estate investments into Turkey begin to increase. Agaoglu launched Maslak 1453, Turkey's largest real estate project in Dubai, at Cityscape Global, to promote our projects. The project received immense interest and so following on, we opened our Dubai office, in March 2013, which is a bridge between the Middle East and our company.

"Now our promotional activities in the region are diversifying further as investors in the Gulf are becoming more attracted to Turkey. Recently, a new law was passed granting residency permits to foreign nationals who own property. This move has opened up market boundaries for Istanbul Maslak 1453, the project that represents Istanbul's new International Financial Centre.

"The dimension of our work has also expanded within our housing and commercial projects due to interest shown by GCC investors, in particular. As our work is focused on customer expectations and satisfaction, we have started to customise our applications through our attractive project designs and our payment plans to offer ease and convenience to investors, just as they may be accustomed to in their countries of origin.

"Turkish and Arabic cultures are both historically rich, sharing social and cultural assets. So our projects blend modern architecture with the cultural and historical richness of both civilizations to offer fine and entertaining concepts. Good examples of this are A1 and B1 Blocks at Maslak 1453 and the Andromeda Gold Project. Situated in Istanbul's most prominent locations, surrounded by nature, these projects are the bespoke products of the culmination of 32 years of Agaoglu's business experience. Both projects feature expansive floor plans that large families prefer and the enthusiasm for their spaciousness and grace in design have been reflected in the demand and sale of our houses.

"My World Europe has been delivered last May to many Middle Eastern families, now new owners of these apartments. We have reasoned that we are on the right track. We have thought of every detail for the ease of our customers, including 24/7 concierge service provided in both the English and Arabic languages.

"Most critically, in February 2014 we introduced a new payment plan scheme into the Turkey market for convenience of customers' purchase. We started to apply payment plans for our delivered projects, similar to the ones our customers from the Middle East are accustomed to.

"We have noted over time that such applications not only meet the expectations and needs of customers but become elements that win their trust and offer them psychological support."

Why is this a good time?

"Day by day, Turkey is becoming a significant place both on the global and political stage and its economic success is undoubtedly being led by the real estate market, which has been welcoming investment for years. Today Turkey, which is the 16th largest economy in the world, harbours great expectations for the next decade in becoming one of the world's top economies and in developing Istanbul, as a finance capital.

"These targets have the construction and real estate sectors at their core and Turkey has already taken giant strides towards being rated by international agencies in recent years with a stable real estate sector. According to PwC's and ULI's (Urban Land Institute) Emerging Trends in Real Estate 2013, Istanbul continues to be one of the most popular destinations for future development opportunities - a serious investment potential compared to other European metropolitan cities.

"To remain protected from the revised VAT system, many house purchasers hastened their decisions and opted to buy houses at one per cent VAT. One hundred per cent of the house sales in January were sold at a VAT cost of one per cent. While 36 per cent of sales last month were from completed housing stock, 63 percent were from houses not as yet completed."

"Over the past six months, the share of foreign investors in total sales was 9.8 per cent. In January, this segment grew to 12.5 per cent. Most of the investors were from the Gulf States."

How are you targeting investors in the UAE & MENA for investment in real estate in Turkey?

"The intense interest and demand from the Gulf countries has been answered by our Dubai office as a touch- point for MENA investors. We also act as an honorary consulate to hold face to face meetings with investors, to organise and process paperwork."

How stable is the environment for overseas investors and what are the incentives and yields?

"As an emergent hot spot for international investment, Turkey's real estate sector has a long-term appeal for European and Asian market investors. Turkey is the sixth largest economy in Europe, one of the world's top eight countries earmarked for future sustained growth and is proving its worth as a competitive environment for investment across all sectors.

"Real GDP growth of 3.6 per cent is expected for 2013, according to the latest World Bank report, rising to 4.5 per cent in 2014 with the OECD predicting the economy will be the fastest growing member of the EU bloc in 2011-2017 (at 5.7 per cent) supported by the Government's successful programme for economic and social reform.

"In early 2013, Ernst & Young ranked Turkey's property market as the second most attractive in Europe for real estate investors, with a survey by PwC reporting that 40 per cent of those surveyed, ranked it as an attractive and viable option.

"The new reciprocity law, ratified last year, opened up the property ownership market to foreign investors and has made purchase of both homes and land possible almost anywhere in Turkey, especially in the bustling capital, Istanbul.

"The Turkish Association of Real Estate Investments Companies expects foreign direct investment into real estate to hit three billion dollars in 2013, growing to 10 billion dollars in the medium term. This is supported by Knight Frank's latest Global House Price Index, which reported that Turkey recorded the seventh highest rise in residential property globally during 2012 - higher than other European countries, at 11.5 per cent.

"Turkey's ongoing effort is to be placed amongst the 10 biggest economies over the world with Istanbul taking steps to position as a top International Finance Center, of which Agaoglu is a partner. His Excellency Premier Recep Tayyip Erdogan is expected to make an announcement towards this programme within the next one and a half months.

"In parallel with these efforts and projects, the housing prices in many promising zones of Istanbul tend to rise quite attractively. Therefore, Istanbul has a higher rental rate of return than those of other comparable developed markets. All in all, Istanbul is becoming a rising and attractive trend for investors the world over."

How are your investors capital - raising?

"A real estate asset-based Sukuk is an incentive as a new instrument in Turkey and will appeal especially to Gulf investors. Islamic financing instruments provide our entry into the banking sector and in the current capital market climate in Turkey, we can act quickly. Recently, the Capital Markets Board (CMB) has announced the release of five separate "mevzuatlastir" types of Sukuk. In fact, Agaoglu Real Estate Development has raised finance for the Istanbul International Financial Center project via a new Sukuk issuance."

Which banks are you partnering with in the UAE and GCC for project finance and development into Agaoglu projects?

"Akbank, Kuveyt Turk and Odeabank."

Which banks are offering mortgages for private consumers in UAE and GCC?

"Many of the national and international banks are providing easy mortgages to benefit international investors into Turkey. Lending conditions will vary depending on several parameters based on the lending bank, mortgage amount and period, etc. Agaoglu is providing off-plan interest-free company installments. In fact, on project delivery, clients are moving into residences and can continue to pay the installments over a period of two years."

What is the type of FDI entering Turkey for Agaoglu projects?

"Multiple sales to individuals and wholesale Gulf buyers is creating an interest for foreign investors into our projects. Large corporate businesses are also taking an interest. Upon enactment of the Reciprocity Act, foreign capital entering Turkey through our company by Q4 2013, exceeded one billion dollars."

How do you work with the Turkish Government and investment authority in developing projects? What type of confidence does this offer overseas investors?

"In releasing the Reciprocity Act, the Turkish Government has allowed real estate sales to foreign nationals. Following this, a major Saudi investment group has invested 200 million dollars into the Maslak 1453 Project. This particular real estate sale has been recorded as the highest grossing volume realised in one lot, in Turkey so far. The Turkish Government continues with necessary steps to facilitate and accelerate investment processes for the market and for foreign investors into the real estate industry."

What can foreign investors own and pass down to family members?

"After the new regulations two years ago it has become very easy for GCC investors. Foreign investors get a title deed, V.A.T and stamp taxes are involved in resale. Taxes can vary depending on size of property and location. Foreigners may gain a residential visa for themselves and their family after receiving the title deed which is renewable every year."

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Source: Banker Middle East

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