29 October 2013, Republic Day in Turkey, was dominated by the inauguration of the Marmaray Tunnel, the first direct rail connection between the European part of Istanbul and the Anatolian part of the city - but also between Europe and Asia through Turkey. This tunnel, construction of which started in 2005, demonstrates and exemplifies the massive changes that Turkey and Istanbul are undergoing. Turkey as a retail property market is becoming increasingly connected - a domestic perspective of rapid growth of organised retail and expanding retail chains is combined with a steady increasing concentration in the property investment market, though Turkey counts still as relatively fragmented. The number of international retailers and property investors active in the market is also growing. Similar to the increasing connectivity over the Bosphorus, where a third bridge is currently being constructed, the Turkish market is set to become more connected in the years to come, driven by a continuing economic growth and a further implementation of EU regulation in economic policies and legislation.
Going back to the first assessments of the Turkish market, Multi has been active in the country for 10 years, over which a leading position in the retail property market could be established, but especially 10 years in which the market grew and evolved into a more mature retail and investment destination, with continuing growth potential. This makes the Turkish market very different from markets elsewhere in Europe. Initially assessing prime markets as Istanbul, Ankara, and Izmir, it was hard to imagine that Multi Forum projects would be successfully inaugurated in second and even third tier cities like Trabzon and Denizli.
Turkey as a growth market has a long term set of economic and demographic growth parameters, but is also characterised by a certain level of vulnerability. In other words, in periods of growth, one can easily become too optimistic, while becoming too pessimistic or even panicking during a downturn. Multi entered the market as first major international developer with the right timing. Land prices were reasonable and municipalities highly supportive. Multi could therefore avoid most of the exaggerated optimism persistent in the market in the years afterwards. Being the first and therefore being able to make use of a temporary monopoly in quite some catchment areas gave also the opportunity to get used to the enormous regional and local diversity. Introducing a concept from abroad does not automatically imply a success in Turkey, and copy-pasting a project from Istanbul into Anatolia is no guarantee for success. Though urban growth seems almost endless, location fundamentals come very precise. Respecting the functioning of society, consumer behavior, and understanding local mobility patterns are key. As loyalty to entrepreneurs and retailers is high, especially in Anatolian cities, a new mall is not an automatic trigger for consumers changing their spending patterns. The location has to be right and close to the customer, the mix has to appeal and the place has to earn customers’ trust. While they tend to be curious about new brands and trends, they are highly sensitive to service quality. The value of mall management in keeping the standards of the property and the quality of retailers is therefore indispensable.
Backed by strong design and development knowhow and experienced and creative mall management, Multi became the leading retail property company in Turkey, with 11 Forum shopping malls totaling almost 800,000 sq.m. GLA, of which eight with a total of 565,000 sq.m. are included in the FTF Forum Turkey Fund, the largest retail property investment company in the country with CPP Canadian Pension Program, Morgan Stanley and Multi as key shareholders. Forum Gaziantep, opened in October 2013, is the newest addition. Additional standing assets, like in Ankara, Erzurum and Manisa, will be added to the management portfolio, and opportunities in second and third tier cities like Adana, Diyarbakir, Canakkale, Corum, Edirne and Elazig offer development potential.
Turkey will continue to be among the most dynamic markets in Europe. Competition is growing stronger, with domestic players becoming more sophisticated and new internationals entering the market. For international retailers, success parameters in Turkey differ compared to for instance central Europe. This is partly connected to regulations and partly to existing market patterns which are still fragmented and in which bazaars and traditional retail entrepreneurs have their own dynamics. That makes Turkey a hands-on market. Direct involvement, a good dose of realism and working with the right partners are among the keys to pick the fruits of opportunity. Like the Bosphorus in Istanbul, the market connectivity of Turkey will further increase in the years to come. hk
The author can be reached at firstname.lastname@example.org
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