REDEVCO is an independent international real estate company, managing and developing one of the largest retail portfolios in Europe, currently valued at 7.3 billion. The portfolio comprises over 750 properties in top locations throughout 18 countries. The company also operates in Asia, where it is building a retail portfolio in the larger metropolitan areas, with a focus on China. It is REDEVCO's ambition to develop Asia as its second home market. REDEVCO is owned by Cofra Holding AG, a Swiss-based holding company. With Turkey on the road to recovery, Real Estate Publishers asked Patrick van Dooyeweert, Managing Director, REDEVCO Turkey, his thoughts on the Turkish real estate markets.
By Bernd Struben, Senior Editor, REP
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Patrick van Dooyeweert, Managing Director REDEVCO Turkey
Q: Turkey witnessed an unexpectedly strong GDP growth surge in the first half of 2010. Has this had any affect on your investment plans?
It's had a very positive affect on our investment plans. The positive GDP growth in Turkey is only strengthening our idea that Turkey is one of the places where we, as a company, should invest our money. The typical Turkish cycle takes 4-5 years, and it's important to have a long term perspective, and we have that, knowing that after every cycle there's a downturn and after every downturn there's a cycle again. As far as I can tell the current trend in Turkey is positive.
Q: Is Turkey's rising inflation rate a concern?
That's rather complicated; sometimes you hear economists say that inflation is a major driver for real estate investment, which is true. But the question is what's the inflation doing with the rest of the economy? Especially in Turkey, where we don't have a real institutional real estate investment market, inflation together with exchange rate volatility has always been a reason to invest in real estate. It didn't make sense to bring it to the bank, and real estate tends not to be highly affected by inflation. However, in the current market in Turkey, most retail lease contracts are made in dollars or euros, which in a lira economy gives you very different dynamics. I can't say inflation is good for the real estate market but it's also not too negative for us. Deflation would be worse.
Q: How do you view the lending situation in regards to Turkish real estate will progress in the coming year?
REDEVCO does everything with our equity, so the lending situation doesn't have a direct affect on us. Most Turkish banks are sound and are still giving loans as far as I know. But the big foreign banks are not so active, so loans of 300 million for just one project, that time seems to be history for now.
Q: Which major issues affect your long term investment strategy in Turkey?
The soundness of the system is crucial. Recent tax reforms have been good. The legal system in Turkey is being adjusted to international standards, and as it becomes more transparent that's obviously positive. Jones Lang LaSalle's recent transparency report showed that Turkey shifted upwards in the global ranking of transparent real estate markets. Those are some of the major factors
It's had a very positive affect on our investment plans. The positive GDP growth in Turkey is only strengthening our idea that Turkey is one of the places where we, as a company, should invest our money. The typical Turkish cycle takes 4-5 years, and it's important to have a long term perspective, and we have that, knowing that after every cycle there's a downturn and after every downturn there's a cycle again. As far as I can tell the current trend in Turkey is positive.
Q: Is Turkey's rising inflation rate a concern?
That's rather complicated; sometimes you hear economists say that inflation is a major driver for real estate investment, which is true. But the question is what's the inflation doing with the rest of the economy? Especially in Turkey, where we don't have a real institutional real estate investment market, inflation together with exchange rate volatility has always been a reason to invest in real estate. It didn't make sense to bring it to the bank, and real estate tends not to be highly affected by inflation. However, in the current market in Turkey, most retail lease contracts are made in dollars or euros, which in a lira economy gives you very different dynamics. I can't say inflation is good for the real estate market but it's also not too negative for us. Deflation would be worse.
Q: How do you view the lending situation in regards to Turkish real estate will progress in the coming year?
REDEVCO does everything with our equity, so the lending situation doesn't have a direct affect on us. Most Turkish banks are sound and are still giving loans as far as I know. But the big foreign banks are not so active, so loans of 300 million for just one project, that time seems to be history for now.
Q: Which major issues affect your long term investment strategy in Turkey?
The soundness of the system is crucial. Recent tax reforms have been good. The legal system in Turkey is being adjusted to international standards, and as it becomes more transparent that's obviously positive. Jones Lang LaSalle's recent transparency report showed that Turkey shifted upwards in the global ranking of transparent real estate markets. Those are some of the major factors
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