Consolidation after the end of the gold rush fever

Dr. Christina Weiss, Deputy Managing Director at avm mfi partners, provides her unique insight into Turkey's retail situation in this special report. mfi management für immobilien AG and avm partners established a joint venture in October 2007 to set standards together in the Turkish shopping center market. Under the company name avm mfi partners, 6 to 10 shopping centers as well as 4 refurbishments are to be undertaken in the next 10 years. The investment locations will be focused on Istanbul and Ankara as well as the other major Turkish cities.


Dr. Christina Weiss, Deputy Managing Director, avm mfi partners

Dr. Christina Weiss has been employed at mfi AG since 1995 and has filled many different positions, such as Project Manager, Authorized Officer, Area Manager for Controlling and Organization; since January 2004 she has been a member of the Executive Board, responsible for Controlling and the Global Expansion. In 2008 she was appointed Deputy Managing Director at avm mfi partners.

The global economic crisis did not leave Turkey unscathed. The effects can be clearly seen in commerce as well as in the development and leasing of shopping centers. The government has successfully stabilized the economy with many sensible policies, such as the cut in the consumption tax rate for cars and household appliances, the decrease in value added tax in individual branches as well as the reduction in the standard tax rate from 18% to 8%. Nevertheless, the tenants in a whole series of shopping centers are rebelling against the owners and operators. The reason is the uncontrolled center growth in recent years - at the same time the quality of the project management, the leasing and the center management was neglected in favor of quantity. As a result of the crisis, these skills are now being pushed into the limelight.

Before the crisis Turkey was one of the favorite countries of shopping center developers and investors. In the boom phase the tenants were more or less queuing up for space in centers, also because there were virtually no established retail locations in the cities. In such a supplier's market the shopping center operators were able to practically pick their tenants. That sometimes resulted in absurd situations: Shopping centers were developed at poor locations and the space was then let at non sustainable rents. Retailers who leased space at these locations are now under pressure. Pressure which is being increased further by the crisis.

To professional shopping center service providers like avm mfi partners this crisis offers opportunities: The leasing and management skills of an experienced provider are now in demand to maintain and enhance values. The owners and operators of such shopping centers, who are often one and the same, now realize that it is this very knowledge that is valuable. In the 212 Power Outlet and the Palladium Shopping Center (both in Istanbul) avm mfi partners was involved in the projects at an early stage and could therefore successfully draw up a leasing and management concept to suit the project in question. Instead of short term profits, sustainable rents and professional

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