Shopping center asset and property management require a proactive approach. While overall demand dynamics look positive, they can only be maintained with a hands-on, watchful approach. This means deploying the same skills one would apply anywhere in the world: a strong analytical approach, long-term investment strategy, high level of professionalism, and market knowledge. Managing and executing high-level marketing campaigns and building a constructive relationship with neighboring retailers and the community are also necessary. Applying this proactive approach has resulted in a very successful investment and development strategy over the past 10 years in Western Europe, and also emerging and developing markets such as CEE and Turkey.
When we started to invest in Turkey in 2005, our strategy was to become a long-term investor. We were one of the first global funds to enter the market, investing in the Carrefour malls portfolio. At the same time, we have invested in CEFIC, a leader in Turkish property and leasing management activities since 1994, in a joint venture with Simon property and Ivanhoe. A key factor of our success in Turkey and other markets lies in providing high standards and integrating all the different stages of asset, property, leasing and development management; while creating a high level of efficiency and, above all, value and results. You can’t just be a foreign investor, you have to consider yourself an active local player in the country.
When a number of our competitors were looking at downsizing and outsourcing to exit from Turkey during the last three years, we positioned our group as a full service Real Estate Investment Manager (REIM) with ambitious development strategy for the next 10 years. At Ærium, we are proud to have achieved, despite of the financial and Eurozone crisis, one of the best track records and references in investment management in Turkey for our equity partners and shareholders.
@Aerium Turkey
Ærium invests mainly in office and retail properties. Is there a reason behind this decision? Ærium has extensive in-depth knowledge and experience in investment, development, and management of office and retail properties in pan-European emerging markets. Our objective is to maximize the value for our investors with the proven expertise and management skills in office and retail properties.
Moreover, our upcoming fund will have a pan-European scope and the strategy will cover a variety of investment solutions across property types: office, retail, hotel, and logistic platforms. This fund will leverage its local execution capabilities using our teams on the ground in different countries to create value through active asset management, repositioning, refurbishing or redeveloping.
How would you characterize the investment environment in Turkey at the moment? What are the challenges and opportunities it presents for potential investors? From a macro-economic perspective, Turkey has strong fundamentals and a very dynamic outlook. The country is set to become one of the top 10 economies in the world by 2023. During the last 10 years, Turkey’s government has taken a proactive and strict stance on its budget deficit. From an unwieldy 11.9% of GDP in 2001, Turkey’s budget deficit has been reduced to a healthy 1.2% in 2013, and is expected to stay in similar territory over the next five years. Bearing in mind that the Maastricht criterion is 3% of GDP, Turkey is way ahead of most of the European countries.
There is a strong sense of a growing internationalization here, which is reflected in retail expansion, real estate growth, and a modern brand of professionalism. At the same time, the country’s ever-increasing reputation as a holiday destination is homogenizing standards in the hospitality and retail trades.
While there are factors such as the recent political issues, which will affect the country’s short-term economic performance, Turkey’s potential remains as strong as ever. The level of interest in real investment in Turkey remains undiminished for local and international investors, pointing to positive long-term growth for this diverse economy.
Leading economists and CEOs are optimistic and do not expect any major recession or financial crisis in Turkey for the coming years. Many international investors such as Blackstone, GIC, ECE, Pradera, Corio, and Amstar are renewing their faith in the country’s future and potential for growth.
Ærium believes strongly in this long-term potential and will continue to invest in this great country.
@Aerium Turkey
In your opinion, what is the outlook for the real estate market in Turkey in the near future? With an unprecedented 3.7 million m² of shopping center space under construction, Turkey is currently Europe’s most dynamic retail market, as well as one of the world’s most engaging real estate landscapes at the moment.
Turkey was Europe’s most active shopping center development market in 2012 and 2013, and is set to take the crown again, outrunning the markets of Russia, Spain, Ukraine, and Poland. The total size of the retail sector (organized and unorganized) in Turkey reached US $320 bln (€276 bln) in 2013 and is expected to grow annually by 10% between 2013 and 2017. The Turkish shopping center sector represents over 9.4 million m² GLA in 2014, with 329 shopping centers and 1.6 billion visitors per year.
In terms of retail and franchise opportunities, greater per capita income, and a demand for lifestyle products, have positively impacted all key segments while e-commerce is also in a stage of rapid expansion.
It is clear that being a part of this success story requires some careful groundwork. But a number of case studies in recent years, show that foreign investors in retail and real estate sectors can enjoy success in Turkey–if they pursue the right strategy.
