Turkey Commercial Real Estate Market Overview - H1 2018
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Research Report Turkey Commercial Real Estate Market Overview H1 2018
Economic Outlook
Economic Outlook
Political Agenda
• The ruling Justice and Development Party (AK Party) decided to hold
early presidential and parliamentary elections on 24 June
2018. Following the constitutional change of April 2017, these
were the first elections of the executive presidency system.
• According to the official result of the elections, the current
President, Recep Tayyip Erdoğan, who has ruled the country for
sixteen years, won the first executive presidential election in the first
round, entitling him to hold the reins of power for a new
five-year term. Moreover, Erdoğan's AK Party and the Nationalist
Movement Party (MHP), which constitute the Nation Alliance, retained
their parliamentary majority by acquiring 53.7% of the vote.
• According to President Erdoğan's election pledges during his
campaign, certain political and economic topics are anticipated to be
top of the agenda. The slowdown in the investment climate is expected
to be overcome by lifting the state of emergency, which was extended
for the seventh time in April. The highways, bridges, airports, power
plants and other mega projects are also envisaged to remain on the
new government's schedule.
• A European Union-Turkey summit was held in March in the Bulgarian
port city of Varna to discuss a wide range of topics – such as migration,
visa liberalization and the customs union – affecting EU-Turkey
relations, which have worsened in recent years.
• Political developments remained a key factor in the economic outlook,
and the economy was in ‘wait-and-see’ mode during H1 2018.
Economic Agenda
• The Central Bank of the Republic of Turkey (CBRT) Monetary Policy
Committee Decisions:
* 18 January: Marginal funding rate (9.25%), overnight
borrowing rate (7.25%), one-week repo rate (8%).
* 7 March: Marginal funding rate (9.25%), overnight borrowing
rate® (7.25%), one-week repo rate (8%).
* 25 April: The CBRT kept its main interest rates on hold;
however, it decided to increase its late liquidity window lending
rate from 12.75% to 13.50% on the back of the rising inflation
rate and upside movements in import prices.
* 23 May: The CBRT kept its main interest rates on hold; however,
it decided to increase its late liquidity window lending rate from
13.50% to 16.50% on the back of the rising inflation rate.
2
* 7 June: The CBRT decided to increase its late
liquidity window lending rate from 16.50% to
17.75% due to elevated levels of inflation and
inflation expectations that continue to pose
risks on pricing behaviour.
• The Federal Reserve (Fed) twice raised its benchmark
interest rate by 25 basis points, in March and June,
and the rate reached 2%.
• The European Central Bank (ECB) decided on 8 March
that the interest rate on the main refinancing
operations and the interest rates on the marginal
lending facility and the deposit facility will remain
unchanged. The ECB also confirmed that net asset
purchases, at the current monthly rate of €30 billion,
are intended to run until the end of September 2018.
• Aside from inflation, which has shown a strong
upward tendency, Turkish Lira (TRY) has continued
to show weak prospects in the first half of the year.
• The current account deficit recorded USD 5,885
million in May 2018, bringing the five-month rolling
deficit to USD 27,724 million, indicating an increase of
circa USD 10,250 million compared to the first five
months of 2017.
GDP Growth
The annual GDP growth rate for 2017 was GDP Growth Comparison
announced as 7.4%. Moreover, Turkey’s
growth momentum continued with the 10%
contribution of household consumption (11%)
and gross fixed capital formation (9.7%), and
the GDP growth figure for the first quarter of 5%
2018 was recorded as 7.4%. The Ministry of
Development’s 2018–20 Medium-Term
Programme (MTP) projects that the growth 0%
rate will be realized at 5.5% for 2018, while the 2015 2016 2017 2018* 2019* 2020*
IMF and World Bank projections indicate
growth rates at 4.4% and 4.5% respectively. G7 Economies
Euro Area
Emerging Market And Developing Economies
Emerging And Developing Europe
Turkey
*Forecast
Source: IMF, World Economic Outlook Report, April 2018
3
FX Rates
The Turkish Lira (TRY) hit a record low against USD and EUR in June 2018, mainly driven by the
Fed’s tightening monetary policy, the widening of the current account deficit and political uncertainty
provoked by the early election.
FX Rates (Monthly Average)
EUR/TRY
5.60
5.20
4.80
4.40
USD/TRY
4.00
3.60
3.20
2.80
May -18
Mar -18
Jun -18
Apr -18
Feb -18
Jan-18
May-17
Nov-17
Jan-17
Dec-17
Mar-17
Sep-16
Sep-17
Nov-16
Feb-17
Apr-17
Jun-17
Aug-16
Aug-17
Dec-16
Oct-16
Oct-17
Jul-16
Jul-17
EUR/TRY USD/TRY
Source: CBRT
Inflation
CPI has shown a considerable decrease, falling to 10.9% during Q1 2018; in November 2017 it had
reached the highest level (13%) since 2003. However, starting in April, CPI showed a considerable
increase and reached 15.4% as of June 2018, mainly stemming from a drastic rise in oil prices and FX
rates.
CPI & PPI
23.7% PPI (y-o-y)
25%
20%
15%
10%
15.4% CPI (y-o-y)
5%
0%
Jun-16
Feb-17
Jun-17
Jun-18
Aug-16
Aug-17
Dec-16
Dec-17
Oct-16
Oct-17
Apr-17
Feb-18
Apr-18
CPI (y-o-y) PPI (y-o-y)
Source: TurkStat
4
Consumer Confidence
The consumer confidence index indicates the consumer’s expectations for the overall economic outlook,
household finances and unemployment rates for the next twelve months. The index was on the rise in
January 2018, and reached the level of 72. However, it has shown a slight decrease in Q2 2018, due mainly
to increasing political and economic concerns.
Consumer Confidence Index
90
80
70
60
50
Jan-18
May-18
Nov-17
Nov-16
May-17
Mar-18
Mar-17
Sep-17
Sep-16
Feb-17
Oct-17
Aug-17
Aug-16
Jan-17
Jun-18
Jun-17
Dec-17
Dec-16
Apr-17
Oct-16
Apr-18
Jul-17
Jul-16
Feb-18
Source: TurkStat
Foreign Direct Investment
Based on the World Investment Report 2017, prepared by the United Nations Conference on Trade and
Development (UNCTAD), Turkey accounted for more than a quarter of total inflows to the sub-region –
West Asia – during 2007-2015. According to the report, political instability has had a negative impact on
the Turkish economy and on FDI since July 2016. The FDI inflow between January and April 2018
showed a significant decrease (19.3%) compared to the same period in 2017.
FDI Inflows (Billion USD)
25,000
20,000
15,000
10,000
5,000
0
2007-2000
2011
2008
2009
2010
2012
2013
2014
2015
2016
2017
(Jan. - Apr.)
2018
(Jan. - Apr.)
2017
Average
Source: Ministry of Economy
5
Investment Market
The investment market performed below average in the In terms of the residential market, there are some
first half of 2018 due to political and economic uncertainty, prominent issues determining the preferences of foreign
mainly stemming from early presidential and investors. Above all, security and education come to the
parliamentary elections as well as TRY’s weak prospects. forefront in European markets. For some foreign investors,
Until the end of June, most investors were waiting for the however, a higher Euro-based income and return rate –
outcome of the elections, delaying their investment mainly in Germany – is particularly attractive, along with
decisions. Compared to the first half of 2017, the price gaining the right to freedom of movement – Portugal
levels of various asset classes – such as shopping centres, notably requires fewer prerequisites – in the Euro Zone.
offices, industrial and logistics facilities and hotels, as well
as land – have shown a slight decrease as of H1 2018, Foreign investors’ interest in the Turkish real estate market
although there has been an increase in the rate of return has shown a significant decrease over the last three years.
for such properties, from 7-8% to 7.75-8.5%. What’s more, there is not a large number of domestic
investors with a strong appetite for real estate investment
As for the retail market, some European markets are either. That said, the price level is envisaged to decrease
offering a satisfactory yield level (4–5%) to shopping further thanks to some large companies facing financial
centre investors. Aside from such competitor markets, constraints and needing to sell properties in their
there are some key issues that are inducing investors to portfolios to meet their short-term capital requirements.
Considering the lack of foreign capital and very expensive
remain cautious, such as the pressure of high interest
debt financing, the investment market has no solution in
rates – mainly driven by the increasing inflation rate,
the near future other than to reduce the price level and
which surpassed 15% as of June – as well as an oversupply increase the rate of return in order to attract foreign
risk with pipeline retail developments. investors watching for an opportunity in the market.
The office market has continued to be tenant-friendly on
the back of the shrinkage in demand in the Istanbul office
market, mainly stemming from a decrease in foreign
companies’ interest in Turkey. That demand shrinkage has
also triggered a considerable increase in vacancy rates
over the last few years. In addition to such domestic issues,
global competition has an adverse effect on the office
market in terms of global attractiveness. Along with the
other countries in the region, the Istanbul office market has
to compete with advanced European markets that are
offering global office investors low credit risks and
promising Euro-based returns.
6
Retail Market 7
Retail Market
Market Notes
• The positive outlook in the market – mainly stemming from a stable trend
in economic indicators during the first quarter of the year – has given way
to a wait-and-see tendency due to the sharp decline in the value of TRY
and the early presidential and parliamentary elections held on 24 June.
Some shopping centres that previously planned to open in the first half of
the year postponed their opening dates to H2 2018 or 2019.
• Demands such as TRY-based rent contracts, exchange rate fixing and
turnover rent remained at the top of the agenda.
• Shopping centres that opened in secondary cities without considerable
shopping centre supply invigorated the retail market in these cities. Given
the size of the population of the cities, these shopping centres attained a
considerable level of visitor numbers, with high domestic interest.
• Parking areas in shopping centres will be increased within the scope of
the newly published ‘Carpark Regulation'. Renovation projects will lead
to amendments to licences. In this regard, the necessity of expanding
parking areas in existing shopping centres will bring additional costs to
investors.
• Retailers have not had an appetite for opening new stores. Even
brands that have pursued aggressive new store-building strategies in
recent years have shown a tendency towards protecting their current
positions, undergoing an optimization process based on in-store
efficiency and turnover levels. However, certain retailers in a strong
financial position have looked at these conditions as growth
opportunities and have opened new stores with lower rent levels
compared to the past few years.
Sector Notes
• Leasing processes have slowed down in the F&B sector, whose rent
levels and decoration costs are considered higher than those of other
sectors. F&B’s area share, which has reached almost 40% in shopping
centres, should be determined by taking the location, concept and
socioeconomic class of the relevant shopping centre into consideration.
• Electronics markets, which have gone through the optimization process
regarding product portfolio and leased area, and have closed inefficient
stores over the past two years, have shown a tendency towards opening
new stores.
• The growth momentum of cosmetics/personal care and home products
brands has slowed down compared to recent years. However, in H1 2018,
these brands have retained the performance level achieved over the last
few years.
8Retail Supply
Shopping Centre Development: GLA & Unit
Active Under Construction* Total
Istanbul Unit 118 18 136
GLA (sq m) 4,627,633 676,638 5,304,271
Ankara Unit 39 9 48
GLA (sq m) 1,572,629 322,500 1,895,129
Rest of Unit 254 16 270
Turkey GLA (sq m) 6,420,870 597,280 7,018,150
Total Unit 411 43 454
GLA (sq m) 12,621,132 1,596,418 14,217,550
*To be completed by end-2021
Source: JLL
Rental Outlook
Prime Rent (EUR/sq m/month)
90 81 75 70
90 81 75 70
Q1 2014 → Q2 2016 Q3 2016 Q4 2016 Q1 2017 → Q2 2018
Source: JLL
Retail Density
Retail Density (sq m per 1,000 inhabitants)
313 sq m 294 sq m 158 sq m
Q2 2018 Q2 2018 Q2 2018
Istanbul Ankara Turkey
The Cities with the highest retail density growth (y-o-y)
286 sq m 89 sq m
Q2 2017 Q2 2017
313 sq m 180 sq m
Q2 2018 Q2 2018
Istanbul Nevşehir
Source: JLL 9H2 2018 Outlook
• Following the removal of political uncertainty, the course of FX rates and
the consumer's propensity to save will shape the retail market,
particularly ready wear and leather and shoe retailers.
• A new era will begin in the retail market, with specialized shopping
centres to be opened in the second half of 2018. The trend, starting with
furniture centres, might continue with centres mainly focusing on children
and young people as well as entertainment units.
• Considering the lower rent income, some investors have a cautious
approach to arts and sports schools in their shopping centres. However,
the number of those units is expected to increase, mainly to generate a
significant footfall in those shopping centres.
• The retail market will be diversified by an increase in retail areas in
train/bus terminals, sports stadiums, universities and A-class office
buildings.
• Retailers are advised to build a retail strategy for expanding their
businesses overseas, to improve cash flow and raise profit margins by
getting foreign exchange turnover.
• Defining the discount period clearly may also increase the consumer’s
interest in seasonal products and increase retailers’ turnover levels.
H2 2018 Outlook
Retail Market - Shopping Centres H2 2018 Outlook
Retailer Demand
Supply
Prime Rent
Retail Density
Source: JLL
10Office Market 11
Market Notes
Office Market
Istanbul Office Sub-Markets
SARIYER
ŞİŞLİ
SULTANGAZİ Seyrantepe
rant pe Maslak BEYKOZ
KUZEY MAR. OTO YOLU
TEM
K ıthane
Ka Kavacık
ESENLER G.O.P Levent
Be ikta
Ba ak ehir TEM
ÇEKMEKÖY
Zincirlikuyu
B.PAŞA
Basın Express i li Mecidiyeköy
KÜÇÜKÇEKMECE
Beyo lu Ümraniye
Üsküdar
E5
AVCILAR Ba cılar
GÜNGÖREN
Altunizade
FATİH
E5 SANCAKTEPE
BAHÇELİEVLER
Ata ehir
NBURNU
ZEYTİNBURNU Göztepe
Airport Area
BAKIRKÖY KADIKÖY Kozyata ı
SULTANBEYLİ
Maltepe
Kartal
Pendik
CBD
1
Non-CBD Europe ADALAR
Asia Tuzla- Kurtköy
Kaynak: JLL
Source: JLL
• Transactions in the office market in the first half of 2018 were not the
result of new companies entering the country nor of growth in the
market. Rather, in addition to cutting down operations and lowering
the number of employees, companies are demanding an increase in
productivity (sq m per person) and a decrease in rent value, which has
caused mobility in the market.
• TRY-based rent contracts are the most prominent change in the
Istanbul office market. Landlords have shown a positive attitude towards
this incentive, taking into account the vacancy rate of above 20% even in
the CBD (Central Business District). TRY-based rent contracts have
reduced rent levels in Grade-A offices and increased the vacancy rate in
Grade-B office buildings.
• Demand for the Levent sub-region in CBD, which has been favoured by
institutional tenants for reasons of prestige over the past few years, has
shown a decrease in H1 2018. Companies wishing to reduce their office
rent costs started seeking out new office buildings at lower rent levels in
sub-regions of Non-CBD Europe, such as Kağıthane and Ayazağa.
• Cost-effective workplace solutions had a significant impact on office
design. Some corporate office tenants have taken a decision to reduce
the space assigned to social facilities in their workplaces to a minimum
level in order to lower expenses.
12Prime Rent (USD/sq m/month)
45 43 40 37 30
Q1 2013 → Q1 2016 Q2 2016 → Q3 2016 Q4 2016 Q1 2017 → Q3 2017 Q4 2017 → Q2 2018
Source: JLL
Vacancy
Vacancy Rate (%), CBD
15.2% 15.2%
21.9% 20.9%
Q2 2015 Q2 2016 Q2 2017 Q2 2018
Source: JLL
13Take - Up
Take-up Volume (sq m)
70,000
60,000
50,000 Along with Levent in the CBD, Ataşehir and
40,000 Kozyatağı on the Asian Side have become
30,000 prominent in terms of take-up transactions in
H1 2018.
20,000
10,000
0
CBD Non CBD Asia Total
Europe
H1 2017 H1 2018
Source: JLL
Major Leasing Transactions, H1 2018
Occupier Location GLA (sq m)
Tekfen Engineering Kağıthane 4,400
3M Ataşehir 4,100
Amazon Levent 2,700
White & Case Levent 2,500
Medina Turgul Levent 2,500
ACT Airlines Kurtköy 2,400
Ewe Energy Ümraniye 1,700
Getir Etiler 1,600
Kowork Kozyatağı 1,600
KFC Ataşehir 1,400
Pernod Ricard Maslak 1,300
Akfel Energy Ümraniye 1,300
Credit Suisse Levent 1,200
Eurozen Mecidiyeköy 1,200
Huawei Maslak 1,200
Dijital İletişim Maslak 1,000
Softtech Levent 1,000
Transactions with GLA higher than 1,000 sq m are included in the list.
Source: JLL
14Istanbul Office Property Clock, H1 2018
Kozyatağı - Içerenköy Küçükyalı - Maltape
Etiler - Levent
Şişli- Z.kuyu- Beşiktaş
Kavacık- Kartal- Kağıthane
Rental Growth Rents Ümraniye
Slowing Falling Maslak
Rental Growth Rents
Accelerating Bottoming Out
Source: JLL
Existing Supply and Development Market
Existing and Pipeline Grade-A Office Supply
Active Under Construction* Total
CBD Unit 92 2 94
Europe
GLA (sq m) 1,972,862 124,400 2,097,262
Non-CBD Unit 54 3 57
GLA (sq m) 1,530,435 255,000 1,785,435
Asia Unit 108 13 121
GLA (sq m) 1,984,595 1,315,000 3,299,595 *To be completed
by end-2020
Total Unit 254 18 272
GLA (sq m) 5,487,892 1,694,400 7,182,292 Source: JLL, Q2 2018
In 2018, existing Grade-A office stock in Istanbul showed an increase of 482,500 sq m (9.6%)
compared to year-end 2017.
1915H2 2018 Outlook
• The completion momentum of pipeline projects is envisaged to decrease in the second
half of 2018. However, the office market is expected to continue to be tenant-friendly.
Ataşehir is expected to continue to be prominent in terms of take-up transactions.
• It is expected that rents that have fallen over the last three years will gradually recover
by 2021.
• Serviced offices, which offer corporate solutions to small-scale companies as well as large
corporates that need small satellite offices, are envisaged to maintain their prominence in
the second half of the year. Landlords’ positive attitude towards serviced offices stems from
their contribution to footfall and to a lower rate of vacancy, despite turnover-based rent
contracts.
H2 2018 Outlook
Office Market H2 2018 Outlook
Take-up
Vacancy Rates
Supply
Prime Rent
Source: JLL
16Logistic Market 17
Logistic Market
Overview
The primary logistics market is located in Turkey’s Marmara region, which
includes the Istanbul and Kocaeli provinces. Hadımköy and Esenyurt on the
European Side, Tuzla on the Asian Side in Istanbul, and Gebze, Çayırova and
Dilovası in Kocaeli remained the primary logistics markets of the Marmara region.
Hadımköy
Çatalca
Silivri İkitelli
Kıraç
Esenyurt
İSTANBUL Sancaktepe
Botaş Haramidere Dudullu
Samandıra
Haydarpaşa
Ambarlı Zeyport Tepeören
Pendik Tuzla
Orhanlı Balçık Pelitli
Şekerpınar
KOCAELİ
Tuzla Çayırova SA
Gebze Dilovası İzmit
Tepecik
Yarımca Kartepe
Yalova
Derince İzmit
Aslanbey
Altınova
Çifliköy
July 15 Martyrs Bridge 3. Airport Northern Marmara Highway Marmaray Primary Markets
FSM Bridge Atatürk Airport E5 Highway Eurasia Tunnel Secondary Markets
Osmangazi Bridge Sabiha Gökçen Airport TEM Highway Ports Tertiary Markets
Yavuz Sultan Selim Bridge Roads Under Construction İstanbul-İzmir Highway Sub-Markets
Source: JLL
Market Notes
• The logistics market has experienced a half-year of shrinkage in terms
of leasing demand, caused by economic and political uncertainty.
Realized transactions have mainly stemmed from cost-saving goal and
operational change rather than from growth-oriented investments.
• In the first half of 2018, sales processes became more prominent than
leasing transactions.
18• Beylikdüzü, İkitelli, Dudullu and Samandıra, which were previously regarded as the outskirts of the city,
started to be considered as ‘city centre’ on the back of increased housing density. In addition to Sakarya
and Düzce on the east side, Çatalca, Silivri and Çerkezköy on the west side have shown development in
terms of industry and logistics.
• TRY-based leasing transactions in the logistics and industrial market, which started to be seen in the
second half of 2017, continued to be more prominent in H1 2018. The rent level, which remained stable
in TRY, recorded a considerable decline due to a fall in the value of TRY against USD.
Adapazarı
Prime Rent (USD/sq m/month)
rifiye
Akyazı
6.5 7 6.5 6.25
Q1 2010 Q2 2010 → Q4 2016 Q1 2017 → Q3 2017 Q4 2017 → Q2 2018
Source: JLL, Q2 2018
Take-Up
Take-Up (sq m)
During H1 2018, 153,000 sq m of logistics leasing
1,000,000 transactions were realized, a considerable decrease
(66%) compared to the same period in 2017.
800,000
600,000
400,000
200,000
0
2014 2015 2016 2017 H1 2018
Source: JLL, Q2 2018
19During H1 2018, the most active industries in terms of leasing transactions were 3PL logistics compa-
nies with 57%, automotive with 14%, and retail companies with 12% GLA share. Manufacturing,
plastics and textiles were the other sectors that had a share of leasing transactions.
Major Leasing Transactions (sq m)
Occupier Sector City District Leased Area (sq m)
Mars Logistics Logistics Istanbul Tuzla 27,000
Tatko Tire Automotive Istanbul Arnavutköy 20,000
Yurtiçi Logistics Logistics Istanbul Arnavutköy 20,000
Bilin Logistics Logistics Kocaeli Gebze 20,000
LCW Retail Istanbul Esenyurt 12,450
Cantaş Cooling Manufacturing Kocaeli Gebze 8,350
DHL Logistics Istanbul Bağcılar 6,500
MFK Plastic Plastic Istanbul Tuzla 6,500
BTM Logistics Istanbul Küçükçekmece 6,000
Lufian Retail Istanbul Esenyurt 5,000
Source: JLL, Q2 2018
20Supply
Major Logistics Sub-Markets in Istanbul-Kocaeli
4,000,000
3,000,000
2,000,000
1,000,000
0
Europe Asia
Istanbul Kocaeli
Existing Stock Under Construction* Planned
*To be completed by end-2020
Source: JLL, Q2 2018
Regional Distribution of Vacancy
6%
Istanbul Europe
3%
87% Istanbul Asia
4%
Kocaeli
Occupied Area
Source: JLL, Q2 2018
21H2 2018 Outlook
Considering the negative impact of the lack of
foreign investors in recent years, the logistics
market is envisaged to remain stable unless the
market cannot attract foreign investors.
Most large-scale companies have completed the
consolidation process that has come to the fore
over the past few years. In this regard, it is not
expected that the consolidation trend will remain
on the market’s agenda in the near future.
Domestic e-commerce firms have continued
to grow in H1 2018. There will be a revival in the
logistics market if global companies such as
Amazon and Alibaba, which entered Turkey in
recent years, make new logistics investments.
H2 2018 Outlook
Logistics Market H2 2018 Outlook
Demand
Supply
Land Values
Prime Rent
Take-up Transactions
Vacancy (Grade A Supply)
Source: JLL
22Hotel Market 23
Market Notes
Hotel Market
The tourism and hotel market in Turkey has shown great resilience to the crisis of
the past two years. In the first half of the year, the market recovered almost to
the level of 2015 figures after seeing a sharp decline in performance measures in
2016 and 2017. The economic crisis is felt strongly within Turkish households, with
increasing inflation rates, diminishing purchasing power and the devaluation of
TRY. This local negativity is, however, reflected favourably in terms of foreign
visitors, providing them with a strong currency to spend on vacationing and
shopping in Turkey.
The major foreign markets that supported the rejuvenation of demand have been
identified as the Russian Federation, Germany, Iran, Georgia and Bulgaria.
Additionally, it’s been observed that China holds an important stake within the
visitors mix, with a 96% increase compared to the previous year due to the
China-Turkey Tourism Year announced by the Chinese and Turkish governments
at the beginning of 2018.
Hotel trading performances were augmented by the rejuvenated tourist demand
compared to the previous two years. As a result, occupancy levels have surpassed
the 2015 figures and average daily rates have increased slightly across the market in
the first half.
Tourism
The number of international visitors increased to 11.46 million in YTD May 2018, a
31% increase compared to 2017.
Number of International Visitors to Turkey
40,000
Foreign Visitor Arrivals
35,000
30,000
25,000
20,000
(000s)
15,000
10,000
5,000
0
2011
2015
2017
2017
2018
2012
2013
2014
2016
YTD May
YTD May
Source: Ministry of Culture and Tourism
24Demand
Airport arrivals have increased consistently over the past decade. In 2018 YTD May, total
passenger arrivals in Istanbul via Atatürk International Airport and Sabiha Gökçen
Airport increased by 14% compared to the same period in 2017, with the total
passenger count being c. 40.4 million.
Passenger Arrivals: Istanbul Atatürk and Sabiha Gökçen Airports
80,000
Passenger (000s)
60,000
40,000
20,000
0
2011
2017
YTD May
YTD May
2012
2013
2014
2015
2016
2017
2018
Atatürk Sabiha Gökçen
Source: General Directorate of State Airports Authority
Performance
In 2018 YTD May, the occupancy levels increased by 17% to 65%, ADR increased by 5.3% to
EUR 62, which resulted in a 23% increase on the RevPAR to EUR 40.25 compared to the same
period in 2017.
Supply
Istanbul has 548 graded hotels, with over 54,600 rooms, which are traditionally dominated
by the upscale and upper-upscale hotel segments. Five-star hotels hold a market share in
excess of 47%.
The rapid growth in hotel supply in Istanbul has added further rooms; if all pipeline and hotel
projects are completed, the total room supply in Istanbul is expected to increase by 7–8%
by the end of 2019.
25Investment
Turkey produced some quality stock of sellable properties and continues to add to this each year. However,
the considerable volatility in the country and risk factors for potential investment firms do not pass the necessary
thresholds. Contrary to that, the yield level of Turkish bonds reached a high level, offering an appealing alternative
investment for foreigners in the first half. There are a few highly opportunistic firms that continue to believe in and
watch the Turkish market but which have not yet concluded any notable investments.
H2 2018 Outlook
Hotel key performance indicators are expected to excel during 2018 compared to
previous years. However, the market will take some time to come back to
competitor market thresholds. In the absence of geopolitical turmoil and terror
incidents, it is likely to remain resilient in the long run.
Quick Facts
d
31 % 11.4 million
International Arrivals
14 % 40.4 million
Passengers at IST & SAW
17 % %65
Occupancy
53 % EUR 62
Average Rate
23 % EUR 40.2
RevPAR
% change over 2017 YTD May – 2018 YTD May
2627
Notes ................................................................................................................................................................. ................................................................................................................................................................. ................................................................................................................................................................. ................................................................................................................................................................. ................................................................................................................................................................. ................................................................................................................................................................. ................................................................................................................................................................. ................................................................................................................................................................. ................................................................................................................................................................. ................................................................................................................................................................. ................................................................................................................................................................. ................................................................................................................................................................. ................................................................................................................................................................. ................................................................................................................................................................. ................................................................................................................................................................. ................................................................................................................................................................. ................................................................................................................................................................. ................................................................................................................................................................. ................................................................................................................................................................. ................................................................................................................................................................. ................................................................................................................................................................. ................................................................................................................................................................. ................................................................................................................................................................. ................................................................................................................................................................. ................................................................................................................................................................. ................................................................................................................................................................. ................................................................................................................................................................. .................................................................................................................................................................
JLL Turkey
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No: 3/5 34398 Maslak - İstanbul, Türkiye
Tel: +90 (212) 350 0800
Faks: +90 (212) 350 0806
Avi Alkaş, MRICS, CSM, CLS, CRX Dora Şahintürk Tarkan Ander
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Authors
Yavuz Can Parlar Serhat Çetin
Head of Research Senior Analyst
Marketing & Research Marketing & Research
+90 (212) 350 0808 +90 (212) 350 0816
yavuz.parlar@eu.jll.com serhat.cetin@eu.jll.com
www.jll.com.tr
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