Last month’s bidding for General Directorate of Highways (KGM) and İstanbul Transportation Authority (İETT) plots are just one example of renewed energy in real estate. The Zorlu Group bought the KGM property for $800 million, while the Dubai-based Sama Dubai company, owned by Dubai Sheik Maktoum, bought the Levent İETT garage property for $705 million. In the wake of these significant purchases, there is curiosity on the market as to whether or not this type of sale will continue.

Cansel Turgut Yazıcı, general manager of the Real Estate Evaluation Department at Turkey Industrial Development Bank (TSKB), says that the most important reason for these recent developments in Turkey’s real estate market is the general state of economic stability. Yazıcı said: “At this moment, the future of real estate in Turkey looks very bright. These sorts of open bidding sales should continue. Economic development and stability are pulling real estate investors into Turkey. Good years lie ahead for our country’s real estate market, and those who are aware of this are on the right track. … If we compare the general situation to a train, those who are buying property are getting on board the train and going, but those who don’t will be very sorry in the future that they missed the train.”

Foreigners investing in İstanbul real estate are generally purchasing shopping centers, offices, and luxurious housing. At the forefront of foreign companies investing in Turkish real estate are British, German and Arab companies. Yazıcı also noted that the relatively cheap price of Turkish real estate in comparison with other developing countries is another reason for its favored status among foreign investors. She said: “The Spanish are looking at property near city centers in the south. Arabs tend to look for places to build apartment buildings and shopping centers. European investors are interested in shopping centers, apartments and office space. With the current economic situation continuing in a positive manner, we will see foreign property purchases continue in Turkey for another 10 years.”

She underlined the advantages inherent in having foreign investors buying into Turkish real estate, noting that foreigners also bring an increase in employment opportunities with them when they buy property. “Foreign companies do not work on their own these days; when they come to Turkey they work with Turkish companies on their investments. They work out contracts with Turkish companies during their investments. Or you might have a situation where the company is itself Turkish, but the financial backing is from abroad. Foreigners are busy building shopping centers and office buildings. At some of these office buildings, there might be jobs opened for between 2,000 and 2,500 people, and all of the employees will be Turkish.”

Yazıcı also touched on the fact that since 2001 there has been a 100 percent increase in the number of companies investing in the Turkish real estate market. “In 2003 our company was working with two foreign companies. This has now gone up to 25 companies. In the past six months the number of foreign companies on the Turkish real estate market has continued to increase. These are investors who are putting very large amounts of money into the market. For example, there are investments made by foreign firms that reach the level of several billion dollars.”

Talking about the shopping centers and luxury housing projects currently being invested in by foreign companies, Yazıcı noted that over the next few years these large-scale investments will start to spread outside of İstanbul. Within this framework, Yazıcı asserted that very soon there will be foreign-backed shopping center projects under way in Eskişehir, Denizli, Kayseri, Mersin, Diyarbakır, Gaziantep, Samsun, Adana and Trabzon. She said: “Investors interested in building housing are looking into Kuşadası, Didim, and Fethiye -- all tourist regions. Then there is also the office building market. Foreign investors are looking at İstanbul for this type of investment. There are foreign companies interested in all three of these sectors -- shopping centers, housing, and office space -- that are active in Turkey right now. There are Turkish managers involved in some of these projects, but the bulk of the people involved in many of these projects are foreigners.”

Yazıcı noted that it is “completely normal” that the prices of housing around the recently sold İETT property in Levent would climb after the highly publicized sale. “The Dubai Tower project is a great one. On the real estate market there is a saying: The value of property near good property goes up, and near bad property goes down. And if we apply this to the Dubai project, it is only natural that the value of the buildings near the coming Dubai Towers would also rise.”

She also asserted that the infrastructure of the Turkish real estate market is in place now, and that as a result, foreign companies investing here now work with Turkish service, project, development, and financial backing companies to bring about their investments.

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