This is a fact sheet about the shopping centers in Turkey written by the Consulate Generale in Istanbul, Turkey. This reasearch is dated April 2007. The info here may not be up-to-date

FACT – SHEET on SHOPPING CENTERS in Turkey

The retail sector in Turkey has reached US$ 70 billion total turnover including the food retail segment. However, the traditional non-organized retail branch is still dominant. Sectoral contacts state that as a whole the organized retail sector represents 40 percent of the entire retail market, while its growth rate implies that the organized retail companies will capture half of the market by 2010. Shopping malls constitute an essential part of the organized retail sector in Turkey. Since the opening of Turkey’s first shopping mall ‘Galleria’ back in 1988, the overall development concerning shopping center projects has been remarkable. Today, total rentable area at shopping malls stands approximately 2.3 million m2 and the number of malls is 135, whereas 102 of them came to service after 2000. 

The rising purchasing power, young population, rapid urbanization, high propensity to consume in comparison to other East European countries are the main factors that contribute to the rapid development of shopping centers in Turkey. Last year, shopping centers in Turkey generated US$ 6 billion total turnover. The Association of Shopping Centers and Retailers (AMPD) estimates the average increase in total annual turnover to be around 10 percent for the coming five years. Turkey currently lags behind other countries in Europe with respect to usable shopping center area in relation to population.

Shopping centers are reported to constitute the largest part of real estate investment companies’ (REIC) portfolios as of June 2006 (i.e., 39 percent). Nonetheless, following the enactment of mortgage law in February 2007 the relative share of residential assets in REIC’s portfolios is expected to take the lead in the coming years. AMPD projects US$ 5 billion investment in shopping malls only for this year and US$ 25 billion for the next five years, respectively. Put in other words, their forecast underlines that 150 new shopping centers employing 150,000 people and covering 4 million m2 usable new shopping area will be established until 2012.

Comparison of Istanbul and Other Regions:

The distribution of shopping centers displays an uneven outlook among Turkish cities. Istanbul ranks first in the list as it alone hosts one third of all shopping centers in Turkey. Furthermore, half of the projects under construction are also located in Istanbul (see Table 1). Despite the growing number of new shopping mall projects in Istanbul, the average occupancy rate stands around 98 percent.

The rental rates per square meter vary in a wide range depending on the location and brand value of individual shopping malls in Istanbul. The shopping malls in central zones command higher rental rates compared to those that are situated in outskirts of the city. Moreover, rates for European part of Istanbul are more expensive than those for Anatolian half of the city. As of mid-2006, rental rates for Akmerkez, Kanyon, Cevahir, Carousel, Capitol, Mayadrom, and Metro City lie between US$ 100-200, whereas Town Center, Olivium and Atrium command approximately US$ 30-80. Sectoral contacts argue that average rental rates outside Istanbul are between US$ 30-50.

There is hardly any suitable place left for shopping mall projects in central districts of Istanbul at the moment. Hence, investors are launching their new projects in rapidly developing suburbs of Istanbul. For instance, Multi Turkmall is undertaking Forum Istanbul (757,000 m2) project in outer Bayrampasa district. When completed in late 2008, Forum Istanbul will be Europe’s largest shopping center. On the other hand, the scarcity of suitable plots is expected to boost the prices of suitable plots in and around the city. A GYODER survey carried out in 2006 highlights that the average land price per square meter rose from US$ 250 to US$ 400 between years 2003 and 2005 in Istanbul. Other than rising land prices, shopping centers built in the city center also escalates the traffic congestion and forces their management to concentrate on differentiation strategies and optimal brand mix while renting out shops given what neighboring shopping centers offer. Foreign brands’ share at shopping centers is as high as 66 percent.

The cities that follow Istanbul with regard to number of operational shopping centers are Ankara (18), Izmir (12), Antalya (11) and Mugla (8). Sector analysts argue that new investments in shopping centers have been taking place in three phases. Based on their views, the first phase started in late 1980’s and concentrated only in Istanbul. In mid-90’s, shopping mall projects expanded to other large cities and important centers along the western coast. Investors are now gradually considering new projects in rapidly industrializing regions and cities located in inner regions provided that they have at least 300,000 inhabitants. For instance, cities such as Eskisehir, Bursa, Denizli, Konya, Kayseri, Samsun, Manisa, Usak, Denizli, Erzurum and Trabzon are attracting various and even rivaling shopping mall projects at the moment. Currently, 24 cities out of 81 have at least one shopping mall.

Recent Foreign Investments & Some New Projects:

Foreign investors’ involvement in shopping malls in Turkey began with Corio (Netherlands) buying 47 percent of Akmerkez for US$ 190 million in 2005. Since then, various international companies have been either developing new projects or acquiring existing shopping centers in Turkey, some of which are listed below:

 ·          Merrill Lynch (USA) and local Krea REIC acquired Neo Shopping Mall (35.000 m2) in Eskisehir under jointly owned Boshphorus Real Estate Investment Fund for US$ 94 million in March 2007.

·          Corio acquired 40 percent of Teras Park (46.500 m2) in Denizli for € 55 million from local Tan Group in February 2007. The project is expected to be completed by 2008. Corio Group announced that it would invest additional €500 million in the next three years for similar projects in Turkey.

·          Kuwait Investment Authority bought out Cevahir Shopping Center (356.000 m2) in Istanbul for US$ 750 million in April 2007. ·          Multi Turkmall (Netherlands) completed Forum Bornova (67.000 m2) in Izmir for US$ 120 million in October 2006. Including Forum Istanbul, which will be the Europe’s largest shopping mall when completed in 2008, Multi Turkmall plans to invest 5 billion on shopping center projects in Turkey.

·          Redevco (Netherlands) started a new shopping mall project in Manisa for US$ 30 million.  Redevco has also plans to undertake a similar project in Erzurum.

·          Local Dogus Group invested US$ 55 million on Power Center (33.000 m2) in Maslak, Istanbul. The project is expected to be completed this year. ·          Local Orjin and Dogus Groups jointly invested US$ 250 million Istinye Park (82.000 m2) in Istinye, Istanbul. The project is expected to be completed this year.

·          Local Gulaylar Group invested US$ 125 million on City’s Nisantasi (17.000 m2) in Sisli, Istanbul. The project is expected to be completed this year.

·          GGP (USA) and Otto AG (Germany) announced that they would jointly invest US$200 million on a new shopping center project in Beylikduzu, Istanbul.

·          Aerium Retail Properties (UK) announced that it would invest €500 million on two shopping mall projects in Istanbul and Ankara this year.

·          MFI Immobilien (Germany) declared that it would invest up to €1.5 billion on shopping center projects in Turkey.

·          Other international groups such as Rodamco (Netherlands), Meinl European (Austria), DIFA (Germany), Sireo (Germany), Commerzbank (Germany), Pradera (UK), Forum Partners (UK), Paladin Properties (USA), Hines (USA)  and Berggruen (USA) are also reported to have shown interest in shopping center investments in Turkey.      

Legal Framework:

Investors need to apply to local municipalities for obtaining construction licenses. Unlike many European countries, there is no legal restraint on new shopping mall projects in city centers. Moreover, current legal framework does not require any distance between neighboring shopping centers in the same district. Since local municipalities levy taxes on individual shops, movie theaters, food courts and parking lots in shopping malls; they conceive shopping mall projects in their districts as steady revenue source in practice.

In 2005, the government prepared a draft bill for organized retail market and shopping centers. The draft bill contained some considerations in favor of small and medium sized shops. It also aimed to bring regulation on working hours and discount sales by ‘large retailers’, which was defined as retailers with more than 400 m2 net sales area by the government. However, the draft bill has not been brought to the parliament yet.      

The average annual yield on shopping center investments in Turkey lies between 10-12 percent. On the other hand, average yields in Western Europe vary between 6-8 percent due to saturated demand in these markets as reported by the Association of Real Estate Investment Companies (GYODER).

Factors such as rising purchasing power, young population, rapid urbanization, high propensity to consume in comparison to other East European countries fuel the growth of shopping center projects in Turkey. Both local and international investors (i.e., retail chains, real estate developers, construction companies and real estate financing institutions) take the future development of the market into account while considering new projects and takeovers in Turkey.              

ANNEX:   Sectoral Organizations:  Association of Shopping Centers and Retailers (AMPD)Address: Dikilitas Plaza Ayazmadere Cad. No:10/1 Kat:5  34349 Dikilitas Besiktas Istanbul Tel: +90 212 227 85 42 - 52 - 62
Fax: +90 212 227 85 35E-mail : This e-mail address is being protected from spambots, you need JavaScript enabled to view it Web: www.ampd.org 

United Brands Association (BMD) Address: Darulaceze Caddesi Nadide Sokak SESA Plaza No:30 Kat 3  80260 Sisli IstanbulTel: + 90 212 320 82 00-01-02
Fax: + 90 212 320 82 03
E-Mail: This e-mail address is being protected from spambots, you need JavaScript enabled to view it  Web: www.birlesmismarkalar.org.tr  

Association Of  Registered Trade Marks (TMD)Address: Valikonagi Caddesi Hasim Bey Apartmani No: 75 Kat: 1 Daire: 1 Nisantasi Istanbul

Tel: +90 212 219 79 99Fax: +90 212 219 54 83

E-mail: This e-mail address is being protected from spambots, you need JavaScript enabled to view it  Web: www.tescillimarkalar.org.tr   

Association of Real Estate Investment Companies (GYODER)Address: Nispetiye Caddesi Levent Ä°ÅŸmerkezi No: 6/2 Levent Istanbul
Tel: (212) 282 53 65 - (212) 325 28 25
Fax: (212) 282 53 93
E-Mail: This e-mail address is being protected from spambots, you need JavaScript enabled to view it   Web: www.gyoder.org.tr  

Consumers’ Association (TUDER)Address: Incirli cad. Akbulut Is Merkezi Kat:1 No:6 D.45-46 Bakırkoy Istanbul

Tel: +90 212 660 47 48Fax: +90 212 543 72 57

E-mail: This e-mail address is being protected from spambots, you need JavaScript enabled to view it    Web: www.tuder.net    

References:- The Real Estate Sector and Prognoses for Istanbul 2015, GYODER Real Estate Research Report (May 2006)- Arasta Shopping Centers and Retail Sector Magazine Editions No:32-35- Survey on Office and Retail Real Estate, Dunya Newspaper, 24 October 2005- Survey on Retail Sector, Dunya Newspaper, 11 October 2006 - Internet- Sectoral contacts    

REF: HA – IST / Mustafa Basaran / April 2007