London Declines, Istanbul Rises

2007 has presented a major setback to the economic stability of London. Commercial real estate prices fell primarily due to the economic decline. Real estate and prime properties, inevitably, became victims of the devaluation in prices. This is as acquisition demand from banks, developers and security companies fell short in terms of the usual gusto. This is practically the result of the market and credit losses that led to the collapse of most prime mortgage lenders as well as their respective businesses.

Istanbul, fortunately, did not feel the economic losses that gripped London. On the contrary, it has been on a steady rise since early 2003 till end of 2007. In totality, Turkey has generated a total of $56 billion of real estate acquisition from foreign investors and business individuals.

The increase in demand for land assets in the region stems from the country’s economic and political stability, thereby, resulting to higher profit and evident capital gains for businesses and entrepreneurs within the area. Economic analysts show that the rise of demand from consumers, especially for those who are into real estate acquisitions, bolstered the country's earnings by 5%, and this has even grown to 7.4% between 2005 and 2007.

The growth in profit also signified the rise of demand for commercial assets. Foreign entities flocked into the city to set up their companies, particularly Class-A offices by real-estate developers in the region. Even Turkish companies opted for these near-luxurious offices despite economic differences with their Western counterparts.

Real Estate Demand

The gist of Istanbul's rise as an economic powerhouse stems from the real estate demand from foreign consumers who seek to expand their profits in different cities in the region. These cater to residential assets, like apartments, condos, hotels, holiday homes, and so on.  Commercial real estate is also in high need due to the rise of tourists and foreign investors deciding to set up shops in the city. Shopping malls and other commercial and entertainment hotspots have, thus, become necessary to satisfy the growing demand of the local and international populace.

The government released numerical figures regarding the number of foreign individuals that entered the region, either to conduct business transactions or simply for entertainment. Studies show that within the next 15 to 20 years, Turkey will expect arrivals ranging from 23 million to a whooping 50 million. Off-plan real estate companies are now eyeing ventures into developing properties that commit to the needs of this influx. These include major residential and commercial projects, and the developing of existing infrastructure to abide by the worldwide technological evolution.

European businessmen and entrepreneurs are also eyeing the economic stability of Turkey and aim to acquire property investments in the region. Both private and institutional investors look closely at the region due to its increased and steady market profit and capital gains. The multi-billion dollar Dubai-Towers-Istanbul is just one of the main projects of Dubai Holding, which is one of the largest investments the development group is set to build. It is even projected to reach around $5 billion worth of total investment.

Economic Growth Factors in Turkish Realty

Most real estate developers in Turkey are adamant in providing quality and honest services to foreign investors and businessmen who seek to set up their own investments in the country. Oypro, one of the leading developers in the area, states that the credibility and trustworthiness of these developers will affect the overall economic growth of Istanbul, and other neighboring cities in the region.

The other factor that has been affecting the economic growth of Turkey for the past 7 years is the low price of real estate properties in the region. That is, as compared to foreign realty. This resulted to property developers allowing foreign investors to negotiate prices and ask for discounts. This also allows them to maximize their profit and capital gains, especially on bulk purchases. The foothold of the various real estate development companies in the region, as well as the interest of foreign investors, is sure to carve the path for Turkey to eventually become an economic powerhouse within the next 10 to 15 years.