Interviewed Patrick van Dooyeweert, General Director REDEVCO center

REDEVCO administer and is currently valued at € 7300000000 Europe’s largest retail portfolios, the development of an independent international real estate company. The top places in the entire portfolio of 750 features includes 18 countries. Enterprise is also with a focus on China, major metropolitan areas in Asia structure a retail portfolio, has been operating. His second home market in Asia is the desire to improve the REDEVCO. REDEVCO Cofra Holding AG, a Swiss-based holding company owned. Patrick van Dooyeweert salvage towards Turkey and the Real Estate Publishers, General Manager, REDEVCO Turkey asked ideas on the Turkish real estate market.


Turkey witnessed an unexpectedly strong GDP growth surge in the first half of 2010. Has this had any affect on your investment plans?

It’s had a very positive affect on our investment plans. The positive GDP growth in Turkey is only strengthening our idea that Turkey is one of the places where we, as a company, should invest our money. The typical Turkish cycle takes 4-5 years, and it’s important to have a long term perspective, and we have that, knowing that after every cycle there’s a downturn and after every downturn there’s a cycle again. As far as I can tell the current trend in Turkey is positive.


Q: Is Turkey’s rising inflation rate a concern?

That’s rather complicated; sometimes you hear economists say that inflation is a major driver for real estate investment, which is true. But the question is what’s the inflation doing with the rest of the economy? Especially in Turkey, where we don’t have a real institutional real estate investment market, inflation – together with exchange rate volatility – has always been a reason to invest in real estate. It didn’t make sense to bring it to the bank, and real estate tends not to be highly affected by inflation. However, in the current market in Turkey, most retail lease contracts are made in dollars or euros, which in a lira economy gives you very different dynamics. I can’t say inflation is good for the real estate market but it’s also not too negative for us. Deflation would be worse.


Q: How do you view the lending situation in regards to Turkish real estate will progress in the coming year?

REDEVCO does everything with our equity, so the lending situation doesn’t have a direct affect on us. Most Turkish banks are sound and are still giving loans as far as I know. But the big foreign banks are not so active, so loans of €300 million for just one project, that time seems to be history for now.


Q: Which major issues affect your long term investment strategy in Turkey?

The soundness of the system is crucial. Recent tax reforms have been good. The legal system in Turkey is being adjusted to international standards, and as it becomes more transparent that’s obviously positive. Jones Lang LaSalle’s recent transparency report showed that Turkey shifted upwards in the global ranking of transparent real estate markets. Those are some of the major factors for our long term investment strategy, and they appear to be good.


Q: What makes Turkey an appealing place for you (or other) foreign investors?

The basics of the country are good, which includes some of the standards like a young population, a growing GDP, etc. Turkey is becoming more of a pivotal player in the regional market, opening to the East and still opening to the West as well, which offers strategic benefits. And in Turkey you can still do business at a reasonable price with reasonable yields and returns; you can buy developments and even existing assets. It is a strong market. However the post crisis market is no longer really an international market. I haven’t seen any new international investors entering this market recently. But they will come back.


Q: What factors can make Turkey difficult for you (or other) foreign investors?

If there is no exit – and we’re not planning an exit – but if there is no real exit then the value of your portfolio is partly determined by the liquidity, by the exit options. And if there are no big institutional or international players or solid enough buyers who could buy one of your assets, then you don’t really have a market. But I’m convinced international investment activity will return in Turkey.


Q: How has market transparency changed since you first entered Turkey? Does more need to be done?

Of course more has to be done, but the same goes for the Netherlands and Germany and any market. You can always be more transparent, more professional. But looking back to 2004, over the last six years Turkey has taken major steps in becoming more transparent. Legislation has improved, but one of the major remaining legal issues is the litigation issue. The legal system does work, but not that fast or transparently. Especially the legislation on rental agreements, between landlord and tenant, are not yet adjusted to the professional market.

Edirne is one of two major REDEVCO projects currently in the pre-letting and design phase.


Q: What is in the pipeline for your future investments in Turkey and why?

We’re currently preparing the developments which we had in the pipeline in Manisa and Edirne, two provincial cities in Turkey, one on the Aegean coast and the other on the Greek border. We’re in the pre-letting and design phase on those projects and expect to start the actual construction of those projects at the end of this year. We’re keeping busy.


Q: There has been much talk of the importance of high quality in top locations in the past two years; is this something you have adhered to in your Turkish investments? And now that Turkey appears on the fast track to recovery, is this still an all important characteristic?

It’s always an important characteristic. We are in a recovery phase in Turkey after the crisis, but we’re not in the same conditions as four years ago. Four years ago everything was booming and everyone was chasing the dream. These days there is capital available but not so easily as a lot of foreign players are no longer pumping money into the country. But more important is that retailers who were opening new stores and doubling their turnovers simply by doubling their space are more cautious now. Four years ago they signed every lease agreement against any rent and took the opportunity. Nowadays they are more reserved and don’t jump into just anything. A lot of them learned the hard way during the crisis that it’s not so easy to open twenty stores in a year. In that way top locations are still very important as the tenants are more selective.

Q: Is there any market for distressed assets in Turkey?

Unfortunately not. We had been hoping for a window of opportunity to buy a lot of assets, but the window was never there. The reason for that is that Turkey experienced a crisis but not a real deep crisis and more importantly Turkish real estate is hardly leveraged; that’s traditional in Turkey. When you make money you don’t take it to the bank you put it into land and take your time and bit by bit, stone by stone you construct your shopping mall. Most owners did not get into trouble simply because their bank relations were limited.

*The above interview is taken in part from the Foreign Investors’ article in REP’s upcomingTurkey Real Estate 2011 Yearbook, due for release later in September. Pre-order your copies today!*

**REDEVCO Turkey is based in Istanbul. A team of more than 40 real estate professionals co-ordinates the Turkish activities of the company. Its mission is to introduce high-quality and sustainable products to the Turkish real estate market. What matters to REDEVCO Turkey is the quality of the portfolio rather than its size. In the short to medium term REDEVCO Turkey will continue to grow its portfolio through identifying development and investment opportunities in retail real estate. **

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