Market
Over the past couple of years Turkey has shown healthy GDP growth figures, outperforming many European markets. The country benefitted from strong global demand and its solid manufacturing basis for the European Market. Nevertheless, Turkey could not avoid being hit by the recession; the crisis hit Turkey mainly via the trade and financial channels. Overall, in 2009 gross domestic product contracted by 5.8% (2008: +0.9%). Structural reforms had put Turkey on a sturdy footing and improved the resilience which avoided a fully-fledged financial crisis. The government took some monetary and fiscal measures in response to the crisis and this alleviated the extent of the downturn and in particular the decline in private consumption (-4.9%), which is the most decisive driver of economic activity in Turkey. Both investments and import and export figures experienced double-digit declines in 2009 of -20.6%, -19.6% and -10.4% respectively. The recession has inevitably led to an increase of unemployment in Turkey. In 2009 the unemployment rate rose almost 4 percentage points to 13.5% (2008: 9.8%). After some years of above target inflation, inflation receded to below the central bank’s target of 7.5% in 2009, arriving at 6.5%. The volatility of the Turkish market impacted the shopping centre sector. With retailers being hit by the recession, both occupancy rates and rental levels came under pressure. This was the result of lower spending in shopping centres, in combination with increased competition. Retailers also had to deal with currency effects, as rents have to be paid in euro or US dollars, while income is in Turkish Lira. New rental contracts were negotiated more often on the basis of step-up rents or with a turnover based component. To alleviate the currency effect for existing retailers temporary discounts were given. Considering the current economic climate, demand is now polarised towards the most attractive locations. New entrants to the market put their expansion plans on hold and adopted a wait-and-see attitude, also as many had trouble obtaining financing for expansion. Nevertheless, prime rents seemed to be stabilising as of year end 2009.
Source: Annual Report 2009, Chapter Review of Operations, page 65 (PDF, 6.362 kB)
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