Speech Of H.e. Ambassador Ünal Çeviköz At The “turkish Real Estate Sector” Event , 09.11.2012
8 November 2012, Britannia International Hotel, 12.30
Ladies and Gentlemen,
It is a distinct pleasure for me to address this distinguished audience and I would like to extend my sincere thanks to “Investment Support and Promotion Agency of Turkey” as well as “The Association of Real Estate Investment Companies” for organizing this event. May I also thank the sponsor of the day, namely the HSBC. It is good to see that the fees charged on our accounts for banking services return for a good cause. I hope today’s presentations will add further insight to the opportunities of investment in Turkey.
In my speech, firstly, I would like to touch upon the general performance of the Turkish economy over the last ten years in view of current trends in the global economic and financial system. Then I will elaborate on the opportunities of investment in Turkey, particularly in the real estate sector.
The global economy is going through very turbulent times. The financial crisis which started in 2008 is not over yet. It is just evolving from one phase to another. While the winds of change are blowing over the economies of world, Turkish economy has proved to be resilient and achieved strong growth rates over the last years. The reason behind this bright picture was that Turkey put necessary fiscal adjustments and structural reforms into implementation in time.
Several years before the global crisis, Turkey faced its own financial and economic crisis at the national level and took significant steps to restructure and rehabilitate its banking sector, to boost its economic competitiveness and to put its fiscal balance on a sound and sustainable path. The structural reforms, hastened by Turkey’s EU accession process, paved the way for comprehensive changes in a number of areas. The main objectives of these efforts were to increase the role of the private sector in the Turkish economy, to enhance the efficiency and resiliency of the financial sector and to place the social security system on a more solid foundation. As these reforms have strengthened the macroeconomic fundamentals of the country, the economy grew with an average annual real GDP growth rate of 5.2 percent over the past nine years between 2002 and 2011. This growth mainly originated from the activities of the private sector. Main sources of growth, on the production side, are robust growth in the services sector and double digit growth rate in industrial sector; on the demand side, private investments and consumptions. Since confidence was restored in the eyes of the business circles and consumers, banks were eager to lend, companies were eager to invest and consumers were eager to spend. And this generated high growth rates in Turkey.
This performance had also reflections on the employment figures. Since 2009, Turkey generated 4 million additional jobs and this is one of the highest rates among the member countries of International Labour Organization. In addition to the high job creation, income distribution in Turkey improved since 2002, including the post crisis period.
Significant improvements in such a short period of time have registered Turkey on the world economic scale as an exceptional emerging economy, the 16th largest economy in the world and the 6th biggest economy in Europe.
Inevitably, this has changed the focus of foreign investors and put Turkey under the spotlight on their radar screen.
A sound macroeconomic strategy in combination with prudent fiscal policies and major structural reforms being in effect since 2002, has integrated the Turkish economy into the globalized world while transforming the country into one of the major recipients of foreign direct investments in the region. Currently, Turkey stands as the 13 th most attractive foreign direct investment destination in the world.
Turkey continues to carry out necessary legal and financial regulations in line with its bid to reposition İstanbul as an international financial center. This project offers global companies a chance to run their financial operations in the region through İstanbul, supported by various incentives, a skilled workforce and a cosmopolitan city with a vibrant local economy. Istanbul is now on high demand by conference organizers as it is a regional hub for leading multinational companies. Turkish Airlines, as the 3rd largest airline of Europe, provides easy access to various destinations all over the world from İstanbul. We are now observing many banks opening subsidiaries or branches in Turkey, not just for Turkish market, but for the whole region. We appreciate the support of the UK for our bid to develop Istanbul as a financial centre.
I am pleased that UK companies have been among the top investors in Turkey. In fact, the UK is the second largest investor in Turkey. More than 2.300 British firms have investments in different sectors in Turkey. We are keen to attract more British investments to Turkey and making real efforts to this end.
There are many investment opportunities in Turkey ranging from finance, automotive, energy, construction and to real estate. Real estate sector, actually, is the focus of today’s gathering.
Turkey’s real estate sector started to develop in the first half of the past decade and has become an attractive market for foreign investors by gradually getting closer to the international standards. As an emerging economy, Turkey has been going through wide-scale urbanization as a result of the rapid industrialization since 1950’s. The increase in population and migration from rural to urban areas triggered rapid growth in the cities. In this context, various legislative reforms have been carried out. The amendments to the Land Registry Law, the Mortgage Law, and the redrafting of tax laws were designed to improve the competitiveness of the Turkish real estate sector and to encourage foreign investments in this sector. According to a survey conducted by the Association of Foreign Investors in Real Estate (AFIRE), Istanbul ranks as the third most attractive real estate investment market among all European cities. Since the beginning of 2002, an organized and international property market has started to develop in Istanbul.
All these measures, apparently, have been perceived as quite beneficial by the British citizens, because the number of British citizens who own property in Turkey is more than 35.000 already, a figure which puts the British in the first rank in terms of foreign property owners in Turkey.
Apparently, there are several factors driving or affecting the infrastructure requirements in Turkey. Some of these factors are as follows:
- Population increase in Turkey
- Continued migration from rural to urban areas
- Need to improve quality of buildings in accordance with earthquake regulations
- Renewal of existing housings
- Modernization and the development of the retail market
- Increase in the number of multinational and large national companies which necessitates set up of more residences, plaza buildings and industrial areas.
- The geographical position of Turkey being a gateway between Europe, Central Asia and the Middle East puts emphasis on the development of the logistics sector and related construction efforts.
Turkey’s construction sector is one of the main drives of growth and the real estate market in Turkey will also continue to be an attractive area for further investment. You know that Istanbul is a candidate for 2020 Olympics. Not only that, but also the 2023 vision of the Turkish government on the occasion of the 100th anniversary of the proclamation of the Republic of Turkey, will help further growth in the market.
I hope that British firms which are already so active in Turkey will make use of the opportunities of investment in construction and real estate sector in Turkey as well.