After the sudden change in the law regarding the acquisition of real estate of foreigners in Turkey on June 15th, 2008 and the increasing negative effects of the global crisis on the Turkish real estate market, problems only kept accelerating for foreign investors interested in this real estate market.
An article published on Apartment Turkey blog analyzes the strategy change some funds had to undertake. The switch to a holding strategy from adding value by constuction and flipping the properties in a few years of time seems to be no more feasible due to difficulties in selling the properties at premium prices.
It is a similar situation to what local investors fell into as soon as the number of transactions in the market have dropped and pressure on prices started to be felt. Investors who have chosen the suburbs of Istanbul due to the development potential they saw have run into even more problems.
According to this and similar articles, our assumption is that investors will try to hold until the market recovers from its current situation and these investors will try to reach their targeted IRR's by collecting rent for their portfolios. It seems to be the most rational decision for both investment funds and also local developers active in the Istanbul market. It is probably the same situation for many European cities.
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