Serviced Apartment Industry in Istanbul

Istanbul Turkey Apartments blog provides some unorganized text taken out of a business plan prepared for investment funds interested in creating a branded serviced apartment chain in Turkey. It is basically about the serviced apartment industy in Istanbul.

The text is interesting in some ways; not only because most of the concepts outlined are specific for Turkey, they can probably be apllied anywhere in the world. Marketing concepts are creative but not specific to Turkey. The data about the competition in the market is deleted along with most other parts of the plan.

The growth timeline is the only part of the business plan that gives an idea of what is possible in the serviced apartment industry in Turkey. Unique selling point is very interesting where it suggests upholding the principles of hygiene, safety and hi-tech equipment.

It is completely true that the serviced apartment industry in Istanbul and Turkey is under-penetrated and presents an early-mover advantage. A good investment and property manager with local experience can work together with foreign investors to develop and manage property investment portfolios with limited downsides and significant profit potential. 60 months is also a very reasonable period not only to create the leading serviced apartments brand in Turkey but also to build enough brand recognition to obtain the highest possible valuation during the exit.

I'd also like to note soem of the several problems with the current competitors making the investment idea a homerun for newcomers;

Most of the competitors in the market suffer from low capitalization and have limited number of units under management. Of those, who have easy access to capital, they choose to remain in the high-end part of the industry which results in focusing on only a small part of the market that are high-income travelers seeking upscale accommodation options.

Some competitors have portfolios that are made up of smaller properties with generally 5 to 8 units in different locations owned by multiple landlords. Targeting a limited type of travellers generally result in property managers to choose a part of the portfolio to focus on and increase the occupancy rates while other landlords suffer from low occupancy rates.

While there are no brands in the market with an established reputation for providing accommodation at multiple key locations and an expected level of services in all premises, there are several companies offering serviced apartments in limited quantities.

I am also confident that the serviced apartment industry in Istanbul and Turkey presents a great potential for foreign investors.

Turkish Real Estate Trends - Residential Sector

Strong fundamentals for residential demand remain intact while short-term demand and supply has been reduced by the lack of liquidity, making distressed residential real estate an attractive investment alternative.

Strong fundamentals for residential demand:
Based on Deutsche Bank’s 2007 forecasts, 5.3 million (3.7 million being households and appr 1.6 million being replacements) of new housing units will be needed between 2007 and 2017. Furthermore, according to the State Planning Agency data, more than 8% of buildings in Turkey are categorized as ‘in ruins’ or inhabitable and only an estimated one-third of all housing units in Turkey have building permits.

Economic circumstances hold up demand in the short-term:
Housing market activity has significantly slowed down in the months following the global crisis, indicating a temporary hold up of demand until the economic picture clears up.

Supply up due to lack of sales and credit facilities:
Many development projects in Turkey are financed through planning and construction phase sales. Accordingly, many new developments have been put on hold when sales saw a sharp decline. High cost of debt and general lack of credit availability has led to offer deep discounts.

The residential market is more stable following the decline in prices by developers willing to go ahead with quick sales instead of holding to the properties. Prices have started showing signs of increases in the last 2 quarters of 2009 and in 2010.

Why Invest in Istanbul Real Estate? Find apartments with high capital gain potential

Why Invest in Istanbul Real Estate? Several different factors had been instrumental in effecting the real estate markets in the U.S . and in Europe and almost all global markets were effected following the economic crisis sparked by the collapse of sub-prime mortgages in the United States. However, several countries had major advantages that resulted in quick recoveries due to strong local demand and having different banking systems. Turkey is one of these countries. If you are searching for the ideal city or region in which to acquire an income generating or off-plan residential property, Turkey is globally one of the best options available at the moment.

1. Istanbul is 1st ranked development and 3rd ranked investment market in Europe, underserved by high-quality product in many sectors and has better growth potential than all other European cities surveyed. (According to the ULI Emerging Trends in Real Estate Europe 2009 Report)
2. Institutional opportunistic real estate investment in Turkey remains relatively underpenetrated and presents an early mover advantage for investors with global know-how.
3. Opportunities to buy undervalued assets in the short to medium term, primary focus on cash generating A and B class commercial properties in Tier 1 cities and finished or nearly finished A and B+  residential developments in Tier 1 and 2 cities with good covenants.
4. Other opportunities in the medium term on cash generating high street retail properties and retail shopping centers in Tier 1 and Tier 2 cities.

Other factors include; Turkish real estate has been less affected by the global credit crunch due to the infant state of its mortgage market. Unleveraged first-home purchases make up majority of residential demand. Turkey is unique in its position being an emerging market with a young and growing population, however it is also developed enough to offer opportunities in institutional quality residential, retail and commercial projects.

The single-family units are still considered a great investment for those looking to acquire affordable properties with high capital gain potential and high yields. Istanbul Properties offers a wide range of properties ideal for foreigners and also more properties are offered upon request.

Prices Recover in Beyoglu.

Although there are no reliable source or centralized listing service to follow up on the real and current property sale prices in Istanbul, according to some sources the property prices in Beyoglu has recovered around 10-15% in the past 6 months to almost reach the previous peak levels in 2008.

The brokers confirm the extensive increase in interest during the last 6 months and the number of transactions completed increased substantially.

Let us know if any of you can find reliable data we can publish that shows the statistics during the last 3 years covering the peak prices, the downturn following the global crisis and the governement;s desicison to stop sales to foreigners and the recovery period.