Turkey with a ninety- year history is having a breakthrough in many business sectors in recent years. The real estate industry is the leading one. Besides meeting the housing demands of a growing population, the need for business centers and the development of a logistics market is inevitably triggering the real estate sector. T he real estate sector has a structure that incorporates many components. Therefore, the industry’s development is in parallel with the socioeconomic development. The development of the real estate industry has boomed in the emerging countries in recent years. In Europe and the U.S. however, with the impact of economic crisis and the global financial recession, the real estate sector has experienced serious decline. In contrast to the lack of demand in Western countries, the real estate sector in Turkey looks promising. According to the TSI data, in the first half of 2013 the rates have reached to 2012 rates already. According to the results of GYODER’s “New Housing Price Index” in September there was a 1.51 percent raise in residential sales compared to the previous month. Compared the same period last year there has been a 13.80 percent increase overall. According to the TSI’s data, in the third quarter in the second half of 2013, the amount of Istanbul home sales totaled 18.4 percent. Ankara and Izmir followed Istanbul with 11.7 with 6.1 percent, and the Hakkari province in Turkey had 24 units of housing sales. In Turkey mortgage sales totaled 39.3 percent overall. The highest mortgage sales were in Istanbul with 21.7 percent. Of the total housing sales in Istanbul, mortgage sales amounted to 46.3 percent. The Kars province had the highest share of mortgage sales with 53.3 percent, while the lowest was Bingöl with 3.3 percent. ISTANBUL: RISING VALUE FOR INVESTORS The dynamism observed in the real estate sector in Turkey is also global. According to the 2013 report of “Europe-Emerging Trends in Real Estate” prepared by Price Waterhouse Coopers (PWC) and the Urban Land Institute ( ULI), Munich, Berlin, London, Hamburg, Paris and Stockholm are the most popular real estate investment cities. Like Moscow, Istanbul is one of the rising cities. Last year Istanbul was selected as Europe’s most popular real estate investment city. And this year, it stood out as the city which is expected to attract highest real estate investments in 2013, next to Munich. The components of the real estate industry There are various factors which contributed to the dynamism experienced in the real estate sector. Turkey’s population growth compared to Western countries is only one of these reasons. To be more specific, while population growth in Europe was 0.3 percent, it is 1 percent in Turkey. These statistics are indirectly affecting the real estate industry. One of the most basic needs of an individual is shelter, hence “housing” is one of the most important components of the real estate industry. Office, commercial, retail and logistic needs are merely sub-components of the real estate sector, depending on economic conditions. As a developing country, Turkey has been in the process of urbanization since industrialization started in the 1950’s. As a result of industrialization, development and the expansion of rural-urban migration, increased urban population brought about a housing shortage. Migration is still an important issue as a result of this ongoing industrialization and urbanization. One of the sectors most affected by this phenomenon in the real estate sector. According to TSI, Turkey’s population which is was 75,627,384 at the end of 2012, is expected to be 84,247,088 in 2023. While the population of Istanbul in 2012 was 13.854.740, this number is expected to raise to 16,568,500 in 2023. Along with the housing sector, retail and logistics sectors seem promising to protect the vitality in the next decade. One of the major factors affecting the real estate industry, is the rapid development of industrial areas in Turkey. Development of industry leads to urbanization and urbanization leads to the increased need for housing and retail. Therefore, it is not possible to assess the real estate sector independently from the socio-economic structure. With population structure and socioeconomic development, the 2023 objectives seem like they are at a sufficent level to trigger the real estate sector. Retail Market With the increasing number of organized retailers and shopping centers in recent years, this area of real estate has begun to gain importance. Unlike the office market, retail real estate market is not limited to the big cities and spread all over the country. Today the number of shopping malls registered to the confederation is around 340, more than one hundred being in Istanbul. In the second half of 2013 and 2014, it is planned to complete construction of new shopping malls on an area of 1,5 million square meters in Turkey, one third being in Istanbul. Retail market in Turkey, together with the Russian market is the fastest growing market in Europe. Logistics and Office Market More than 60 percent of logistics operations in Turkey are held in Istanbul. Istanbul’s industrial zones are located on the main roads such as TEM and E -5. The surrounding cities Izmir and Tekirdağ are among Turkey’s other main logistics centers. Even though the occupancy rates have fallen in recent years there has been an increase in the warehouse rents. The leased 24 thousand square feet space in the third quarter of Istanbul office market has reached a total of 112 thousand square meters in that year. The customers are mostly banking, finance and professional services companies operating in the sector. Office demand from both international and national companies are directly connected with Turkey’s economic growth potential. Also efforts to convert Istanbul into a regional financial center, is a factor that is keeping the office market active. Due to the failure of in a project in the third quarter of last year, Istanbul’s existing office stock remained at the level of 3.2 million square meters. As a result of strong demand, leasable space decreased to 277 thousand square meters, and the overall vacancy rate has dropped 8.8 percent. Legal Regulations The biggest challenges in the sector are; land registration fees, stamp duty on contracts, notary fees and the high amount of VAT. This case pushes small businesses to work undeclared while corporate companies slow down the work. New regulations made by the government seem to be the only way to prevent unregistered land acquisition. Another reason Turkey has become the focus of attention in the world in real estate field is the globally acknowledged projects realized in recent years. On the way to EU membership, by reforms and change of legislation implemented in property field; in particular by the regulations made in the Land Registry Law, Mortgage Law and Tax Law, the industry’s competitive structure was protected and has contributed to development. With the amendment of the reciprocity law in 2012, real estate sales can be done today by citizens from over 183 countries. By the provision in the legislation, the environment created for foreign investment and large-scale projects scheduled to be for foreign investors has turned Turkey into an attractive market . According to GYODER’s positive statements, an increase in both direct investments and through capital markets is forecasted. All of these processes create a necessity of an arrangement for buyer and seller rights. CITY Hotel ManagEment Even though Istanbul was the first runner up in the list of the worlds most invested cities (in the city hotel managment field), Akfen CEO İ. Süha Güçsav underlines that there are also many other cities in Anatolia with great potential. Besides targeting to improve the lack of international standards in city hotels across Turkey, Akfen REIT plans to continue making domestic and international investments mainly in Istanbul and in Russia. Turkey’s first and only ‘city hotel conceptoriented’ real estate investment trust Akfen REIT, with its strategic cooperation that has been operating since 2005 with Europe’s largest hotel group Accor aims to create a more stable and reliable long-term cash flow, 15 of all Akfen REIT’s hotel investments under the Novotel and Ibis brands are in Turkey, 4 in Russia and one in the TRNC. By underlining that the company will have 20 hotels (including 4 of them in Russia operating with a total capacity of 3,641 rooms by the year 2015) Güçsav is indicating that they will maintain their leading position in this field.