Market
As in other countries, the Turkish economy cooled in 2008, with growth down to 2.6% compared with 4.8% in 2007 and also lower than the average for the preceding years (2002-2006 average: 7% per annum). For a long time it seemed as if the credit crisis would not affect Turkey, where the banks had been healthy since the 2001 crisis. However, the consequences were felt in the real economy in Turkey in the second half of the year particularly, as the economic downturn in Europe, Russia and the Middle East led to a sharp fall in exports in the fourth quarter. Domestic demand was also substantially lower in the second half of the year. There was a significant fall in confidence, especially on the part of industry, and investments fell by 10%.
Consumer confidence also showed a downward trend throughout the year. There was a brief rally at the end of the summer, when it became clear that the ruling AK party of President Gül and Prime Minister Erdogan had escaped banishment from the political arena, but when the impact of the credit crisis began to be felt in Turkey shortly afterwards, consumer confidence collapsed again. This combination of falling consumer confidence and lack of economic growth also held consumer spending down to 2.5% below the average of 7.1% seen in the period 2002-2007. Unemployment, after falling into 2006 and 2007, went up again slightly in 2008 to reach 10.9% by the end of the year. Despite falling in the latter months of the year, the average inflation rate was still higher in 2008 than in 2007, at 10.4% versus 8.8%. The global economic uncertainty depressed foreign investments, and the knock-on effect of this was a devaluation of the Turkish lire against the Euro and the US dollar.
The Turkish shopping centre market continues to develop steadily. During the year under review a relatively large number of new centres opened to the public. The pipeline is also considerable, though it is likely that some pipeline projects will be deferred or cancelled due to a lack of finance. Generally speaking, the range of retail opportunities in shopping centres is well below the European average, even after correction for disposable income. There are, however, wide regional differences, with some areas having no shopping centres at all while in others several new shopping centres have been opened, as in Ankara, for example. Retailers have found it difficult to keep pace with this expansion because their organisations were not geared to cope. Following a strong first half-year, rents also came under pressure due to a combination of falling retail spending and the devaluation of the Turkish lire, making matters difficult for tenants who contracted to pay their rents in euros or dollars. Temporary rent discounts or other incentives are increasingly being given, often in exchange for a higher turnover percentage, and the achievable rents on new projects have also fallen.
Source: Annual Report 2008, Chapter Review of operations, page 112 (PDF, 2,1 MB)
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