TÜRKİYE MARKETBEAT HALF YEAR 2023

ECONOMIC OVERVIEW 

Monetary policies that will guide the economy in the new period are being determined 

Türkiye economy grew by 4% compared to the same quarter of the previous year. While the agricultural and industrial sectors contracted by 3.8% and 0.7%, respectively, the services sector (including construction) grew by 5.1%, the best performance of the last 5 years. Growth compared to the previous quarter was realized as 0.3%. In the June issue of its Global Economic Prospects Report, the World Bank revised its growth forecast for Türkiye from 2.7% to 3.2%, and its forecast for next year from 4% to 4.3%. In its World Economic Outlook report, the IMF also raised Türkiye’s growth forecast for 2023 by 0.3% points to 3%, but unlike the World Bank, it decreased its growth forecast for 2024 to 2.8%. Moody’s also raised its growth forecast for the Turkish economy from 2% to 2.3% for this year and from 3% to 4% for 2024 in its report published in March. 

OFFICE MARKET OVERVIEW

Office prime rents remain at a five-year high in terms of US$

In the first half of 2023, the overall supply in the İstanbul office market remained stable at 6.46 million sq. m. The total leasing transactions in the first quarter of the year was 34,589 sq. m, and 72,603 sq. m in the second quarter. Thus, total leasing transactions in the first half of the year amounted to 107,192 sq. m. Compared to the same period of the previous year, there was a decline of more than 50%. On the other hand, 74% and 77% of the leasing agreements in the first half of the year, in terms of square meters and number respectively, were new leasing agreements, while renewals declined compared to the previous year. In addition, the increase in the initial investment costs of companies due to the rise in construction costs has increased the demand for ready-made and second-hand decorated offices. It is observed that the vacancy rates of serviced offices, which were also in demand during the pandemic, decreased and this situation put upward pressure on rents.

RETAIL  OVERVIEW

After 13 years, Abdi İpekçi Street is the most expensive street again 

In the first half of 2023, high occupancy rates were observed in high streets and shopping centers due to high demand. Despite limited supply of leaseable area, however, brands continue to pursue their growth strategies. The prime rent level on İstanbul’s main streets recorded a significant increase of 144.4% in US$ terms in this quarter compared to the same quarter of the previous year. Likewise, rent increases in well-performing shopping centers are also noteworthy. Strong demand for high streets and high occupancy rates resulted in higher prime rents.

INDUSTRIAL OVERVIEW

Rents per square meter increased by 33.3% in US$ compared to last year and reached the highest level in the last 15 years

According to available data, there were more transactions in warehouse space leasing activities in the second quarter compared to the first quarter, totaling 65,500 sq. m in the first half of the year. As in previous periods, the supply of quality warehouses is limited and the demand for warehouses with large closed areas is high. While there was no significant increase in prime rents compared to the previous quarter, there was a significant increase of 33.3% compared to the previous year.

RESIDENTIAL OVERVIEW

House sales in Türkiye decreased by 22.1% in the first half of 2023 

In the first half of 2023, house sales in Türkiye decreased by 22.1% y-o-y to 565,779 units, which is below the same period of the previous year. In addition, mortgaged sales decreased by 28.6% compared to the same period of the previous year and were realized as 121,530. However, first-hand house sales decreased by 17.9% y-o-y to 171,158, while second-hand house sales decreased by 23.8% y-o-y to 394,621. 

HOSPITALITY OVERVIEW

Prices rise while occupancy continues to decline

In the first 6 months of 2023, the number of foreign visitors to Türkiye was recorded as 19.6 million, a significant increase of 74% compared to the same period of the previous year. İstanbul recorded 7.9 million arrivals with an increase of 50% compared to the same period of the previous year. In the first half of 2023, hotel occupancy in Türkiye decreased by 12.4% year-on-year to 52% and in İstanbul by 13.7% to 59%. In Europe, average occupancy rate in the first 6 months of 2023 was 66.5%, outperforming Türkiye’s average.