Zirve Eki - ISTANBUL REstate

we still see an international interest in Turkey. You mentioned
that new companies. So it is not only a Turkish market but still
in the international content.
Alan S. Robertson: We are not seeing them spending money
in Turkey yet, but they are looking. But we are now speaking to
meet two or three foreign investors every week who are keen to
find out about Turkey. This time last year we were seeing one
every, two or three weeks. There is a much greater interest in
Turkey and I see that continuing if you look at the position that
Turkey has this time around compared with seven or eight years
ago. The foreign investors and those private equity funds and so
on who require to deliver very good returns to their investors or
institutions or universities sitting on the states and so on; To get
these returns they need to look outside the more mature markets.
Last cycle, they were looking at Russia, Poland, Romania, Czech
Republic and so on. This time, we are finding that Turkey as much
higher up the shopping list as a location for them to invest and
it was last time. And it is for the reasons that we all know about
that there is a very compelling story to tell about Turkey; the
demographics, the way the economy is growing and the way the
education system is growing. Turkey has an increasingly important
role in this part of the world. So I think we can look forward with
some anticipation.
Andreas Schiller: Okay. Thank you very much.
Nuri fiapkac›: Sorry, can I add something? I mean, the main
problem of the Turkish market as from my point of view is that
not that the banks are not willing to provide financing, I'm sure
there is financing that they would like to provide. But it depends
always on the project itself. That is also the problem that you
probably will have as the foreign investors. I mean, private equity
guys, if they want to do real estate, they expect higher returns.
So this is the problem in Turkey. We can't get these high returns
to make Turkey interesting for private equity or other alternative
investment vehicles. So why should a private equity banker or
private equity company invest into the development or into the
project in a project in Turkey if he can't get return which is more
than 10%. So the land prices, the market behavior, the
intransparence of the market are the problems that we have in
Turkey. So I am sure you will have meetings with foreigners every
week but when they come to the market figures, they stop. They
can invest in their home countries, especially during the crisis
they are able to invest in UK, they can buy probably core values
in Germany and all over Europe. Why should they invest in Turkey?
That is the question that people in Turkey should ask themselves.
Andreas Schiller: Okay, interesting point. Why should they
invest in Turkey? I pass it over to a Turkish Lady here, Güniz
Çelen.
Güniz Çelen: I want go into all the details. We have continuing
studies on how to convince them. The problem is that they don't
have the money. The funds are very short. So we have to also
create new vehicles and strategies for them to be able to invest.
The same thing is coming from the Middle East. We have high
wealth individuals and high net wealth individuals and families
are very interested in investing to Turkey as well. And we have
Turkish families as well that do this as an alternative too; they
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Gayrimenkul Zirvesi 10
16-17 Haziran 2010
make core business and they want to go into real estate. They are
like the jewelry people that we have in the gold business or
formerly the textile people. And we have now people coming
from the iron and steel industries, as well. So these people are
very interested in real estate but how will they invest? It is our
role to look into and create vehicles and strategies for them to
come into it. Yes, they are convinced. The convincing part is not
so important. The important thing is the track record that you
create and you can go into the corporate business. So, what we
do is therefore different... This time we have a much more educated
market and in the meantime since 2006 onwards, 2005 and 6
onwards, the local market has learned a lot from international
investors as well. So we have these high net worth families
contributing to the informal closed end funds on project basis.
And this is the very Turkish style which we call "imece" in Turkish.
So we have the group, a cluster of people who is ready to go in
the Middle East and enter the projects. We are also working in
the New York market and we are seeing that sellers are also
financing which we haven't seen in Turkey. But we think that it
does solve a lot of matters as the transaction volume in the market
is very low. And if you are interested in buying and you don't have
the funding, an alternative source of financing can be the sellers'
financing as well, because some of these portfolio companies do
have means for collateralizing or securitizing new investment
funds for others as well. But we don't have this type of legal, let's
say, structure in Turkey yet. I haven't seen it. Leasing companies
are very interested as well. So if we put all these together, does
the hurdle rate or the return on investment offset the financial
costs of any resources or the expectancies that we were talking
about? Yes and no. It depends on your approach to the
development. This is very important in this area. The banks, the
investors, all of them need very sophisticated services, assistance
and support from different types of companies which are project
management companies, construction contracting companies,
cost assumation, valuation and design companies etc. But the
most important hindrance or contingency on investment projects
is the permission side. The permission side is a lag time which is
unfortunately very costly and that we cannot avoid this. This is
the area that we work with the highest uncertainty and this is
what brings in a higher expectancy of return, like we are talking
about 25, 27% IRR in an investment project. Of course the bargain
starts with 35% which is impossible. So what are we talking
about? We are talking about cost and how we manage the funds.
Thank you.
Andreas Schiller: Thank you very much. Later on I would like
to come back to what you mentioned, the permission side and
what solutions there can be. But let me integrate the two beside
you, Sylvio. I think you want to say something about it but let me
ask you from an Italian point of view being in Turkey, representing
an American company. Do you agree with what Güniz just said
or how is your point of view?
Sylvio de Michieli: I would just say that to realize the project
according to difficulties of financing and expectation about return
on investment, we didn't try. We should like to propose just a
different construction that we have already done in other countries,