Zirve Eki - ISTANBUL REstate

16-17 Haziran 2010
that the Turkish, their practices or approach of Turkish investors were
completely different than international ones. Let me put this in other way.
The approach and practices of Turkish investors in the 80s was completely
the same with the investor's practices in Spain in 80s or Italy or France. The
problem is we enter to the market late. That is why we are learning
altogether. Our investor learned, our government learned and our banking
institutions learned. In the 80s, we didn't know how to finance a project,
in other words, we didn't know the terminology of project financing. We
were talking about but we didn't know it. Moreover, we didn't have any
institution or a practice concerning the appraisal. Without appraisal, how
can you go with the project finance or something like that? Now Turkey
has started those practices in terms of institutional finance, in terms of equity
funding whatsoever, and in terms of money markets, and in terms of capital
markets too. There are some fundamental examples. One may say that
those fundamental examples are not successful enough, I can accept it but
we have to consider them as a baby in the market for the moment and
that baby is having his own experiences to develop himself. This is very
important. Right now the Turkish investors is learning deal structuring. Very
predominantly they are doing deal structuring. Moreover, they are doing
deals abroad. Turkish investors are investing in abroad. Probably, if I can
count, maybe the hotel of Turkish investors abroad is not less than 40 in
number which was a dream 20 years ago. That is why, my last word
concerning this is; 'we are learning very quickly`. Our institutions are learning
very quickly and no one should be hesitating about Turkish finance
circumstances and finance practices. Of course we will criticize ourselves,
but on the other hand the institutionalization of Turkish project finance is
highly improved. It is very very important. That is why we shouldn't be too
worried about existing practices. Of course there are some inherited practices
for example bureaucracy is very slow. For example, project finance is still
an issue that we cannot penetrate to the banks' brains very easily. That is
true but believe me 20 years ago, 30 years ago, 40 years ago it was even
worse in some European countries. That is why we have to look the issue,
we have to see the issue in this way that we are learning, we are adapting
ourselves and we are adopting the international standards very quickly. For
example our banking right now is extremely strong in comparison to banking
practices of many European countries. And we are taking advantage of it.
This is very important and Turkish tourism has started to take the advantage
of it as well. That is why, one thing is very important. The basic missing
thing in project finance and in the finance of Turkish tourism investments
is the relation with the capital markets. Nothing to be criticized and nothing
to be worried about money markets but we have to concentrate ourselves
to the relations with the capital markets. Our capital market is narrow and
this extremely shallow in terms of tourism. And moreover we have to create
some instruments to the capital market of Turkey as well as to the international
capital markets so that we can go in a better way. Tourism in last 20 years
became very competitive and major part of the economy. That is why no
one can reverse this. And there is only one direction which is positive and
we have to concentrate ourselves to the capital market relations.
Ömer ‹svan: Can I add something to that? Let's not forget that is where
Turkey is in the world. If we are going to talk about tourism, we are talking
about in the top 8. This is not a joke. So we are not talking about like an
emerging market or anything. We are in the first division of tourism in the
world. So in 2010 figures we are number 8 up from nine and in the first
10 only two countries went a nudge up. All the others basically went down.
And in terms of improving their numbers in absolute terms not in comparative
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terms, Turkey was the only one that actually improved their numbers in
terms of arrivals in 2009, during the crisis. So we are talking top 8. We don't
see actually, when we look we don't see too many competitors who are
going to basically enter into that kind of a top league. And so Turkey is there
to remain in the top 8 or top 5 even, because China is already there. That
is going to be a leap, some balance improvement but it is already there and
above so it is going to be in the top 5 -6, top 5,6,7,8, whatever it is. So we
are talking about one of the top tourism investment countries in the world
right now.
Jakob Forstnig: That is understood and doubtless the touristic activity
in Turkey is up there as you say in the top 10. The interesting part about this
and Haluk Kaya mentioned an interesting thing. The investment in hotels
has to be separated between leisure and business, especially in Turkey,
apparently on the whole coast in Antalya, Bodrum, there are, I think, only
three branded hotels and most investors are local, if not all of them, maybe
there is an exception. So it is obviously very advantagous for the Turkish
economy in general to have this sector which is growing, which continues
to grow and I am sure with the natural resources this will continue. It is
nevertheless interesting to state that there is no international foreign capital
coming to this specific sector. The business sector I think, can be stated as
different because we have had examples of foreign capital coming to Turkey.
And Tavit thank you very much for anyway answering the question that I
didn't ask which is "are Turkish investors going abroad to buy hotels" and
you have already explained how this is evolving. I would like to give everybody
a final chance to get a final point of view or statement. From what I can tell,
Bettina has been getting some competition from local banks going forward.
Maybe she has something to say about that. If Theodor will have - find some
products, the criteria have been explained. The interesting part will be whether
the products, the hotel developments will be more institutional as Ömer said.
But please Bettina, what is your summary or final statement you would like
to make, also based on what Ömer has said?
Bettina Graef: Based on the competition. I mean, yes, at the end of the
day competition is increasing but I think this is, you know, obviously for me
not the best scenario, but in a general thing, competition shows that more
interest is being generated into the investment in real estate, in lending. And
the more interest there is, the more of a thriving market it is going to be,
and the more of normalized and institutionalized market it is going to be.
So I think looking forward whilst I may not necessarily like it, I think for the
whole industry it may be a good thing.
Jakob Forstnig: But they also understand the know-how for hotels has
to be built up. It takes time. So project finance is one thing, hotel financing
is almost another thing, but obviously let's not to try to be too scientific about
this, but I think there is something to be said about it. Good. Theodor, maybe
you have a few pointers to give us.
Theodor Kubak: Yes. As an institutional investor governed by the
German investment, equity, the lease is one of the main criteria which we
need to look at and the leases has a few components which is very difficult
to change, meaning in an ideal case, for one there is very few hotel companies
in Turkey, I should say, international hotel brands with actually give a lease.
So in some of the cases, we have what we call a triangle situation where
there is the owner, the leaseholder and the management company. So the
leaseholder would have the management contractor with the management
company and would guarantee the lease to someone like us. Having said
this, the lease should be structured in such a way that there is a rather high
fixed component versus high flexible component that some companies which
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