Turkey is recovering from the global financial crisis strongly, with its economy ranked as one of the most stable performers in the region, according to a recent report from real-estate brokerage Cushman & Wakefield.
“Recent growth has been even faster than expected, aided by strong employment growth, and low interest rates,” the report said, adding that Turkey has experienced one of the “quickest stabilizations” and “strongest recoveries” in Europe, citing rising employment and strong growth across numerous sectors.
Yet while David Hutchings, head of Cushman & Wakefield’s European Research Group, said there has been strong corporate investment in Turkey over the last year, he warned of an overall “double dip in sectors that rely on demand.”
Hutchings said declining demand from Germany and France for Turkish imports may yet have a negative impact on the Turkish economy.
The research group head told the Hürriyet Daily News & Economic Review that investors will be watching Turkey to see if “the government maintains fiscal and monetary discipline,” and whether it will fall into the trap of spending large amounts of money in the run-up to the June 2011 general elections.
The Cushman & Wakefield report said that in the real estate market, rental growth was down 7.7 percent in the industrial sector, but up 4.7 percent in the retail sector and 2.5 percent in the office sector. This, according to Alan Robertson, managing director of global real-estate services firm Jones Lang LaSalle, is directly correlated to Turkey’s economic outlook.
“When the economy is not good for the industrial sector, industrial rents go down,” said Robertson. “There is a direct correlation.”
Office market rents fell by roughly 25 percent following the peak of the global financial crisis in early 2008. However, since the third quarter of 2009, they have stopped falling. Office real-estate has been recovering nicely, but Robertson believes “the industrial sector is a little behind the office sector, and will recover next year.”
“When you have gross domestic product growth like Turkey’s, you have to expect a correlation in the real-estate market,” he said.
Facing austerity measures
According to the Cushman & Wakefield report, this year Europe experienced its strongest second-quarter growth in a decade. The report noted that the recovery is being driven primarily by exports from core countries, particularly Germany.
However, because of falling global demand for exports and the application of expected austerity measures, the second quarter may represent the “high point for this phase of the cycle,” the report said.
It also said there was a great economic “disparity, country by country” which is expected to persist. The economic troubles hitting Greece and, to a lesser extent, Portugal, Ireland and Spain, are in stark contrast to the recovery of other countries such as Germany.
Employment is back on the upswing in the finance and business sectors, up 1.8 percent overall since the third quarter of last year. Meanwhile, employment in manufacturing continues to fall, although the rate has recently slowed. Such a trend is partially reflected in the real estate market, with positive growth being experienced in office real estate, compared to negative growth in industrial and retail markets.
While exports are leading the recovery, job creation in the industry has slowed. Hutchings told the Daily News that while there was no increase in hiring in the industrial and manufacturing sectors, many industries are capitalizing on spare capacity to fuel growth.
(Report Originally appeared in Hurriyet Daily News)