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Turkish REITs &
Real Estate Market
Cenk Arson, Rönesans Gayrimenkul Yatırım A.Ş.

              MIPIM, March 2012
Agenda

I. Rönesans Gayrimenkul Yatırım A.Ş.


II. REITs in Turkey


III. Fundamental Market Drivers


      I. Office Market


      II. Retail Market




                                       2
Rönesans Gayrimenkul Yatırım A.Ş.
                                                                          Istanbul      ■    Commercial real estate developer and investor.

                                                                                        ■    Focuses on two markets; Turkey and Russia and on two
                                                                                             asset classes; retail and office.
                  Istanbul                      Samsun
                                                                                        ■    13 yielding assets with a total GLA of c411,000 sqm(1).
                    Ankara
                                                                                        ■    34 properties in portfolio, 21 in Turkey and 13 in Russia.
                                                           Malatya
                                            K. Maraş
     Izmir                                                                              ■    11 projects under development.
                                                             Şanlıurfa

                    Antalya           Adana       Gaziantep                             ■    Total GAV: US$2.3 bn(2), owned GAV: US$1.7 bn(2).

                                                                                        ■    EPRA NAV: US$1,285 mn(2).


                                                                                            Portfolio Value by Development Status (9M11)


                                          St. Petersburg

                                                  Yaroslavl
                                                                      Surgut

               St.
               Peters
               burg                                                       Novosibirsk

  Retail
  Office
  Mixed use
 Properties under development
  Land

(1) As of Dec 31, 2011, (2) As of Sep 30, 2011, excludes two assets acquired in 4Q11.
                                                                                                                                                       3
Development Pipeline
       2012                                                    2013                                                       2014
 Optimum İzmir               Samsun SC & Hotel             Aura Surgut                  Renaissance Premium         Ronesans Tower
                                                                                                                    Istanbul




 Concept: Optimum Outlet     Concept: SC and Hotel         Concept: Shopping mall       Concept: Office
 Expected GLA:               Total GLA: 79,899 sqm         Total GLA: 64,789 sqm        Total GLA: 11,851 sqm
 54,950 sqm                  Completion year(1): 2013      Completion year(1): 2013     Completion year(1): 2013
 Completion year(1): 2012    RGY: 49.99%                   RGY: 84.59%                  RGY: 89.04%                 Concept: Office
 RGY: 99.99%                 Latest Milestones:            Latest Milestone:            Latest Milestone: Project   Total GLA: 40,447 sqm
 Latest Milestones:          Acquired in Feb 2011;         Construction works           finance in place,           Completion year(1): 2014
 98% pre-leased, opening     Construction works            started in 2Q11              construction works          RGY: 99.99%
 on March 30, 2012           started in 2Q11                                            started in 1Q12             Latest Milestone: Building
                                                                                                                    permit in place
Mecidiyeköy Office
                                          Kahramanmaraş                  Şanlıurfa                                  Küçükyalı Shopping
                                                                                                                    Centre & Hotel




Concept: Office
Total GLA: 10,747 sqm                    Concept: Shopping mall          Concept: Shopping mall                     Concept: Retail and hotel
Completion year(1): 2012                 Total GLA(2): 57,500 sqm        Total GLA(2): 50,000 sqm                   Expected GLA:
RGY: 99.99%                              Completion year(1): 2013        Completion year(1): 2013                   94,180 sqm
Latest Milestone:                        RGY: 49.99%                     RGY: 99.99%                                Completion year(1): 2014
Construction works started               Latest Milestone:               Latest Milestone:                          RGY: 99.99%
in 2Q11                                  Project acquired in May         Acquired in August 2011                    Latest Milestones:
                                         2011, project finance and
Renaissance Pravda                                                                                                  Concept design
                                         building permit in place,
                                                                                                                    completed
                                         construction works
                                         started in 4Q11




Concept: Office
Total GLA: 18,383 sqm
Completion year(1): 2012
RGY: 89.04%
Latest Milestone:
Construction works started
in 3Q11                                                                                                                                          4
Agenda

I. Rönesans Gayrimenkul Yatırım A.Ş.


II. REITs in Turkey


III. Fundamental Market Drivers


      I. Office Market


      II. Retail Market




                                       5
Turkish REIT Regulation
■   Regulation on Turkish Real Estate Investment Trusts (REIT) was passed in 1995.


■   Brings special tax benefits to REITs:
     • Corporate tax exemption,

     • 0% withholding tax on corporate earnings and dividends paid out,

     • VAT exemption on security purchases to portfolio,

     • Stamp duty exemption on real estate sales/purchase contracts and promise-to-sell agreements.



■   Investor Friendly:
     • Transparency (Valuation & Transactions),

     • Stronger corporate governance,

     • Encourages IPOs and access to capital markets.




                                                                                                      6
Listed REITs
■      24 listed REITs                                                                      Evolution of No. of REITs & NAV on ISE

■      Total Mcap: 13.1 bn(1), 3% of the total market
       capitalization on the ISE.

■      Aggregate NAV: 15.8 bn(2) as of June 30, 2011(3).

■      However, majority of REITs are small with an NAV of
       less than TL0.3 bn.

■      Emlak Konut REIT alone accounts for 44% and 35% of
       the total Mcap and NAV.

■      REIT IPOs gained pace after CMB lowered the
       minimum floatation ratio from 49% to 25% at YE09.

■      9 REITs have listed their shares since then (6 in 2010,                                    Source: CMB, ISE
       2 in 2011 and 1 ytd in 2012) with a total IPO size of                                      (1) excludes Özak REIT which was listed in Feb 2012.
       TL2.1 bn.

■      Moreover, 5 REITs are preparing to come to the
       market.



(1) Total Mcap excludes EGS REIT but includes Özak REIT, which was listed on Feb 15, 2012. The Mcaps are as of March 1, 2012
(2) Total NAV excludes EGS REIT and Özak REIT.
(3) Due to a regulatory change, REITs ceased publishing their NAV tables after June 30, 2011.                                                            7
Listed REITs
Ranking of Listed REITs by NAV - (bn TL, as of June 30, 2011)*




                                                                                Total NAV: TL15.8 bn

                                                                                Sector avg: TL0.7 bn




Source: ISE
*Excludes EGS REIT, which has a negative NAV as of June 30, 2011 and Özak REIT, which was listed on the ISE on February 15, 2012.
Due to a regulatory change, REITs ceased publishing their NAV tables after June 30, 2011.                                           8
Portfolio Composition of Listed REITs
Composition of Portfolio (June 30, 2011)                                   Real Estate Portfolio by Asset Type (June 30, 2011)




Source: CMB Monthly Reports                                                  Source: ISE




 ■       Residential is the largest asset class with a 29% share followed by retail (25%).

 ■       Offices and hotels have a relatively smaller 8% and 5% shares

 ■       REITs have a sizable landbank, constituting 32% of their real estate portfolio.




                                                                                                                            9
Market Performance of REITs




    Source: ISE


■         REITs tend to outperform the broader market when the economy is growing and especially when the interest rates are falling.

■         Based on the June 30, 2011 appraisals, REITs’ average gross rental yields are 6.6% in retail, 8.1% in office and 9.3% in industrial segment.
■         REITs were a major underperformer during 2008 due to rising interest rates. But, they bottomed out in late 2008 and caught up with the
          overall market in 2009 thanks to the sharp reversal in interest rates, improving economic fundamentals and pent-up demand. REITs became
          an underperformer again from 2Q10. Yet, this changed after Emlak Konut REIT’s IPO in December 2010, which in view of its large size,
          triggered a considerable interest in the sector.
■         REITs beat the overall market by a slight 7% in 2011 and they are performing in line with the ISE-100 so far in 2012.




                                                                                                                                                 10
Agenda

I. Rönesans Gayrimenkul Yatırım A.Ş.


II. REITs in Turkey


III. Fundamental Market Drivers


      I. Office Market

      II. Retail Market




                                       11
I - Turkish Office Market - Stock
Existing Office Stock by Submarkets (Istanbul)


                                                 ■   Istanbul is the only meaningful office market with
                                                     the current stock of 2.9 mn sqm as of YE11.



                                                 ■   40% of this stock is located in the CBD and 60% in
                                                     non-CBD.



                                                 ■   New supply reached 326,000 sqm in 2011
Source: Jones Lang LaSalle (JLL), January 2012       following the 235,000 sqm and 250,000 sqm
                                                     delivered in 2010 and 2009, respectively.
European Office Stock Comparison (mn sqm)


                                                 ■   However, high quality office supply is still limited,
                                                     especially in the CBD, as most of the existing
                                                     stock is low quality office space converted from
                                                     residential apartments.




Source: Jones Lang LaSalle
                                                                                                             12
Major Drivers:


■   Ongoing shift from outdated offices to modern premises.

■   GDP growth,

■   FDI inflows,

■   Relocation and expansion needs triggered by sector consolidation and
    M&As,




                                                                           13
GDP Growth & FDI Inflows
Real GDP Growth (YoY, %)                                       FDI Inflows




Source: TurkStat                                               Source: Turkish Ministry of Economy




  ■       Turkey was one of the world’s top performers in economic growth during 2011.

  ■       FDI inflows started to pick up in 2011 driven by Turkey’s relatively stronger standing vs. its peers
          in the current global environment.

  ■       Foreign interest may further escalate with a pending improvement in Turkey’s credit rating to
          investment grade.

                                                                                                           14
M&A Activity and Consolidation
         Avg turnover per company in manufacturing sector                          M&A Activity in Turkey (US$ bn)
(‘000 EUR)




   Source: Eurostat, Turkstat, 2004 and 2005 Data                                   Source: Deloitte, Annual Turkish M&A Review 2011



             ■   M&As & sector consolidation are another major driver of office demand in Turkey.

             ■   Turkey still lags far behind the developed European countries in terms of company scales and there is still significant scope
                 for further consolidation in many sectors.

             ■   In 2011, total M&A volume in Turkey reached US$15 bn in 241 transactions despite the lack of big ticket privatizations.

             ■   Foreign investors accounted for 74% of the total deal volume vs. 36% in 2010.



                                                                                                                                           15
Agenda

I. Rönesans Gayrimenkul Yatırım A.Ş.


II. REITs in Turkey


III. Fundamental Market Drivers


      I. Office Market


      II. Retail Market




                                       16
II - Turkish Retail Market - Drivers


■   Growing and young population,
■   Urbanization,
■   An expanding middle class,
■   Changing shopping preferences towards modern retail outlets,
■   Growth in organized retail.




                                                                   17
Strong Demographics & Urbanization
 Age Profile Comparison                                                Urban Population (% of Total Population)




Source: Eurostat, TurkStat                                               Source: TurkStat, UN Urbanization Prospectus




■        Turkey has the youngest and the second largest population in Europe.
■        67% of the Turkish population is aged under 40 and only 7% above 65.
■        Turkey also has one of the highest population growth rates in Europe (1.1% p.a. vs. EU average of 0.4% p.a.).
■        The urbanization of the Turkish population continues, which bodes well for the retail market.


                                                                                                                         18
Emerging Middle & Affluent Class
Middle & Affluent (MA) Class Population


        180                                                                                                                                   30,000




                                                                                                                                                       )
                                                                                                                                                       $
                                                                                                                                                       S
                                                                                                                                                       U
                                                                                                                                                       (
                                                                                                                                                       s
                                                                                                                                                       s
                                                                                                                                                       a
                                                                                                                                                       l
                                                                                                                                                       c
                                                                                                                                                       A
                                                                                                                                                       M
                                                                                                                                                       a
                                                                                                                                                       t
                                                                                                                                                       i
                                                                                                                                                       p
                                                                                                                                                       a
                                                                                                                                                       c
                                                                                                                                                       r
                                                                                                                                                       e
                                                                                                                                                       p
                                                                                                                                                       P
                                                                                                                                                       D
                                                                                                                                                       G
                                                                   25,700
                     149
        150                                                                                                                                   25,000

        120                                                                                          17,856                                   20,000
                                                  15,303                                                        15,575
                   13,183         13,578                                                 13,137
          90                                                                                                                11,910            15,000
                                    70                                                                                               11,035
          60                                                                   7,684                                                          10,000
                                                     39              36         31           29
          30                                                                                           21                                     5,000
 m
 M




                                                                                                                  13
 A




                                                                                                                             11
 n
 u
 o
 p
 a




                                                                                                                                      10
 s
 c
 )
 (
 t
 i
 l




            0                                                                                                                                 0
                    China          Russia         Mexico            Brazil     India     Poland      Turkey    Argentina Malaysia Indonesia

                                                                   MA class population (m)        GDP per capita MA class

Source: Pramerica Real Estate Investors Research, December 2009.




 ■       Turkey has the second highest middle and affluent class per capita GDP among emerging economies.
 ■       Fuelled by the normalization in the Turkish economy, MA population is increasing in both number and purchasing
         power.
 ■       Turkish MA population is projected to grow by 13 mn to 34 mn over the next 10 years.




                                                                                                                                                       19
Household Dynamics & Retail Turnover
Household Debt to GDP (1H11)                                                   Retail Market Turnover




Source: CBT, BRSA, TurkStat, ECB                                                Source: Trade Council of Shopping Centres & Retailers



    ■      Turkey still has a low household indebtedness compared to EU countries.

    ■      As of 3Q11, Turkish household debt consisted of 36.2% consumer loans, 35.5% mortgages, 23.7% credit card payables
           and 4.5% auto loans.

    ■      Turkish retail market recorded significant growth over the last 6 years.

    ■      This was sustained even during the crisis years of 2008-2009.

    ■      However, despite this strong growth, organized retail still acounts for 40-42% of the overall retail market vs. 80-90% in
           developed countries, signalling more way to go for Turkey.
                                                                                                                                        20
Has The Market Been Oversupplied ?
 GLA Evolution in Turkey (sqm)                                           European Shopping Centre Pipeline (2H11/2012)



                                CAGR (2005-2011): 24%




                                                                                                                    (mn sqm)
Source: Council of Shopiing Centres, Jones Lang LaSalle January 2012       Source: Cushman & Wakefield, September 2011




     ■        The growth in GLA accelerated from 2006 onward.

     ■        As of YE11, there are 302 shopping centers in Turkey encompassing a total GLA of 7.6 mn sqm.

     ■        Based on the existing stock and pipeline projects, Turkey is the seventh largest retail market in Europe and also
              has the second largest development pipeline among European countries after Russia.




                                                                                                                               21
Retail Density
 GLA per 1,000 Capita
                                              ■   Turkey’s retail density stands at 104 sqm per
                                                  1,000 capita as of YE11.

                                              ■   Based on the current development pipeline,
                                                  it is projected to reach 124 sqm by the end
                                                  of 2013.

                                              ■   Ankara and İstanbul are the two leading
                                                  cities in GLA per 1,000 capita with 236 and
                                                  232 sqm, respectively, which have already
                                                  caught up with the EU averages.

                                              ■   While major cities have attained a certain
                                                  level of saturation and there exists an
                                                  oversupply in some parts of those cities,
                                                  Turkey, as a whole, is still underpenetrated
                                                  and lags behind most of the EU countries.

                                              ■   As of 3Q11, there is still no modern retail
                                                  supply in 32 cities out of the total 81 cities in
                                                  Turkey.


Source: Cushman & Wkaefield, September 2011

                                                                                                22
Conclusion


 Strong Market                        Supportive Regulatory
 Fundamentals                             Framework




                 Value opportunities for
                  investors in Turkish
                         REITs



                                                              23

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Turkey's REIT sector: an iceberg in Europe-Cenk Arson, Rönesans RE Investment

  • 1. Turkish REITs & Real Estate Market Cenk Arson, Rönesans Gayrimenkul Yatırım A.Ş. MIPIM, March 2012
  • 2. Agenda I. Rönesans Gayrimenkul Yatırım A.Ş. II. REITs in Turkey III. Fundamental Market Drivers I. Office Market II. Retail Market 2
  • 3. Rönesans Gayrimenkul Yatırım A.Ş. Istanbul ■ Commercial real estate developer and investor. ■ Focuses on two markets; Turkey and Russia and on two asset classes; retail and office. Istanbul Samsun ■ 13 yielding assets with a total GLA of c411,000 sqm(1). Ankara ■ 34 properties in portfolio, 21 in Turkey and 13 in Russia. Malatya K. Maraş Izmir ■ 11 projects under development. Şanlıurfa Antalya Adana Gaziantep ■ Total GAV: US$2.3 bn(2), owned GAV: US$1.7 bn(2). ■ EPRA NAV: US$1,285 mn(2). Portfolio Value by Development Status (9M11) St. Petersburg Yaroslavl Surgut St. Peters burg Novosibirsk Retail Office Mixed use Properties under development Land (1) As of Dec 31, 2011, (2) As of Sep 30, 2011, excludes two assets acquired in 4Q11. 3
  • 4. Development Pipeline 2012 2013 2014 Optimum İzmir Samsun SC & Hotel Aura Surgut Renaissance Premium Ronesans Tower Istanbul Concept: Optimum Outlet Concept: SC and Hotel Concept: Shopping mall Concept: Office Expected GLA: Total GLA: 79,899 sqm Total GLA: 64,789 sqm Total GLA: 11,851 sqm 54,950 sqm Completion year(1): 2013 Completion year(1): 2013 Completion year(1): 2013 Completion year(1): 2012 RGY: 49.99% RGY: 84.59% RGY: 89.04% Concept: Office RGY: 99.99% Latest Milestones: Latest Milestone: Latest Milestone: Project Total GLA: 40,447 sqm Latest Milestones: Acquired in Feb 2011; Construction works finance in place, Completion year(1): 2014 98% pre-leased, opening Construction works started in 2Q11 construction works RGY: 99.99% on March 30, 2012 started in 2Q11 started in 1Q12 Latest Milestone: Building permit in place Mecidiyeköy Office Kahramanmaraş Şanlıurfa Küçükyalı Shopping Centre & Hotel Concept: Office Total GLA: 10,747 sqm Concept: Shopping mall Concept: Shopping mall Concept: Retail and hotel Completion year(1): 2012 Total GLA(2): 57,500 sqm Total GLA(2): 50,000 sqm Expected GLA: RGY: 99.99% Completion year(1): 2013 Completion year(1): 2013 94,180 sqm Latest Milestone: RGY: 49.99% RGY: 99.99% Completion year(1): 2014 Construction works started Latest Milestone: Latest Milestone: RGY: 99.99% in 2Q11 Project acquired in May Acquired in August 2011 Latest Milestones: 2011, project finance and Renaissance Pravda Concept design building permit in place, completed construction works started in 4Q11 Concept: Office Total GLA: 18,383 sqm Completion year(1): 2012 RGY: 89.04% Latest Milestone: Construction works started in 3Q11 4
  • 5. Agenda I. Rönesans Gayrimenkul Yatırım A.Ş. II. REITs in Turkey III. Fundamental Market Drivers I. Office Market II. Retail Market 5
  • 6. Turkish REIT Regulation ■ Regulation on Turkish Real Estate Investment Trusts (REIT) was passed in 1995. ■ Brings special tax benefits to REITs: • Corporate tax exemption, • 0% withholding tax on corporate earnings and dividends paid out, • VAT exemption on security purchases to portfolio, • Stamp duty exemption on real estate sales/purchase contracts and promise-to-sell agreements. ■ Investor Friendly: • Transparency (Valuation & Transactions), • Stronger corporate governance, • Encourages IPOs and access to capital markets. 6
  • 7. Listed REITs ■ 24 listed REITs Evolution of No. of REITs & NAV on ISE ■ Total Mcap: 13.1 bn(1), 3% of the total market capitalization on the ISE. ■ Aggregate NAV: 15.8 bn(2) as of June 30, 2011(3). ■ However, majority of REITs are small with an NAV of less than TL0.3 bn. ■ Emlak Konut REIT alone accounts for 44% and 35% of the total Mcap and NAV. ■ REIT IPOs gained pace after CMB lowered the minimum floatation ratio from 49% to 25% at YE09. ■ 9 REITs have listed their shares since then (6 in 2010, Source: CMB, ISE 2 in 2011 and 1 ytd in 2012) with a total IPO size of (1) excludes Özak REIT which was listed in Feb 2012. TL2.1 bn. ■ Moreover, 5 REITs are preparing to come to the market. (1) Total Mcap excludes EGS REIT but includes Özak REIT, which was listed on Feb 15, 2012. The Mcaps are as of March 1, 2012 (2) Total NAV excludes EGS REIT and Özak REIT. (3) Due to a regulatory change, REITs ceased publishing their NAV tables after June 30, 2011. 7
  • 8. Listed REITs Ranking of Listed REITs by NAV - (bn TL, as of June 30, 2011)* Total NAV: TL15.8 bn Sector avg: TL0.7 bn Source: ISE *Excludes EGS REIT, which has a negative NAV as of June 30, 2011 and Özak REIT, which was listed on the ISE on February 15, 2012. Due to a regulatory change, REITs ceased publishing their NAV tables after June 30, 2011. 8
  • 9. Portfolio Composition of Listed REITs Composition of Portfolio (June 30, 2011) Real Estate Portfolio by Asset Type (June 30, 2011) Source: CMB Monthly Reports Source: ISE ■ Residential is the largest asset class with a 29% share followed by retail (25%). ■ Offices and hotels have a relatively smaller 8% and 5% shares ■ REITs have a sizable landbank, constituting 32% of their real estate portfolio. 9
  • 10. Market Performance of REITs Source: ISE ■ REITs tend to outperform the broader market when the economy is growing and especially when the interest rates are falling. ■ Based on the June 30, 2011 appraisals, REITs’ average gross rental yields are 6.6% in retail, 8.1% in office and 9.3% in industrial segment. ■ REITs were a major underperformer during 2008 due to rising interest rates. But, they bottomed out in late 2008 and caught up with the overall market in 2009 thanks to the sharp reversal in interest rates, improving economic fundamentals and pent-up demand. REITs became an underperformer again from 2Q10. Yet, this changed after Emlak Konut REIT’s IPO in December 2010, which in view of its large size, triggered a considerable interest in the sector. ■ REITs beat the overall market by a slight 7% in 2011 and they are performing in line with the ISE-100 so far in 2012. 10
  • 11. Agenda I. Rönesans Gayrimenkul Yatırım A.Ş. II. REITs in Turkey III. Fundamental Market Drivers I. Office Market II. Retail Market 11
  • 12. I - Turkish Office Market - Stock Existing Office Stock by Submarkets (Istanbul) ■ Istanbul is the only meaningful office market with the current stock of 2.9 mn sqm as of YE11. ■ 40% of this stock is located in the CBD and 60% in non-CBD. ■ New supply reached 326,000 sqm in 2011 Source: Jones Lang LaSalle (JLL), January 2012 following the 235,000 sqm and 250,000 sqm delivered in 2010 and 2009, respectively. European Office Stock Comparison (mn sqm) ■ However, high quality office supply is still limited, especially in the CBD, as most of the existing stock is low quality office space converted from residential apartments. Source: Jones Lang LaSalle 12
  • 13. Major Drivers: ■ Ongoing shift from outdated offices to modern premises. ■ GDP growth, ■ FDI inflows, ■ Relocation and expansion needs triggered by sector consolidation and M&As, 13
  • 14. GDP Growth & FDI Inflows Real GDP Growth (YoY, %) FDI Inflows Source: TurkStat Source: Turkish Ministry of Economy ■ Turkey was one of the world’s top performers in economic growth during 2011. ■ FDI inflows started to pick up in 2011 driven by Turkey’s relatively stronger standing vs. its peers in the current global environment. ■ Foreign interest may further escalate with a pending improvement in Turkey’s credit rating to investment grade. 14
  • 15. M&A Activity and Consolidation Avg turnover per company in manufacturing sector M&A Activity in Turkey (US$ bn) (‘000 EUR) Source: Eurostat, Turkstat, 2004 and 2005 Data Source: Deloitte, Annual Turkish M&A Review 2011 ■ M&As & sector consolidation are another major driver of office demand in Turkey. ■ Turkey still lags far behind the developed European countries in terms of company scales and there is still significant scope for further consolidation in many sectors. ■ In 2011, total M&A volume in Turkey reached US$15 bn in 241 transactions despite the lack of big ticket privatizations. ■ Foreign investors accounted for 74% of the total deal volume vs. 36% in 2010. 15
  • 16. Agenda I. Rönesans Gayrimenkul Yatırım A.Ş. II. REITs in Turkey III. Fundamental Market Drivers I. Office Market II. Retail Market 16
  • 17. II - Turkish Retail Market - Drivers ■ Growing and young population, ■ Urbanization, ■ An expanding middle class, ■ Changing shopping preferences towards modern retail outlets, ■ Growth in organized retail. 17
  • 18. Strong Demographics & Urbanization Age Profile Comparison Urban Population (% of Total Population) Source: Eurostat, TurkStat Source: TurkStat, UN Urbanization Prospectus ■ Turkey has the youngest and the second largest population in Europe. ■ 67% of the Turkish population is aged under 40 and only 7% above 65. ■ Turkey also has one of the highest population growth rates in Europe (1.1% p.a. vs. EU average of 0.4% p.a.). ■ The urbanization of the Turkish population continues, which bodes well for the retail market. 18
  • 19. Emerging Middle & Affluent Class Middle & Affluent (MA) Class Population 180 30,000 ) $ S U ( s s a l c A M a t i p a c r e p P D G 25,700 149 150 25,000 120 17,856 20,000 15,303 15,575 13,183 13,578 13,137 90 11,910 15,000 70 11,035 60 7,684 10,000 39 36 31 29 30 21 5,000 m M 13 A 11 n u o p a 10 s c ) ( t i l 0 0 China Russia Mexico Brazil India Poland Turkey Argentina Malaysia Indonesia MA class population (m) GDP per capita MA class Source: Pramerica Real Estate Investors Research, December 2009. ■ Turkey has the second highest middle and affluent class per capita GDP among emerging economies. ■ Fuelled by the normalization in the Turkish economy, MA population is increasing in both number and purchasing power. ■ Turkish MA population is projected to grow by 13 mn to 34 mn over the next 10 years. 19
  • 20. Household Dynamics & Retail Turnover Household Debt to GDP (1H11) Retail Market Turnover Source: CBT, BRSA, TurkStat, ECB Source: Trade Council of Shopping Centres & Retailers ■ Turkey still has a low household indebtedness compared to EU countries. ■ As of 3Q11, Turkish household debt consisted of 36.2% consumer loans, 35.5% mortgages, 23.7% credit card payables and 4.5% auto loans. ■ Turkish retail market recorded significant growth over the last 6 years. ■ This was sustained even during the crisis years of 2008-2009. ■ However, despite this strong growth, organized retail still acounts for 40-42% of the overall retail market vs. 80-90% in developed countries, signalling more way to go for Turkey. 20
  • 21. Has The Market Been Oversupplied ? GLA Evolution in Turkey (sqm) European Shopping Centre Pipeline (2H11/2012) CAGR (2005-2011): 24% (mn sqm) Source: Council of Shopiing Centres, Jones Lang LaSalle January 2012 Source: Cushman & Wakefield, September 2011 ■ The growth in GLA accelerated from 2006 onward. ■ As of YE11, there are 302 shopping centers in Turkey encompassing a total GLA of 7.6 mn sqm. ■ Based on the existing stock and pipeline projects, Turkey is the seventh largest retail market in Europe and also has the second largest development pipeline among European countries after Russia. 21
  • 22. Retail Density GLA per 1,000 Capita ■ Turkey’s retail density stands at 104 sqm per 1,000 capita as of YE11. ■ Based on the current development pipeline, it is projected to reach 124 sqm by the end of 2013. ■ Ankara and İstanbul are the two leading cities in GLA per 1,000 capita with 236 and 232 sqm, respectively, which have already caught up with the EU averages. ■ While major cities have attained a certain level of saturation and there exists an oversupply in some parts of those cities, Turkey, as a whole, is still underpenetrated and lags behind most of the EU countries. ■ As of 3Q11, there is still no modern retail supply in 32 cities out of the total 81 cities in Turkey. Source: Cushman & Wkaefield, September 2011 22
  • 23. Conclusion Strong Market Supportive Regulatory Fundamentals Framework Value opportunities for investors in Turkish REITs 23

Notas del editor

  1. Wide national footprint with operations in 6 of the largest 8 cities in Turkey RGY targets densely populated areas with high purchasing power
  2. Wide national footprint with operations in 6 of the largest 8 cities in Turkey RGY targets densely populated areas with high purchasing power
  3. Wide national footprint with operations in 6 of the largest 8 cities in Turkey RGY targets densely populated areas with high purchasing power
  4. Wide national footprint with operations in 6 of the largest 8 cities in Turkey RGY targets densely populated areas with high purchasing power
  5. Wide national footprint with operations in 6 of the largest 8 cities in Turkey RGY targets densely populated areas with high purchasing power