Speaking to the Turkish Daily News during a gathering by the Center for Economics and Foreign Policy Studies, or EDAM, in Bodrum last weekend, Daniel Gros, director of the Brussels-based Center for European Policy Studies, warned Turkey it would need to get things moving.  

  Although there was a lot of volatility in world markets at present one could still succeed by executing the right kind of project in the right place, said Ali Ağaoğlu, chairman of Ağaoğlu Group.

  “Today world markets are going through truly uncertain times. But we are also seeing states and central banks trying to control the market and this shows determination to work together on the issue,” Ağaoğlu said. “It would be wrong to say the crisis won't impact Turkey at all – the crisis has the potential to do so. But there is notable need for new residential units in Turkey, as 50 percent of the existing building stock is not up to standard. In a time like this, a right project in the right place will sell.”

    While the country's lenders will experience slower loan growth and an increase in non-performing loans, their “healthy starting position” means a “neutral short-term impact on their” credit rating, Moody's said in the e-mailed report. Moody's rates Turkey's banking industry Ba3, or three steps below investment grade, with a “stable-to-negative” outlook.

    “Turkish banks' consistently strong profitability since 2003 has translated into comfortable capitalization levels,” Moody's said. “But the global credit crunch and weakening economic conditions in Europe are likely to spread into Turkey, possibly sooner rather than later. We would expect loan growth in Turkey to ease, with a degree of deterioration in asset quality.”

    Turkish banks are likely to suspend the expansion of their branch networks this year and in 2009 and “exhibit further caution in their lending activities over the next few months,” Moody's said. Economic growth is likely to slow to 3.5 percent this year from 4.5 percent in 2007 and to as little as 2 percent in 2009, it said.

  Consumer lending  

  Lending to consumers at Turkish banks, excluding credit cards, has increased 35-fold since 2002 to $82.6 billion as the Central Bank reduced interest rates and an accord with the International Monetary Fund helped bring 26-straight quarters of economic growth. The Central Bank has increased interest rates by 1.5 percentage points to 16.75 percent since April to damp an acceleration in inflation, paring demand for loans and capping banks' profitability. 

   The proportion of non-performing loans at Turkish lenders may increase by as little as 100 basis points next year if the credit crunch doesn't stem the flow of funds from abroad used to balance the current account deficit, Moody's said.

    Deterioration in banks' asset quality would be “much more severe” if the current account gap brings a sharp depreciation in the Turkish lira, accelerating inflation and leading to a steep rise in interest rates, Moody's said. In that case non-performing loans may increase by more than 800 basis points, it said.

turkishdailynews.com.tr

  Those wishing to purchase houses have been contacting with the construction firms with the perception that “the prices are at the lowest ebb and hence it is the right time to purchase residences.”

  An analysis of luxury housing projects in places such as Istanbul's Bahçeşehir district reveals that the discount rates in luxury housing projects surpass that of the declared amounts if you manage to drive a hard bargain with the representatives of the real estate companies. In addition, it is possible to find even better prices in projects where the delivery of the houses has just started.

  There was a 10 percent discount offered at the Ispartakule boutique project, located at the center of Bahçeşehir during negotiations with project managers. Internet research, however found houses in Ispartakule at 20 percent less than the prices listed by homeowners and real estate agencies.

  The managers of another highly popular project in Istanbul said their company could make a 28 percent discount on cash purchases. This level stood at 25 percent in the news published in newspapers. Meanwhile, the price of a highly-qualified project in Ataşehir, on the Anatolian side of the city, which stood at $525,000, had then declined to $475,000, and later on declined furthered to $440,000.

  There is an intensity in the sales offices of these luxury housing projects. Companies such as Ağaoğlu Group of Companies and Sinpaş Real Estate Investment Trust, or REIT, have moved the start for sales in their new projects to an earlier date and extended the opening hours of their sales offices, now also including weekends.

  Ağaoğlu, which has started sales in Southside, the last stage of its Ataşehir My World project, has managed to sell 62 houses within five days. The prices of the houses in the project vary between YTL 345,000 and 445,000, and those wishing to purchase the houses in the project are provided with the opportunity to pay the cost through installments 5 percent of the total cost, if they pay 10 percent of the total cost in advance.

  “Investors have started to venture into real estate rather than speculative investment tools such as the stock exchange,” said Hasan Rahvalı, general manager of Ağaoğlu Group of Companies.

  REIT, which started the sales of houses in the third stage of its Bosphorus City project due to massive demand at the weekend, has managed to sell nearly 100 houses within two days.

  The company fulfilled the sales of a total of 1009 houses in its Bosphorus City project from Sept. 31 onward, said Şebnem Kadıoğlu, corporate communications manager of Sinpaş REIT. “We have put the houses in the third stage, which we previously thought about putting up for sale in 2009, up for sale last week. We have sold 100 houses during the weekend,” said Kadıoğlu.

  Bosphorus City is comprised of a total of 2,793 houses and the prices of the houses in the project range from YTL 181,320 and YTL 2.36 million.

Stagnation in secondhand houses:

  The decline in the prices of luxury housing projects along with attractive payment schemes have further increased the stagnation in the secondhand houses. The real estate market was confronted with the signs of stagnation prior to the crisis, said Nabi Cücük, general manager of Reha Medin Real Estate Services, adding that this stagnation would continue during the first three months of 2009.

  The prices were receding for the last eight to nine months, said Ebru Karahan, business development manager of Remax, adding that the customers generally preferred to purchase homes in new projects.

     The rate increased from 8.8 percent in the same time of last year, Turkish Statistical Institute said on its Web site yesterday. The jobless rate was 9 percent in the month-earlier period.

  Unemployment in Turkey, with a fast-growing young population, is a growing concern as the country begins to feel the fallout from the global economic slowdown and the credit crunch. Economists say the official figures underestimate the true extent of unemployment, which is difficult to gauge due to the country's large unregistered economy, reported Reuters.

  Turkey's economy grew 1.9 percent in the second quarter, the slowest since it emerged from a 2001 recession, as the Central Bank increased the cost of borrowing and a court case against the ruling party shook consumer confidence, reported Bloomberg. The global credit crunch is likely to further slow economic expansion, according to an Oct. 9 report by Morgan Stanley.

     Turkey added 451,000 jobs in services, construction and manufacturing in the period from the year earlier, while agricultural jobs fell 78,000, the statistics agency said yesterday. The workforce grew about 575,000, it said.

   About 22.6 million people were employed, compared with 22.2 million a year earlier, it said. The workforce participation rate, a measure of how many people of working age are working or seeking employment, rose to 49.9 percent from 49.5 percent a year earlier, the Ankara-based statistics agency said.