11. Juni 2010 
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Istanbul office take-up on road to recovery
The Istanbul office leasing market has been making a gradual recovery since the third quarter of 2009 with Q110 take-up standing at 35,939 sq m (386,856 sq ft) which is 15 times greater than the figure recorded in Q109 of 2,500 sq m (26,909 sq ft). With the telecommunication, IT, electronic, insurance and pharmaceutical sectors continuing to drive demand, international real estate advisor Savills associate Kuzey Bati predicts that take-up will continue to remain strong throughout 2010.
Murat Ergin, head of Savills associate Kuzey Bati, comments: “In-line with the predicted economic recovery in Turkey over the course of 2010, we expect the office market to reflect a similar trend. This will inevitably have a positive impact on rents, which should benefit from some upward pressure as a result.”
According to Kuzey Bati, current achievable prime rents in Levent Central Business District (CBD) stand at $37 per sq m per month. The overall average rent has decreased to $21 per sq m per month, which reflects a decline across all office districts in Istanbul.
When assessing supply, Kuzey Bati notes that total office stock in Istanbul reached 2.8 million sq m (30 million sq ft) at the end of the first quarter in 2010. This has resulted in an increase in the average vacancy rate to 9.9% from a previous figure of 9% however, Kuzey Bati states that if the strong demand continues as expected, the vacancy rate should not increase significantly.
With regard to the investment market Kuzey Bati research confirms that investor appetite, particularly from national private investors, has remained strong although due to a lack of suitable investment product, transaction levels have been muted. This competition for prime assets between discerning investors has resulted in a hardening of prime CBD yields, which have moved into current levels of 7.75%. This is 25 bp lower than the same period in 2009.
Murat Ergin continues: “Given the strong demand and limited supply imbalance for prime office investments in Istanbul, we expect that the prime office CBD yield will decrease to 7.50% throughout 2010 for the best products.”
Murat Ergin, head of Savills associate Kuzey Bati, comments: “In-line with the predicted economic recovery in Turkey over the course of 2010, we expect the office market to reflect a similar trend. This will inevitably have a positive impact on rents, which should benefit from some upward pressure as a result.”
According to Kuzey Bati, current achievable prime rents in Levent Central Business District (CBD) stand at $37 per sq m per month. The overall average rent has decreased to $21 per sq m per month, which reflects a decline across all office districts in Istanbul.
When assessing supply, Kuzey Bati notes that total office stock in Istanbul reached 2.8 million sq m (30 million sq ft) at the end of the first quarter in 2010. This has resulted in an increase in the average vacancy rate to 9.9% from a previous figure of 9% however, Kuzey Bati states that if the strong demand continues as expected, the vacancy rate should not increase significantly.
With regard to the investment market Kuzey Bati research confirms that investor appetite, particularly from national private investors, has remained strong although due to a lack of suitable investment product, transaction levels have been muted. This competition for prime assets between discerning investors has resulted in a hardening of prime CBD yields, which have moved into current levels of 7.75%. This is 25 bp lower than the same period in 2009.
Murat Ergin continues: “Given the strong demand and limited supply imbalance for prime office investments in Istanbul, we expect that the prime office CBD yield will decrease to 7.50% throughout 2010 for the best products.”
