Shining Star Of Economy: Real Estate

We took a closer look at the Turkish real estate industry with Mehmet Kalyoncu, Chairman of the Executive Board at GYODER

We have talked with Mehmet Kalyoncu, Chairman of the Executive Board, who said, “Real estate has been regarded as one of the safest investment means in Turkey for many years. Real Estate will continue to grow as one of the leading industries of Turkey in our country where the need for new housing continues due to demographic reasons”, and we mentioned the current position of the real estate sector that is the shining star of the Turkish economy, its share in the economy, the reflections of the pandemic on the real estate industry, and the future predictions of the industry.

Where would you place the Turkish real estate industry compared to the world? How do you see the position of Turkey?

I would like to emphasize that the real estate industry in Turkey has a greater potential compared to the world. One of the important trade centres of the world, Turkey is an attractive country with its transportation facilities, tourism, entertainment, fair, and congress tourism today. Particularly Istanbul and Izmir, Bodrum, Antalya, where real estate development has recently begun to be handled by more corporate firms, continue to draw the attention of investors from all over the world, especially after the pandemic.

At the same time, Turkey has raised its infrastructure above world standards. We have seen how important infrastructure is, especially during the pandemic process in which our strong health infrastructure has been tested. In our country where infrastructure development has been carried out with great success, we have very valuable projects that have been considered with all aspects and implemented such as communication infrastructure, airports, hospitals, highways, and energy facilities. Being a strategic wealth for our country, the real estate industry paves the way through up-to-date regulations in order to rapidly adapt to the developing world.

Real estate has been regarded as one of the safest investment instruments in Turkey for many years. Real estate will continue to grow as one of the leading industries of Turkey, where the need for new housing continues due to demographic reasons.

How do you see the share of the real estate industry in the Turkish economy? How much is the contribution of the industry to the economy?

Having the ability to rapidly recover by adapting to the conditions with its experience and knowledge, the real estate industry has finished 2020 with a performance better than 2019 despite the effects of the pandemic. This performance directly affects not only the real estate industry but also 250 sub-industries. In fact, neither the public nor the majority of our society perceives the real estate industry merely in terms of the size of the volume of housing, construction, or contracting services, they also take into account all activities by considering the 250 sub-industries influenced by this industry.

All these factors also show how big the impact of the construction industry is. The industry should not be thought of as just the construction and production stages, and it should be noted that real estate has reached a serious economic size together with its sub-industries. In fact, manufacturing and industrial production act in line with the general trends of the construction industry. At the same time, our industry contributes significantly to our country in terms of macroeconomic aspects in creating employment and preventing unemployment.

Could you share your view on the reflections of the lifestyle that changed with the pandemic on the real estate industry in terms of both living spaces and investments?

Due to the pandemic, many factors from sales to construction systems, from the structure of the spaces to the materials used, from consumer behaviour to general trends have changed. We are in a period in which human habits are better examined, and the harmony of technology and design has become very important in real estate. The pandemic process revealed the importance of experience design. In other words, giving thought to experience and having structures de signed in the most appropriate way for the user experience has become important.

The sense of responsibility imposed by the awareness that each project leaves a mark on the city in terms of its environmental impacts has recently become more mature in the real estate industry. In 2021 and afterwards, this awareness will enable a human-oriented, people-oriented development to emerge in our cities. The real estate industry has also come to know the indigenization in the construction industry and realized how important the domestic product is during the pandemic period in which each country has turned in on itself. In the upcoming period, it is necessary to support initiatives for more indigenization, especially in the sophisticated systems used in the construction industry.

We know that there is an increasing foreign demand ort he Turkish real estate industry. Can we hear your predictions about the future of the industry based on the latest figures?

Existing in the geography of unique beauty and bearing the traces of ancient cultures, our country continues to impress foreign investors as an important trade centre as well as with its natural and cultural wealth. In 2018, when the new regulations were implemented, the field where the recovery in the real estate industry was the most intense was the sales to foreign investors. Housing sales to foreigners reaching 39 thousand 663 units at the end of 2018 has increased by 78.4% compared to the previous year. Housing sales to foreigners were 45 thousand 483 in 2019 and 40 thousand 812 in 2020.

In 2013, when the Reciprocity Law that paved the way for housing sales to foreigners in Turkey entered into force, sales to foreigners were realized as 12 thousand 181 units. The number of houses sold to foreigners in 8 years since 2013 has exceeded 220 thousand units. We should note that a foreign investor who purchases a house continues to contribute to the economy even after purchasing it. Industries such as home textile, furniture, education, health, and retail are also nourished after the purchases of foreign investors. Through the booklet “How to Buy Property in Turkey” that we have prepared as GYODER for foreign investors, we aim to show the ways foreigners can own real estate in Turkey.

Constantly updated and presented to the participants at fairs abroad by us, the booklet covers the basic issues that need to be taken into consideration in all processes from the stage of real estate acquisition, real estate preservation, disposal, and acquiring citizenship through investment in Turkey. As one of Turkey’s largest industries, real estate should be in a closer relationship with technology and design. We want to bring our industry closer to these disciplines. The main stakeholder here is of course the academic institutions.

We have concentrated on our academic projects, increased our collaborations with universities, and carried out the graduate thesis awards competition in the field of real estate for the first time together with the Economic Policy Research Foundation (TEPAV) in Turkey. We have established the data science and artificial intelligence program in the field of real estate with Yıldız Technical University (YTU) We have created very good content in this field. In the Distance Education Certificate Program for Artificial Intelligence and Data Science in Real Estate we have carried out with YTU, start-ups that come to the fore with their applications for real estate have spoken and shared their experiences. Thus, we have brought theoretical knowledge together with practical applications.

Furthermore, we are going to raise awareness through a mainframe that is more inclusive than artificial and data science, and a certification program that explains the point of intersection of real estate and technology. We have a Proptech map. In this graph prepared by Mete Varas, Chairman of the Real Estate Technologies Committee of GYODER, we also include city-related issues in the system. There are the aspects of mobility, logistics, analytics, and retail and sharing offices as well. The common ground of the companies in the Proptech is: “To act with the motivation to provide a service.” This is not something that the real estate industry is very accustomed to.

In the real estate or construction industry, the service is given to either the landowner or the main contractor. Now, in this context, the companies need to work in the habit of serving through “B2C” channels. In fact, indigenization of the components purchased during the actual construction should be the subject of focus of the Proptech in Turkey. As GYODER, we are trying to achieve this. Here, it is necessary to see the picture in the data section for the most imported products and to evaluate the opportunities. Turkish entrepreneurs can fill these gaps in line with their enthusiasm and areas of expertise. We have an idea of bringing all these together.

As GYODER, we are creating awareness. In fact, we aim to establish a community, an ecosystem through this awareness. In this community, people are starting to think about this field, proptech, which they did not think about before. Proptech will bring us the clustering. Our goal is to create this clustering in order to accelerate the development of the real estate industry. This clustering will provide acquaintance, and acquaintance will turn into cooperation and investment.

Today, start ups need to reach us more to give offers, get our opinion, and collaborate with us. Of course, we always have to support start-ups as well. Having become the umbrella organization of the real estate industry, GYODER has made significant contributions to the changes in the Communiqué on Principles Regarding Real Estate Investment Companies (REIC) of the Capital Market Board that was awaited by the industry for a long time. With the devoted teamwork of the REIC Committee under the roof of GYODER that lasted for about a year, the factors that will affect the future of REICs were revealed. The regulations that paved the way for REICs with market size of TRY 58 billion led to excitement in the industry. We believe that REICs will continue their activities more effectively with these regulations that meet the needs of today.

An institutional structure enabling the combination of individual savings and the use of these savings in real estate investments by professionals, the Real Estate Investment Fund (REIF) aims to acquire value gain and/or rental income by investing in real estate assets. The market size of the Real Estate Investment Fund in Turkey has reached TRY 11.7 billion.

Chairman of the Executive Board at GYODER Mehmet Kalyoncu