Business in Istanbul 2012

7/29/2019 Business in Istanbul 2012

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BUSINESS INISTANBUL

5 Turkey in 20417 Investor Trends: Real Estate

17 The Best Airline in Europe

PUBLISHED BY GLOBAL INVESTMENT I LIMITED AND DISTRIBUTED WITH THE SUNDAY TELEGRAPH

SPECIAL REPORT 2012


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Editor: Joseph BoveCountry Consultant: Mert uglanDesign: Kuljit Kaler

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Te Views expressed in Business in Istanbul Special Report 2012 are not necessarily those shared with t he publisher, Global Investment I Limited. Wishing to reect the true nature o Istanbul, urkey,the editor has included articles rom a number o sources, and the views expressed are those o th e individual contributors. No responsibility or liability is accepted by Global Investment I Limited or anyloss to any person, legal or physical, as a result o any statement, act or fgure contained in Business in Istanbul Special Report 2012. Tis publication is not a subsititue or advice on a specifc transaction.

3

A Prime MarketISPAT highlights the opportunities or oreign investors in Turkey.

As the world economy is altering in recovering rom the

recent global fnancial crisis and acing a second recessiondue to the Euro zone sovereign debt problem, investors

are looking or sae havens where they can fnd growth,

confdence and stability with lucrative opportunities.

Turkey, with its robust economy as well as a bright uture,

is oering investors a secure investment environment with great

business opportunities. The Turkish economy has been set on

strong undamentals. For example, in regards to the sovereign debt

problem, which is now threatening the global economy let alone

the EU, Turkey reduced its gross public debt stock ratio to 39%

o GDP in 2011 down rom 74% in 2002 (Average o the 27 EU

countries was more than 82% in 2011). Similarly, the budget decit

is another problem creating a pessimistic economic outlook. While

many countries are unable to rein in their widening budget decits,

Turkey managed to reduce its budget decit to 1.4% o GDP in

2011 down rom 10% in 2002. Thereore, Turkey is one o the ew

countries which meet the EU public nance criteria, namely the

Maastricht Criteria; 60% or public debt and 3% or budget decit.

As such, the Turkish economy expanded by a phenomenal 9.2% in

2010 and 8.5% in 2011, standing out as one o the astest growing

economies in the world. Such a sound economy is encouraging

experts and international institutions to make condent projections

about the uture o the Turkish economy. According to the OECD,

Turkey is expected to be the astest growing economy among

the OECD members during 2011-2017, with an annual average

growth rate o 6.7%.While Turkey has been implementing structural reorms on

the one hand, it has taken various initiatives in close cooperation

with the private sector, to improve the investment climate. One o

these initiatives is the establishment o the Coordination Council or

the Improvement o the Investment Environment (YOIKK), which

is a key structure where the private sector makes contributions to

the process o improving the investment climate and has already

been recognized as a success story o public-private platorm by

international economic authorities.

The council has rationalized the regulations on investments

in Turkey, developed policies by determining the necessary

arrangements that will enhance the competitiveness o theinvestment environment, and generated solutions to the

administrative barriers encountered by the local and oreign

investors in all phases o the investment process including the

operating period. Moreover, the government has taken an exclusive

measure to provide a more business-riendly environment or

oreign investors in Turkey.

In addition to the Coordination Council or the Improvement

o the Investment Environment, the government has established

the Investment Advisory Council (IAC) with the participation o

senior executives rom prominent multinational companies in order

to address the administrative barriers to investment, improve

the positive image o Turkey

as an attractive investmentdestination and provide a global

perspective to the ongoing

investment climate reorm

agenda. The results have been

impressive, or example it used

to take 38 days to establish a

company in Turkey, whereas now it takes only 6. Additionally, the

Turkish government works hard or the betterment o the investment

environment. A recent incentive package, introduced in April 2012,

provides investors with a wide range o options to benet rom. The

new system drastically reduced the cost o production by oering

tax deductions and exemptions; land provisions as well as paying

social security premiums or both employers and employees.

As part o this new system, various strategic investment areas

are determined to balance the countrys account decit and the

investments in these sectors will be strongly supported.

Impressed by such an attractive and improved investment

climate, European investors and predominantly UK investors have

been focking to Turkey. That is why around 80% o FDI infows to

Turkey come rom Europe. Similarly, the UK has been one o the

top investors with around USD 15 billion o FDI stocks in Turkey.

Moreover, Turkeys geographical proximity to export markets is

supported by a legal ramework through the ree trade agreements

and the customs union. Turkey has a customs union with the EU

and ree trade agreements with 22 countries. So companies notonly have a logistical advantage but also a benign legal ramework,

which enables investors to export their products to dierent

markets without customs duties. Moreover, the legal ramework is

reinorced with double taxation prevention treaties with 75 countries

and bilateral agreements with 72 countries or the promotion and

protection o investment.

There is ample opportunity in many sectors ranging rom

energy, nance, automotive, ICT, ood and beverage, agriculture,

renewable energy, iron and steel, to petrochemicals and real

estate. More opportunities will come with the realisation o Turkeys

grandiose targets or 2023, the centennial celebration o the

ounding o the Republic. The country has several aims: to becomeone o the top 10 economies in the world with a GDP o USD 2

trillion, to increase its exports volume to USD 500 million, to upgrade

the countrys energy, transportation, and health inrastructure

through the construction o hospital cities, to more than double

electricity generation, and to build new bridges on the Bosphorus

and Dardanelles straits. It is also a national target or Turkey to

make Istanbul an international nancial centre. Foreign investors

can always count on the Investment Support and Promotion

Agency o Turkey or investment opportunities in Turkey. ISPAT is at

their disposal in every stage o their investments. It is the perect

time to invest in Turkey; dont miss the opportunity!

By lker AycPresident

Republic of Turkey Prime Ministry InvestmentSupport and Promotion Agency (ISPAT)


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Business in Istanbul

As co-chair o the body

which is working to

orge stronger busi-

ness ties between Tur-

key and Britain, mine is

not an impartial voice.

However, it is because I

believe so strongly that

our two countries com-

plement each other so

well that I make time rom

my day job as head o

Turkeys main high street

bank to make this riend-ship work.

Since the global cri-

sis in 2008-2009, Turkey

has become the astest

growing economy in Europe and will be one o the engines o global

growth in the coming decades. Deepening economic cooperation

means greater prosperity or both the UK and Turkey. Together,

we can orce the pace o the European recovery. Prime Minister

Cameron put his nger on the reason why, when he said, Turkey

can be a great unier. Because instead o choosing between East

and West, Turkey has chosen both. Turkey is now the economic

powerhouse o an expanding region a nation that exercises infu-ence not through a single commodity but through the maturity o

its industrial and service sectors. However, we remember where we

are coming rom and where our allegiances lie. Turkey is a member

o the Euro-Atlantic community and o NATO, as well as an acces-

sion country o the European Union.

Turkey historically and geographically is a part o Europe, the

Middle East, North Arica and the Caucasus. It is also an active

member o G-20 and plays a vital role in shaping and coordinat-

ing global policies. Turkey oers strong long-term growth potential,

equal to any o the BRIC economies. The International Monetary

Fund (IMF) and other international nancial institutions estimate

that Turkey will continue to grow strongly due to its youthul pop-

ulation. A recent PricewaterhouseCoopers report, The world in2050 names Turkey as one o the E7 economies -China, India,

Brazil, Russia, Indonesia, Mexico and Turkey- surpassing the cur-

rent G7 countries. A very recent HSBC study also orecast that Tur-

key would become the worlds 12th biggest economy by 2050 with

a GDP o $2.149 trillion and a per capita GDP o $22,063. These

ambitious projections are based on hard evidence about Turkey

and the Turkish economy. There are multiple indicators pointing to

Turkeys competitive advantage:

Turkeys foreign trade volume grew to $300 billion in 2011,

Its dynamic population has an average age of 28,

Well-educated productive labour force,

An urbanised society with a growing middle class, Low debt-to-GDP ratio,

Stable interest rates, ination and Turkish Lira FX rates,

Turkeys proximity to the newly emerging markets, CIS, ME and

Arica; as well as to big markets such as the EU and Russia,

Turkeys position as a gateway to global energy resources.

These healthy macro-economic undamentals mean Turkey stands

out as a solid long-term investment choice among the emerging

market economies. The approximate $90 billion o oreign direct

investment Turkey received in the last 10 years is urther proo o

condence in the countrys record.

Turkeys Foreign Economic Relations Board (DEK), wasounded in 1988 to monitor and develop Turkeys economic, com-

mercial, industrial and nancial relations with oreign countries and

international organisations. It is the gateway o the Turkish private

sector to the world. DEKs services include providing consultancyservices to public institutions and organisations; helping compa-

nies identiy new markets, organising international business events,

representing and lobbying or the Turkish private sector in the inter-

national arena, executing strategies or oreign economic relationso Turkey, attracting global capital to Turkey, and assisting Turkish

companies to invest abroad. For this mission, DEK relies on its 109Business Councils, which are established by a cooperation agree-

ment signed with oreign counterparts. The Business Councils

have two sides; one on the Turkish side and the other a counterpart

organisation in the relevant country. The Turkish-British Business

Council (TBBC) working under the umbrella o DEK ocuses onthe development o bilateral economic relations between Turkey

and the UK, which have already gained very positive momentum in

recent years. Prime Minister Recep Tayyip Erdoan spoke during arecent visit to London of a Golden Era, in the relations between

our two countries.TBBCs primary goal is to allow Turkey and Britains economic

relationship to reach its true capacity. Even though the trade vol-

ume between Turkey and Britain adds up to 12 billion USD a year,

there is still much potential or growth. In this respect, the Business

Council prioritises to;

Develop balanced economic and trade relations between the

two countries,

Specify the potential areas of cooperation,

Create the necessary environment for stronger cooperation,

Identify problems in bilateral economic relations and offer solu-

tions,

Promote the cooperation of Turkish and British companies in third

markets, Organise economic, cultural, political and social events and ac-

tivities to complement bilateral economic relations.

Within this ramework, TBBC actively promotes the Istanbul Fi-

nance Centre Project at home and abroad in the attempt to ur-

ther enhance Istanbuls role as a regional and global nance hub.

The Council also works to strengthen cooperation between small

and medium sized enterprises (SMEs) and attract more direct in-

vestment rom the UK to Turkey. TBBC is ocused on inrastruc-

ture, contracting, construction, ICT, deence industry, aviation and

healthcare sectors as ertile areas or bilateral expansion.

For the upcoming period, TBBC will be co-organiser o the

Turkish-British Tatldil Forum with the Ministry o Foreign Aairs oTurkey on October 12-14, 2012. Turkish-British Tatldil Forum is

a high-level, but intimate gathering o representatives rom both

countries in the world o politics, media, business, and academia

- convened to discuss the issues, global and in particular, which

matter most to our important riendship.

By Suzan Sabanc DinerChairpersonDEiK/Turkish-British Business Council

A Business Perspective:Prospects for a Stronger Turkish-British Economic Partnership and Turkish-British Business Council (TBBC).


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5

Turkey in 2041PwC recently released a special report to mark the 30th anniversary o the rm in Turkey.

The report Turkey in 2041: Looking to the uture is an eco-

nomic study looking at the growth capabilities o fve sec-

tors striving to achieve the standard o regional centres o

excellence.The ve sectors include Food & Beverage Process-

ing, Agricultural R&D Services, Alternative Energy, Automobile Pro-

duction, and Tourism. According to the projections developed by

PwC using a long-term growth model, Turkeys GDP per capita is

expected to double by 2041 compared to its current level and ex-

ceed USD 35,000. The expected growth means Turkey will signi-

cantly narrow the income gap between it and developed countries

over the next 30 years. Furthermore,Turkey is expected to become

the 12th largest economy in the world by 2041.

Although the report ocuses on ve key areas o the Turkish

economy there are other signicant topics discussed. For examplethe section entitled Turning challenges into opportunities empha-

sises the importance o structural reorms to boost Turkeys global

competitiveness. Improving transport inrastructure, legal rame-

work, and tax collection eciency are cited as priorities or oster-

ing sustainable growth over the longer-term.

To sustain long-term economic growth and development, the

report ocuses on Turkeys ability to draw rom its growing skilled la-

bour orce and avourable climate, as well as geographical location

at the crossroads o a number o wealthy regions. It continues to

state, the success o the Turkish economy over the next 30 years

will depend on Turkeys ability to develop an international competi-

tive advantage, to attract oreign direct investment, and to developindustries into international centres o excellence that can help

the country export goods and expertise to its region and beyond.

The ollowing are highlights rom the report by PwC, in which

the rm shares their views on the prospects o the ve key sectors

identied or long term growth within Turkey.

Food & Beverage Processing

Over the next thirty years Turkeys ood and beverage market has

the potential to continue to expand as it is well positioned to meet

rising demand, both domestically and internationally. Growing pop-

ulations, rising incomes, urbanisation and the increased coverage

o organised retail should present particular opportunities in the

processed, packaged and rozen ood sectors as consumer tastesshit toward convenience products and supermarkets prolierate.

Agricultural R&D and Services

Over the next thirty years, there is opportunity or oreign R&D-

intensive companies to enter the Turkish market and or local com-

panies to emerge, beneting rom Turkeys increasingly educated

population and rom the avourable policy initiatives to oster in-

novation. A centre o excellence could be strengthened by the ar-

rival o oreign high-technology rms. The establishment o a centre

o excellence in agricultural R&D will help improve productivity in

the local agricultural sector, providing a potential boost to other re-

lated centres o excellence such as ood and beverage processing.Once the industry is more established, regions such as the Middle

East and Arica could become ertile grounds or exports o R&D

and related services or the agriculture industry. Arica in particular,

with its vast stock o under-armed ertile land, could become an

attractive export market or this industry.

Alternative Energy

Turkeys hot climate and natural waterways allow a third o its in-

stalled capacity to be made up rom renewable sources. It is par-

ticularly strong in hydroelectric and solar technologies and is ex-

pected to use these renewable sources to serve a large part o the

rising domestic demand or energy.

There will be plenty o opportunities or growth; around hal

o the nations potential hydroelectric capacity has yet to be con-

structed. And whilst Turkey had the second highest solar hot water

installed capacity in the world ater China in 2009, its high radiation

levels make it more suited than most European countries or large-

scale generation in the uture.

Automobile ProductionTurkey is particularly spe-

cialised in the manuacture

o light-commercial vehicles

(LCVs). This has been fuelled

by their advantageous tax

treatment at home, which

has boosted domestic con-

sumption, and by the re-

quirement or more labour-

intensive techniques in the production o these models, where

Turkey can oer lower wages relative to developed European

economies. LCVs now make up half of total automobile productionin Turkey, up rom a quarter in 2000.

There is the potential or this segment to grow and become

a key centre o excellence or Turkey over the next thirty years, as

more oreign carmakers partner with Turkish companies to benet

rom existing production knowledge and a more competitive labour

market, as well as establishing their own independent operations.

Along with LCVs, the sector as a whole is looking forward to strong

growth and is expected to become a undamental centre o excel-

lence or the Turkish economy.

Tourism

Over the next thirty years, Turkey is well positioned to tap into a

growing travel-hungry middle class in emerging markets. Currently,a larger proportion o visitors to Turkey come rom emerging mar-

kets than can be ound in established destinations in some devel-

oped countries. Approximately 43% o Turkeys overseas visitors

come rom emerging economies whilst this segment accounts or

less than 22% o visitors in the US and less than 10% in Italy.

PwC UK Chie Economist John Hawksworth said o the report:

Turkey has seen a remarkable turnaround in its economic ortunes

over the past decade, and we see this strong perormance con-

tinuing over the next three decades, pushing Turkey up to 12th in

the global GDP league table by 2041. This refects Turkeys dy-

namic, relatively youthul labour orce and strategic location at thecross-roads between Europe and Asia. Turkeys uture is prom-

ising and the continued push to develop centres o excellence

amongst several business sectors will be one o the countrys most

important strategic initiatives to date in attracting oreign rms and

keeping the economy on a sustainable growth path.

Turkey is expected

to become the 12th

largest economy in

the world by 2041.


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Growth TrajectoryThe Borsa Istanbul strives to raise the prole o Capital Markets in Turkey.

The Borsa Istanbul (IMKB), Istanbuls stock exchange was

established in 1985 and began operations shortly thereater.

Currently, there are three markets operating at the IMKB: the stock

market, the bonds and bills market and the international market.

The IMKB provides a air and transparent environment or trad-

ing o a wide variety o securities, namely stocks, exchange traded

unds, government bonds,

Treasury bills, money mar-

ket instruments (repo/

reverse repo), corporate

bonds and oreign securi-

ties as well as oreign ex-

change utures contracts.

There are a total o 389listed companies on the

IMKB and that number

is expected to continue

growing in line with the

general economy. The majority o the companies listed are in the

manuacturing sector while the nancial institutions account or the

highest amount o market capitalisation o any sector listed. While

Agriculture, Forestry, and Fishing industries are represented by only

one company, the sectors market capitalisation represents 6% o

the total exchange. The act that so much Foreign Direct Invest-

ment fows into Turkey on an annual basis allows or more small

and medium sized businesses to consider listing, beneting notonly the exchange but the whole Turkish economy.

The IMKBs integration with international markets, like any ex-

change, is a key attribute o their success. IMKB to date has coop-

eration agreements with the World Federation o Exchanges (WFE),

Federation o European Securities Exchanges (FESE), Federation

o Euro-Asian Stock Exchanges (FEAS), Organisation o the Islamic

Cooperation (OIC), The Islamic Financial Services Board and the In-

ternational Islamic Financial Market. The rate o oreign investment

in the exchange as a percentage o ree foat market capitalisation

is near the 2007 high o 72% at 63% to date. This is ar above the

2000 low o 41% when Turkey had one o the lowest valued cur-

rencies in the world.

Last month, at the 7th Turkish Arab Economic Forum, theBorsa Istanbul President ibrahim Turan, emphasized his plans tointegrate the Istanbul Stock Exchange with neighbouring stock

exchanges. The Borsa Istanbul (IMKB) is the regions largest

and most developed stock exchange. When we look at the mar-

kets capital, it is more than $250 billion and comprises 30 per-

cent o Turkeys GDP. According to Turan, the IMKB 100 Index

has perormed better than the worlds developed economies. We

are looking or opportunities to expand our partnerships. We are

participating in the regions stock exchanges. In the uture this list

is going to become even longer, said the President, noting that

Turkey had signed agreements with the Macedonian, Casablanca,

Kazakhstan, Egyptian and South Korean stock exchanges.Currently the main task or the IMKBs executive team is to

grow the exchange rom the current amount o listed companies.

Surprisingly less than 90 o Turkeys top 500 companies, rising to

130 or the top 1000 companies are represented on the exchange,

representing a huge opportunity or growth. As small medium

sized enterprises continue to receive encouragement to join the

exchange and overall revenues increase the number o compa-

nies going public could triple within a ew years. Similar to sectors

like manuacturing and tourism the exchange will naturally benet

rom geographic position as it continues to develop Turkey as a

regional centre. It is expected that the Capital Markets Law of 1992

will undergo signicant changes so that the IMKB can implement

international standards and European Union directives. When the

changes to the law occur more products including Islamic bank-

ing instruments like Sukuk rental bonds and trading in commercial

products will be opened to investors.

The priority in 2012 is on completing the IMKBs demutaliza-

tion process and becoming a joint stock company that will provide

a platorm to serve as an access point to exchanges worldwide.The key objective is to attract and connect Euro-Asian Exchanges

to the world through the new platorm. There would be large scale

benets in developing an ecient network through which all capital

market institutions will communicate with each other and increase

total liquidity in the markets. As proposed the plan would reduce

transaction costs in the market, implement an integrated risk man-

agement and surveillance system, and centralise collateral man-

agement at Takasbank, Turkeys main clearing house. The IMKB

aims to create an environment where the capital and commodities

markets grow together by supporting each other. The exchange is

also expected to be working towards allowing investors to access/

invest in global stock exchanges via the IMKB.Another widely anticipated move is the horizontal and verti-

cal integration o capital market institutions. Horizontal integration

would mean the integration o the whole value chain,including set-

tlement and custody. In terms o vertical integration, the IMKB pro-

poses a merger with The Turkish Derivatives Exchange and Istan-

bul Gold Exchange. The IMKB also wants to be the operator and

technology provider o any commodity or energy exchange to be

established in Turkey. This integration will take place once the new

legislation on Capital Markets Law comes into effect.

As Istanbul continues to evolve into a Global Financial Cen-

tre it is recognised that to achieve this eat there must be an in-

dependent publicly owned stock exchange. These steps would

help launch a publicly traded IMKB, an achievement Turkey eelsis needed to attract new listings, raise capital and increase liquid-

ity in the exchange, and overall increase the prole o Istanbul as

serious contender to become an international nancial centre. In

a crowded market and competitive world o unds and securities,

especially with the increasing dominance o oreign exchanges in

Singapore, Hong Kong and even Russia, this is really the rst step

to becoming a truly international nancial hub. Perhaps one o the

most important upsides o the global nancial crisis, which began

in 2007, is the increasing role that developing countries play in the

world economy as well as more avourable perception o these

economies risk notes Mr. ibrahim Turhan.

Whilst a certain amount o chaos still exists in many countries,Turkey is nding a way to compete and take advantage o growth

verticals across many industries. Turning Istanbul into an interna-

tional nancial centre places the country in a strong and enviable

position; and could provide the right mix o Eastern prudence and

Western philosophy to compete on the global stage.

The Borsa Istanbul(IMKB) is the regionslargest and most devel-oped stock exchange.When we look at the

markets capital, it ismore than $250 billionand comprises 30 per-cent o Turkeys GDP.


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7

Investor Trends: Real EstateInternational leader Jones Lang LaSalle provides an inside look at the Istanbul real estate market.

By Dr. Kvan Erman, MRICS, Director, Capital Markets & Advisory, Jones Lang LaSalle Turkey

Investor interest in Istanbuls real estate market has strongly

revived in 2012, with negotiations continuing on a ew poten-

tial transactions.These are largely in the orm o existing assets in

the retail market but development projects are also on the agenda.

Jones Lang LaSalle has seen interest from all sorts of inves -

tors, including sovereign wealth unds, investment unds and pri-

vate equity unds. Retail remains the priority market or investors,

with interest not just limited to solo shopping centres, but also

shopping centre portolios covering the secondary cities.

The lack o transactions over the past three years has caused

the market to remain illiquid. This has made pricing dicult, par-

ticularly or global investors, as they seek transactional evidence to

back their pricing calculations. However, it is observed (based on

on-going negotiations) that the gap between the asking and oeredyields has narrowed. The institu-

tional vendors have more realistic

yield expectations; equally global

investors have become keener to

enter the market, refecting this

on their yield oers.

Retail

Based on market intelligence,

negotiations continue on a ew

transactions in the retail market,

with strong potential to be closedduring the remainder o the year.

It is certain that negotiations take

a long time, partly due to the

slow internal processes o some

investment unds, but also longer due diligence stemming rom lim-

ited transparency in the market.

The Code o Obligations, which became eective on 1 July

2012 and includes a few controversial articles related to FX-de-

nominated rent contracts, has had an impact on delays. The law

has caused uncertainty regarding rental growth in oreign curren-

cy-linked contracts, impacting the uture rental income potential

o commercial assets. The Proessional Associations had strongly

lobbied against the government to amend the controversial articlesand some o the potential investors are known to have delayed deal

closure in order to see the outcome o the lobbying activity. The

government positively responded to this, passing a piece o legisla-

tion in June that postponed the implementation o the controversial

articles until 2020. This is expected to restore condence in the

Turkish market, and the negotiations on the suspended deals are

expected to resume.

The closure o the potential deals will re-establish the yield

level in the Turkish market. This will be an important step or the

improvement o market transparency. The remainder o the year

might also see deals involving solo shopping centre disposals in

the secondary cities, which will be a major milestone in showingglobal investor interest in the secondary cities, but also providing a

yield indicator or the secondary markets. The successul closure o

the deals on which negotiations continue will, thereore, show that

i the assets are rightly priced the market becomes liquid, providing

a track record or yield.

Ofce

Investor demand or existing oce assets has remained very strong.

However, the lack o institutional assets seriously undermines the

investment potential. JLL continues to see that strata traditional

sale tends to be strongly preerred by the vendors, as they can

generate higher sale receipts on unit basis compared to the block

sale. However, the strata sale seriously damages the sustainability

o the product as it makes the asset and property management di-

cult. This will also limit the number o institutional assets entering

the market.

Part o the pipeline development to enter the market in the CBD

(Central Business District) and in major sub-markets, is expected to

qualiy institutional investment requirements, increasing the possi-

bility o transaction in the oce market. The asking yields, however,might be an obstacle in the way

o potential transactions, as they

are likely to be aggressive, re-

fecting the limited number o op-

portunities. On the basis o this,

JLL sees investors considering

development projects via joint

venture with local developers as

well as orward purchase oppor-

tunities. However, joint ventures

are not very common as the local

developers are reluctant to sharetheir development prot, relying

on their experience in the wider

geographical region. The lack o

pre-lease practice in the oce

market also acts as a barrier or orward purchase transactions by

investment unds, as most o them have a pre-lease requirement o

50% minimum. Jones Lang LaSalle strongly encourages multina-

tional and Turkish corporates who are owner-occupiers to consider

the sale and leaseback option, which will enable them to generate

cash proceeds that can be utilised in their core business. This op-

tion is increasingly being considered by multinational companies,

while Turkish corporates are less inclined, due to cultural reasons.

However, the belie is they will realise the benets in time, and thatsale and leaseback opportunities will become more available in the

medium term.

Outlook

The Law of Reciprocity, which came into effect on 17 May 2012,

lits the condition o reciprocity or oreign legal and private persons

to buy property in Turkey. The new law is expected to particularly

aect residential sales by individual investors, especially rom the

Gul countries. As the oreign legal parties can easily buy property

via a company established in Turkey, the law is not expected to

make a major impact on the commercial real estate market.

In the medium to long term, Jones Lang LaSalle believes therewill be more institutional investors entering the Turkish market, with

possible intervals due to the pricing gap and legal challenges. On-

going economic uncertainty in the Euro zone and possible deterio-

ration in the uture will, on the contrary, trigger more investment to

Turkey as Istanbuls strength will be more underlined.

Zorlu Centre project in Istanbul - A mixed use development


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Creating a Global Financial CentreIstanbul prepares to build an International Financial Centre to bridge the East and West.

Istanbul, Europes largest megacity with a population o over

15 million has always been home to Turkeys fnancial sec-

tor and the heart o the economy, contributing 25% o the

countrys total GDP. Levent and Maslak are Istanbuls two nan-

cial districts and the headquarters o Turkeys largest companies

and banks, including Turkeys two leading publicly traded banks;

Isbank and Akbank. It is also home to global giants o the nancial

sector including Citibank, JP Morgan, HSBC and Deutsche Bank.

In 2007, as part o their long term economic growth plans,

the Government set about developing Istanbul into a ully-fedged

international nancial centre, where large international banks are

based and investment decisions made. The goal is to make Istan-

bul one o the top 10 nancial centres in the world by 2023, the

centennial celebration o the country. At the heart o this ambitionis Istanbuls new nancial district which is being built in the Eastern

part o the city in the Ataehir neighbourhood on the Asian sideo the Bosphorus. Spanning over a staggering 2,500,000 square

metres, the Istanbul IFC will create a nancial centre larger than

London or New Yorks in size when completed.

The project, which has already began construction, will en-

compass oce space, residences, a conerence hall, a shopping

mall and a hotel and generate over 30,000 jobs. It will house the

countrys nancial regulatory agencies and state owned banks,

many o whom will be relocating rom Turkeys capital Ankra. The

Banking Regulatory and Supervision Agency (BDDK), the Capital

Markets Board (SPK), the Turkish Bankers Association (TBB) andthe Borsa Istanbul (IMKB) will all be relocating to the new site. There

are also talks to move the Central Bank to the new centre to pro-

vide the essence o a truly integrated nancial services community.

State owned banks including, Ziraat Bank, VakifBank and Halk-

bank will also make the move once the project is complete along

with other nancial rms and related businesses.

Istanbul ranks amongst the worlds top cities in economic

growth and has a vibrant and growing nancial and commerce sec-

tor. According to an extensive study completed by Deloitte in 2007,

creating a successul IFC in Istanbul would generate $20 billion

GDP, adding over 150,000 jobs by 2025. However creating a world

class nancial centre that provides integrated nancial services in

all major nancial market segments, including oreign exchange,money, capital (equities and bonds), banking and insurance is no

easy task. There is still a need to urther enhance transparency

and regulation, improve tax policies and address the human capital

needed to support an IFC. The Government is already working to

address these challenges with a much anticipated legislative pack-

age that will act as a conduit or Istanbul to become a leading global

nancial centre. It will include tax and regulatory changes, special-

ised courts, an arbitration chamber, and the implementation o the

new commercial code which is also due to be enacted very soon

and intended to improve corporate transparency and governance.

The Government has also been working to improve the investment

climate and urther integrate the capital markets to grow the sizeand liquidity and improve the competitiveness and attraction o the

market or both local and oreign investors which they realise will

help to strengthen Istanbul as an international nancial centre.

Turkeys nancial sector is highly liberalised and the sector is

ready or urther expansion, driven by solid economic growth along

with declining interest rates and infation. According to the Turk-

ish Banking Regulation and Supervision Agency, the Turkish nan-

cial sector increased by approximately 20% year on year between

2002 and 2010. The sector is dominated by the banking industry

which controls about 77% o the total assets. The Turkish insur-

ance sector is also developing rapidly with 25 % o CAGR (Com-

pound Annual Growth Rate) during 2002-2010, and has gained

new momentum ater the social security reorm that has introduced

universal health insurance. Furthermore, increasing the countries

prole in non-conventional nancial services and banking, including

Islamic banking practices is also adding to the sectors attractive-

ness and global reach. Turkey at present has our Islamic banks,

which accounted or 5% o Turkeys 1-trillion-lira ($559 billion)

banking sector in late 2010, according to data rom the Participa-tion Banks Association o Turkey.

Although Turkey has seen phenomenal growth over the last

decade and has been resilient to domestic and external nancial

fuctuations, this was not always the case. Since 2001, when the

Turkish economy suered a crisis o their own, due to a miscal-

culated currency devaluation that led to some o the banks need-

ing bailouts, the Government embarked on a series o banking re-

orms. In an eort to avoid repeating the crisis o 2001, the Central

Bank raised capital adequacy requirements or all nancial institu-

tions and as a result the number o banks operating in the mar-

ket signicantly reduced. There was an increase o mergers and

acquisitions which subsequently led to stronger balance sheetsand improved capitalisation o the banks, creating an overall more

sustainable and stronger banking sector. According to the BDDK,

the banking sector had a sound capital adequacy ratio o 19% in

2010, ar above the European Basel requirements o 8%. Turkeys

banking sector remains sturdy and protable. It is this combination

o prudent regulation and avoidance o toxic nancial instruments

that has helped Turkish banks avoid the eects o the global re-

cession and European debt problem. Today Turkish banks are in

a much stronger position, with seven o the top banks controlling

about 80% o the sectors assets.

Turkeys nancial sector and particularly the banking sector

represents great opportunity or investors. Enjoying strong growth

rates due to high levels o credit growth and a low level o mar-ket penetration even in basic products. Additionally with the rise

o Islamic nance and privatisation plans or state owned banks

expected soon the uture is promising. The Turkish banking sector

has enjoyed a wave o oreign investment in the last 5 years rom

international banking groups including; Citigroup, Dexia and BNP

Paribas. There are now more than 20 banks with oreign capital

and the sector will continue to be observed by investors around

the world looking or strong perormance and returns. According

to gures released by the BDDK, The Turkish banking sectors net

prot in the rst ve months o 2012 rose 14.1% on the year to 9.62

billion lira (5.32 billion USD) and banking sector loans increased by

22% to 730.2 billion lira (404 billion USD).Whilst challenges remain to Istanbul becoming a global nan-

cial centre, the resilience the Turkish economy has shown, coupled

with Government reorms and an advantageous geographic loca-

tion, place Istanbul in a good position to become a strategic desti-

nation in world nancial markets.


9/20


10/20


11/20


12/2012


A Historic CharterThe British Chamber o Commerce o Turkey celebrates 125 years.

Established as the British Chamber o Commerce o Turkey

and the Balkans, the BCCT was only the second chamber

established outside o the UK. For economic victories o coun-

tries, strong international trade relations are an important element

or success. The BCCT has signicantly contributed to the recent

increase in trade relations between the UK and Turkey. In the last

18 months, they created a platorm or ace to ace networking

or more than 3,000 businessmen at approximately 70 events.

Through introduction o a special purpose electronic portal, busi-

nessmen have been able to explore opportunities between the two

countries since the beginning o this year.

Jonathan Beard, Chairman o the British Chamber o Com-

merce said in a speech celebrating the Queens Diamond Jubilee:

Being the representatives o a historical journey rom the 19 th cen-tury to 21st century is giving us excitement as the members o the

Board o Directors. The Chamber was established as Turkish and

Balkan British Chamber o Commerce in 1887 and was the biggest

Chamber o Commerce outside England at that time with its two

thousand members. At present, we are trying to provide new busi-

ness development opportunities to companies with the commercial

and cultural bridge we established between our two countries. The

British Chamber o Commerce contributed to the rapid increase in

commercial relations between England and Turkey recently.

In order to contribute to investment trac between the UK

and Turkey, a primary ocus o the BCCT is business airs and con-

erences. In act, the organisation directs members to airs which

have high business development potential in both countries. Al-

ways keeping in perspective, the diversity o trade and the benets

o open dialogue are key actors o success or many participants.

BCCT has recently started to assist in the promotion o a

major new air organisation called Power Industry Turkey, which

is being organised by the ITE Group, one o the largest exhibition

companies in the world. The Power Industry Turkey Conerence

and Showcase in September 2012*, aims to bring together over

30 local and international senior-level power industry executives,

along with government ocials, who will explore key issues impact-

ing Turkeys power and energy market. Some o the topics include

assessing Turkeys investments into nuclear power, opportunities

or wind, hydro, and solar energy, and eects o privatising genera-

tion and distribution on the wider industry. Power Industry Turkeysoverall goal is to connect local and international power companies

to identiy, discuss and implement new business opportunities in

the Turkish power market; one o the astest growing power mar-

kets in the world.

The British Chamber o Commerce o Turkey is the ocial host

o the Power Industry Turkey 1-2-1 matchmaking meetings and is

working to develop and implement a marketing campaign that will

help British businesses nd new opportunities and partners in the

ast-growing Turkish power market.

*The Power Industry Turkey Conerence and Showcase will be

hosted at the Sheraton Hotel, Istanbul on September 26-28, 2012.

Quality Exports = GrowthThe Turkish Exporters Assembly sets a strategy or success.

Political stability and a sound macroeconomic strategy have

integrated the Turkish economy into the globalized world,

while transorming the country into one o the major recipi-

ents o FDI in the region. Exports have been the main engine o

the Turkish economy. The Turkish Exporters Assembly (TIM) rep-

resents the export part o the Turkish economy. As an umbrella

organisation o exporters associations, the assembly has 55,000

active members who are pioneers o competitive Turkish sectors

and work globally.

With the stability o its economy and its dynamic, productive,

and active population, Turkey continues to be the star o the re-

gion with its growth potential. Last year, Turkey became a centre of

stability, trust, and production with $722 billion in national income,

$135 billion in exports, and a oreign trade volume o $375 billion.

Turkey has moved rom receiving resources rom the IMF to trans-

erring resources to the IMF.

To great eort the country has also been implementing seri-

ous structural reorms. The main objectives o these reorms are

to increase the role o the private sector in the Turkish economy, toenhance the eciency and resiliency o the nancial sector, and to

place the social security system on a more solid oundation.

With the oreign trade gures it has attained recently, and an

enduring rough time or global trade, production, and investment

- like most countries, Turkey is decoupling in a positive direction

rom the worlds other economies. Despite negative developments

in world trade, Turkish exports in the rst hal o this year exhibited

quite a successul perormance. Over the rst hal o the year, Tur-

keys exports rose by 11.2%. The economy grew a urther 3.2% in

the rst quarter.

Thanks to enterprises in new export markets, exports to the

Middle East, Arica, the CES (Common Economic Space States),and other Asian countries increased signicantly. Current account

decit, too, continued to all with the reduction in imports. When

the steps taken to solve the current account decit problem infu-

enced the economy, increasing Turkeys credit score entered the

agenda. The international rating organisation Moodys raised Tur-

keys credit rating toward a positive outlook.

Started by TIM, the 2023 Export Strategy is a visionary study

that will change Turkeys economic outlook. Focused on innova-

tion, skilled human capital, inormation technologies, R&D, and

entrepreneurship, all recognised sectors o the uture, the Turkey

Export Strategy places great importance on the innovative and

sustainable growth o exporting companies in order to reach the$500 billion exports target or 2023.

With a skilled workorce delivering on the 2023 Export Strat-

egy, Turkey is advancing toward a much brighter uture by the great

eorts o 55,000 dynamic exporters who are committed to growth

and excellence.


13/20


13

Growing hand-in-hand with TurkeyTurkcell Group CEO Sreyya Ciliv shares how the rm evolved into a regional giant.

Turkcell, due to its net-work supremacy, is rec-ognised globally by in-dependent institutionsincluding INSEAD andthe World EconomicForum, as well as orits cutting-edge appli-cations and superiorservice quality, somemarking global frsts.

Sreyya Ciliv

Group CEO

Turkcell

The story o Turkeys Turkcell

evolving into a leading com-

munications and technology

company, and the resilience

o the Turkish economy to

external shocks over the past

decade go somewhat hand in

hand; both ranking among the

champions o the global are-

na. Turkcell, due to its network

supremacy, is recognised glob-

ally by independent institutions

including INSEAD and the World

Economic Forum, as well as orits superior service quality and

cutting-edge applications, some

marking global rsts.

Turkey, with its successul

economic model, stable policies,

healthy nancial sector, and robust public debt dynamics, ranked

as the third astest growing economy in 2011 ater China and Ar-

gentina with 8.5% GDP growth; this despite a global economic

slowdown and the worst economic crisis ever aced by the Eu-

ropean Union. With its tech-savvy, young population o 75 million

and remarkable GDP perormance over the past 9 years, Turkey

has become the worlds 16th largest economy and the 13th most

attractive oreign direct investment (FDI) destination. Meanwhile,

as the rst and only Turkish company listed on both the New York

and Istanbul Stock Exchanges, Turkcell has evolved into a regional

player, serving 65.3 million customers across nine countries, in ve

o which Turkcell operations are the market leader.

Within the markets in which we operate, Turkcell sets trends

in Turkey, rom which we derive the bulk o our revenues. This said,

Turkcell has also improved Turkeys competitiveness in the glob-

al arena, particularly through strenuous eorts regarding the 3G

launch. This new era, dened by the integration o communication,

inormation and entertainment is all about mobility, internet, smart-

phones, and applications dierentiated by network quality, speed,

customer experience and innovation.Turkcell is clearly dierentiated rom our competitors in all

these aspects. Our signicant investments in our mobile network,

with mobile internet speeds reaching 43.2 Mbps, ranked us rst in

Turkey and 13th globally, with data speed targeted to double to 84

Mbps by the end o 2012. Additionally, our high-end niche player in

the bre broadband market, Turkcell Superonline, oering speeds

o up to 1,000 Mbps on its ber network, ranks Turkey among the

top-ve countries in the world by data speed, while transorming

the historic Silk Road into a Fiber Road, with Istanbul positioned

as a regional trac exchange centre.

We also dierentiate Turkcell by providing our customers with

cutting-edge technology o exceptional quality that makes theirlives easier. These technologies developed by our R&D and inno-

vation base, Turkcell Teknoloji, have also earned the recognition

o international rms and are being exported. Most recently, Turk-

cell urther enriched its telecom services through the integration o

cloud computing, data centres and advanced security solutions,

while building Turkeys rst machine to machine (M2M) platorm,

uniting all machine to machine solutions provided to our corporate

customers under the M2M Umbrella. Our innovative total tele-

com solutions, especially in location-based services and Near Field

Communication (NFC), such as mobile payment, mobile signa-

ture, mobile education, telemetry applications, e-government appli-

cations and various products and services, have elevated Turkey to

a country o rst. Another

o our dierentiators con-

cerns the smartphone.

Since 2010, we have

been providing our sub-

scribers the best smart-

phone internet experi-ence at aordable prices

with our own branded T

series handsets. These

smartphones, eaturing

mobile services and ap-

plications, plus NFC ca-

pabilities, serve our core

objective o increasing

smartphone penetration,

and thereby raising mo-

bile internet usage. We ensured our leadership o the smartphone

market in Turkey with Turkcells T20, which became the best-selling

NFC supported android phone in 2011.

We also set Turkcell apart by contributing greatly towards

Turkey becoming an inormation society, prioritising equal oppor-

tunities in inormation access and closing the digital divide. Having

emphasized equality o opportunity in all aspects o lie, we have

assisted Turkeys progress with projects boosting the welare and

growth o the local economy. For example, we employ 13,000 peo-

ple through Turkcell Global Bilgis call centres and have established

an eco-system o over 80,000 people, including Turkcell dealers

and business partners.

Turkcell has also championed the sphere o corporate social

responsibility. Notably, our Snowdrops project, acknowledged by

the United Nations, has granted 85,000 scholarships to emale stu-dents since 2000. Meanwhile, our Bridge o Hearts project which

oers cultural exchange opportunities to children rom across Tur-

key, as well as our Runners to the Future project, supporting the

training o young athletes, are aimed at investing in uture genera-

tions. Last but not least, in the aftermath of earthquakes in Van in

late 2011, we combined our knowledge, experience, and love or

our people in the spirit o compassion by initiating the Turkey Mon-

ey-box for Van project, a campaign in support of local education.

With the customer at the heart o our operations, and by acili-

tating their lives with the latest technologies, Turkcell was named

Company o the Decade by World Finance Magazine, conrming

that our achievements are indeed acknowledged internationally.Turkcell will remain on the top rung o the communications and

technology ladder, a rising star in the growing Turkish economy,

and one o the most valuable international brands. In this light, we

will greatly contribute towards Turkey realising its vision or 2023,

the 100th anniversary o the Republic.


14/2014


A Global Turkish BrandOne o the worldwide leaders in glassware reinorces the opportunities or Turkeys export drivenmanuacturing sector.

The Turkish manuacturing sector has all the attributes to be

a world leader in the export o high quality goods.The strate-

gic location o Turkey coupled with a young, highly educated and

motivated workorce help make Turkeys manuacturing sector ro-

bust, but what really drives production in this country o just under

75 million people is the expectation, desire, and pride o producing

quality goods. While there are many destinations or the outsourc-

ing o goods at a air and sometimes even low price, the Turkish

manuacturing sector is built on a dierent oundation. The sector

believes in selling the eatures o Turkey, whether it is proximity to

large external markets, access to quality materials, human capital,

sucient energy supplies, a large internal market, or the sense o

pride the Turkish export community has in their cratsmanship.

To date Turkey has enjoyed an excel-lent start to 2012 with the country attract-

ing 78.6 percent o its FDI in the January-

May period rom the EU alone. During this

period oreign companies invested mainly

in Turkeys manuacturing sector, espe-

cially ood and beverages, at $2 billion

o FDI. This gure proves that Turkey has

become a critical manuacturing centre. It

is also expected that Turkeys new highly

attractive investment incentive scheme,

launched at the beginning o the year to

reduce dependency on imports and cut

the countrys account decit and boost

investment rom both local and oreign

investors into the countries vital strategic

sectors, will urther encourage FDI fow

into the country and manuacturing sec-

tor. The scheme includes exemptions on

customs duties and VAT, reduced tax lia-

bilities and support with interest payment

and social security. In act, besides ood

and beverage the manuacturing sector

has seen signs o growth in automobile production, alternative en-

ergy materials like solar cell panels, and quality goods like leather

goods and glassware.A shining example o this growth lies in the Paabahe Glass

Co., part o the iecam Group. Paabahe started productiono soda glass tableware by manual production method in 1935.

Paabahe Companys brands include; Paabahe, automatedsoda glass products; Denizli, the hand-made and automated crys-

talline products brand; Borcam, the brand or heat resistant items.

The products are developed to cater to three dierent segments;

namely household, catering and industry. Presently Paabahehas about 13,000 products grouped under the mentioned brands,

and the number is increasing every day. Thanks to the continuous

development and investment policies it has been pursuing since

its oundation; Paabahe is one o the three largest glasswaremanuacturing & sales rms worldwide. The company is the market

leader in Turkey. Exporting to 130 countries, Paabahe capturesin advance the new trends and requirements o the present time in

world markets, and increases its market share in the world on an

ongoing basis thanks to technological developments.

Pursuing its sales & marketing organisation outside Turkey in

order to strengthen its position in the world and orming logistics

warehouses in Europe, Paabahe also initiated in recent years itsinvestment leaps or production purposes abroad. In line with this

initiative, Posuda Ltd., a glass tableware plant was bought in Rus-

sia in 2003 and was ully modernised with new equipment in 2004.

The actory has attained ull capacity production with its new prod-

uct range and Paabahe quality control requirements, and as a re-sult reached the intended leadership position in the market. Trakya

Glass Bulgaria-EAD, the glassware plant investment launched in

mid-2004, commenced production in 2005, has also become a

strategic location and important production acility or the com-

pany. With its competitive positioning Paabahe Company has

successully minimised the impacts o cy-clical risks, accelerated activities ocused

on product development, promotion and

positioning, and improved capacity utilisa-

tion in production and workorce ecien-

cies. With sales mainly in Turkey, Europe,

the CIS and Middle Eastern countries, the

company grew its total sales volume sig-

nicantly, despite the damaging eects o

the Arab Spring and the European debt

spiral. Eective marketing activities in Tur-

key and Russia were urther bolstered by

the improved logistics centres in Spain

and France. Product development or

both domestic and international markets

has continued.

Paabahe notably grew total salesin 2011 compared to 2010. Production

continues in domestic plants in Krklareli,

Eskiehir and Mersin, as well as abroad,and in Bulgaria and Russia. The company

has succeeded in growing its oreign sales

volume by an impressive 20% compared

to 2010. In 2012, with its competitive price approach and sales,

marketing and distribution strategies, Paabahe is going to con-

tinue operations aimed at winning a larger share in targeted mar-kets. The Company plans to position its brands strongly, increase

its brand sales and reinorce its marketing power through ecient

product management and marketing communication.

Although there has been a slight downturn in Turkish manu-

acturing output in 2012, the market remains buoyant especially

with robust opportunities in a ew key sectors. The Turkish govern-

ment has also implemented policies to encourage domestic pro-

duction and enhance the competitiveness o its exports by making

legislation investor riendly and providing incentive schemes which

improve tax liabilities or oreign rms to set up operations and pro-

duction acilities. To date this legislation has helped win over large

companies like Coca-Cola and GE Healthcare and it is expectedthat more will ollow. Already Istanbul is displacing centres like

Dubai as the leading place in the region to operate a multinational

business rom, and with healthy companies like Paabahe whohave managed to achieve a winning global brand rom Turkey the

business case or international companies only becomes stronger.

Glassware by Denizli, a Paabahe brand.


15/20


16/2016


The Enlightened CityIstanbul oers visitors old city charm with a modern fare.

Istanbul has rejuvenated itsel rom an old city with labyrinth

like alleys and ancient mosques, to one o the hippest cit-

ies in the world. O course the alleys, markets and mosques are

still very popular and attract millions o visitors every year to the

city; looking to immerse themselves in Turkish culture. However it

is also now attracting just as many

tourists or its restaurants, bars,

and clubs as or the Blue Mosque.

Istanbul is a thriving city oering

something or everyone. Strolling

and people watching in Istanbul is

not a hobby but a liestyle, whether

you ancy a trip to Topkapi Palace

to get a glimpse o how the Sultansused to live, a day o shopping and

negotiating at the Grand Bazaar, or

a cruise down the picturesque Bos-

porus, the city is built or explora-

tion. At the same time, digging into

the rich culinary tastes or enjoying a

local beverage whether it be a tradi-

tional Turkish coee or a glass o the local anise favoured aperiti

Raki and people watching the day away also oers a pleasant time

in Istanbul.

Istanbul is a big city and the plethora o districts each with its

own charm, means that the city is hard to conquer or a tourist. Is-

tanbul province is divided into 39 districts; each o them has a local

municipality elected by the people living in the neighbourhoods be-

longing to that district. There is also the Metropolitan Municipality

(IBB) taking care o all the districts in general, having duties such as

coordinating and controlling the activities o the District Municipali-

ties, selecting solid waste disposal sites, building and maintaining

city roads, bridges, operating a public transport system, and so on.

Districts like Kadiky, on the Asian side o the city, has been

one o the astest growing districts in

Istanbul or 25 years now, it has areas

o ashionable designer retails shops,

ne dining and entertainment making

it popular especially or wealthy locals

and visitors. Developed promenades

along the water, especially around

the marinas and yacht clubs, add ex-

treme value to the district and makeit very desirable or Turks and oreign-

ers alike. While Beyolu on the Euro-pean side o Istanbul, is littered with

ancient ruins and remnants o history.

It was here that in 1348 the Genoese

built the amous Galata Tower, one o

the most prominent landmarks in Is-

tanbul. Today Beyolu thrives as a culture hub with many museumsand art galleries oering tourists and locals a contemporary and

trendy feel that is on par with Paris, London or New York. Each one

o Istanbuls districts has culture and history to discover. Picking

one over another may never be easy, but the chance to lounge in

a traditional Raki tavern or enjoy aternoon tea at one o the many

beautiul neighbourhood tea houses the city oers is never ar, no

matter what district you nd yoursel in.

Turkey is playing a continually important role in the interna-

tional political arena, particularly as a bridge between Eu-

rope and Asia. Its geographically strategic location has osteredinvestment interest in the country in general and in particular, the

hotel industry. Istanbul remains the ocal point or oreign devel-

opers to enter the Turkish hotel market. Still characterised by a

dominance o small to medium sized unbranded hotels, the num-

ber o developments carrying an international brand are increasing

rapidly. Brands rom all categories will be entering the Istanbul hotel

arena in the coming years, including luxury brands such as Shan-

gri-la as well as mid range brands such as Hilton Garden Inn and

Courtyard by Marriott. Considering two o the top external markets

or tourism arrivals are the UK and USA it is no wonder that Anglo

hotel groups are looking closer at Turkey. Istanbul is also seeing a

growth in the number o arrivals rom the Gul Countries which willonly add to the need or more oreign brands and luxurious hotels.

Istanbul has managed to build its reputation as one o the

worlds major conerence destinations and is an increasingly popu-

lar choice or the worlds leading international associations. Istanbul

was ranked 9th in 2011 by the International Congress and Conven-

tion Association (ICCA) or the number o meetings held with a total

o 113 large events. The move rom 14th to 9th in just two years

represents a high average number o participants per meeting.The ICCA statistics do not refect the ull picture as they exclude

the non-rotating meetings, so the total amount o MICE (Meetings,

Incentives, Conerences and Events) tourism is in act higher. Ac-

cording to the Istanbul Convention Bureau, the average length o

stay is between three and our days. The numbers are expected to

increase in 2012, which is why Istanbul is a prime market or hotel

developers worldwide.

Istanbul welcomes about 7.5 million visitors a year and as

such is clearly the major market in Turkey or hotel growth. Whether

visitors are coming rom within Turkey, by sea, or by air, domestic

and international tourists agree on one major point; 31% o both

preer 5 star hotels. Istanbul being the crossroads at which culturestraditionally meet will continue to see increased business and trade

rom Asia and Europe or generations to come, which will garnish

growth in Istanbuls tourism and conerence industry. With that in

mind, many hotel groups will have the opportunity to prosper with

sound investments in a growing and robust destination.

Istanbul, A Developers ParadiseRapid urbanisation and a rise in leisure and MICE tourism is paving the way or new developments.

The Blue Mosque - Istanbul, Provided courtesy o the Turkish Culture and Tourism Oce


17/20


17

The Best Airline in EuropeA look at how Turkish Airlines have achieved global success and recognition by setting themselves apartrom the rest.

Turkish Airlines has

come a long way

since its inception

in 1933. The airline

will be celebrating its

80th anniversary next

year and should be

extremely proud o its

achievements. It has

transormed itsel rom

a small national airline

to a truly global leader

in the airline industry.

However, the rise toworldwide success did

not happen over-night

or Turkish Airlines.

While many enviable European counterparts are quietly wondering

how Turkish Airlines became Europes leading carrier, the strategy

set by the executive team in Istanbul is clearly a globally winning

recipe, emphasized by the numerous accolades awarded to the

company in recent years.

With a geographical area o about 300,000 square miles

(775,000 square kilometres), and a population o 75 million, Turkey

is a large aviation market and houses 43 domestic airports. Nearly

hal o Turkish Airlines customers are travelling within the country.

While their neighbours simply do not have the advantage o a large

local market, Turkey enjoys a strong point-to-point market, as well

as additional transers. Since deregulation in 1996 Turkish Airlines

has been impacted by competition within the market although it

continues to stand as the dominate player with 50% o the market

share domestically and 47% o the international market share.

Continuous redevelopment opportunities and the aggressive

economic growth rates in line with the need or new markets have

created increased demand or air transportation services between

the EU, the Americas, Asia and Turkey. At the same time the Turk-

ish aviation industry has a wide range o segmentation opportuni-

ties and executions. The industry outline enables dierent com-

panies to create dierent segments to reach the desired prots.Recent developments o the airline industry have moved the seg-

mentation rom being only geographically oriented to a much more

sophisticated and detailed level. Todays industry considers the

markets behavioural segmentations as business, leisure and vis-

iting friends and relatives (VFR), also price segmentation is a major

consideration point or airlines. Turkish Airlines, amongst others,

are able to analyse market inormation including the demograph-

ics, income levels and disposable incomes o potential airline pas-

sengers which are taken into consideration beore setting the price

intervals or every network an airline has to oer.

With increased domestic competition and many low cost air-

lines already operating within Turkey, Turkish Airlines has elevateditsel by oering superior services and privilege programs. They are

wide ranging, impressive, and completely distinguished rom the

oerings o most airlines. The Turkish Airlines experience could be

anything rom an in-fight che to superior executive lounges with

total amenities. These standards are leading contributors to being

voted Europes Best Airline by SKYTRAX (a traveller based website

in the UK) in 2011 and 2012.

Not only is Turkish Airlines the countrys largest passenger car-

rier, it is also the largest cargo carrier. The company leads in total

export and import cargo in Turkey. Cargo carried in international

lines has been increasing over the last two years. As o 2011, 90%

o cargo carried was rom

international business. It is

expected that with growth

o the Turkish manuac-

turing sector and regional

economic growth, cargo

will continue to increase.

Clearly this puts TurkishAirlines in a leading posi-

tion as the company enjoys the most routes, planes, and domestic

hubs and is one o the astest growing international carriers world-

wide. Meaning there is no shortage o planes or cargo to be sent

on and a continuous increase o new routes to open trade doors.

A major source o pride and uture business or Turkish Airlines

is Turkish Technic. The ully owned subsidiary o the airline Turkish

Technic provides maintenance services to more than 100 clients,

including international airlines such as Lufthansa, KLM, and Brit-

ish Airways as well as a majority o domestic airlines. Increased

demand has led Turkish Technic to set up a new international Main-

tenance, Repair, Overhaul centre, expected to be the largest MRO

Centre in the region through the HABOM project located at Sabiha

Gken International Airport, 70km rom Istanbuls main airport.

The new international maintenance centre will be a ull service pro-

vider or both narrow body and wide body aircrat, by perorming

heavy maintenance, engine and components maintenance. The

maintenance centre will be established as a centre-o-excellence

having ull capacity or some specic types o aircrat or which the

projections indicate quick feet growth and increasing outsourcing

rates, like the Airbus A380. The HABOM project plans to provide

not only maintenance service to around 400 aircrat per annum,

but also training and other services to the civil aviation industry in

Turkey and the surrounding region. The total estimated investment

requirement or the airrame and component maintenance centresis around 500 million USD. By the year 2022, HABOM is estimated

to generate a 6.5 billion USD share rom airrame and component

maintenance segments alone.

Along with the unique service and gourmet menus Turkish Air-

lines has gone to great extent to build a global brand. Currently

engaged in sponsorship agreements with Manchester United FC,

Barcelona FC, and Kobe Byrant o the NBA, the airline is attracting

many new international customers. In the rst quarter o 2012 rev-

enues were up 20% over the same time last year. Turkish Airways

is proving the best way to brand a country, grow its economy, and

increase trade is through a well-run fagship carrier. The lessons

learned in the past have been identied as strengths in the uture,while the mandate to get tourists into Turkey and business people

out still remains strong. As Turkish Airlines picks up the SKYTRAX

award or the Best European carrier or the second year in a row,

there is great excitement around the companys uture and global

growth prospects.

Turkish Airlines voted

Europes Best Airline,

a second year in a

row by SKYTRAX.

CEO, Temel Kotil, Ph.D. receiving the SKYTRAX award forBest Airline in Europe


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ent.

The Spirit of Istanbul

5 Great Things To Experience

n Istanbul

istanbul is one of the most beautiful and exciting cities

in the world. you could easily spend weeks there and

still not see everything. but you must experience

5 things before you leave istanbul.

The Grand Bazaar first opened in 1461. It currently has over 4000 shops,selling everything from oriental rugs and antiquities, to waterpipes, jewelry,souvenirs and ceramics. Its customary to bargain for the best price,sometimes close to half of the initial offer. Probably, youll get lost in there-itsa veritable labyrinth. If you find something you like, buy it because youllnever find the same vendor again.

The Galata Tower was constructed in 1348 in the Genoese quarter and wasthe tallest structure of the city when it was built. Today, it offers a magnificentview of the fairytale city as well as oriental belly dance performances andauthentic shows.

1. Taste the Perfect Couple:

Turkish Coffee & Turkish Delight

2. Visit One of The Largest

& Oldest Marketplaces nThe World:The Grand Bazaar

3. See The Panoramic View

of Istanbul From Galata

Tower

Turkish coffee spread to the rest of the world by the tradesmen andstatesmen visiting Istanbul and it became a popular Turkish taste all overthe world. Remember that Turkish coffee should be served foamy. Turkishcoffee is served very hot and with a glass of cold water to freshen the mouthto better taste the coffee. It is traditionally served with Turkish delight lokum.

The British down pints in pubs, the French guzzle wine in brasseries andthe Greeks smash plates in tavernas, the Turks? Turks make merry in themeyhane, the age-old Istanbul version of a tapas bar, a place to indulge inmeze... Youll not find menus in many meyhanes, its common practice toorder on the waiters recommendations. Istanbuls most famous meyhanedistrict is Nevizade, located just off stiklal Street.

Rak is a distilled alcoholic beverage that has existed in Anatolia for the past500 years. Rak is an indispensable part of the Turkish entertainment anddining culture.Yeni Rak is the worlds most consumed anise spirit and Turkeys mostrenowned global trademark. Yeni Rak is the best-selling product in Turkishduty-free shops and is available in all international key accounts.

The Way to Experience Rak

Drink rak by first adding water and then a couple of ice cubes.

Always drink your rak chilled or with ice. Rak should be consumed slowly, with hot and cold traditionalTurkish mezzes, while being surrounded with cheerful conversations.

4. Take A Cruise Along

The Bosphorus

5. Get A Taste Of 500 Years

Old Culture: Turkish Raki &

Meyhane

The Taste

Youll Never Forget

Board a ferry at the terminal adjacent to the Galata Bridge (inEminn) and cruise up the strait toward the Black Sea. The ferry

chugs along the waterway, passing beautiful mansions, the most-photographed Ortaky Mosque, passing beneath the BosphorusBridge which connects Europe with Asia and along the RumeliHisar Fortress.


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Documents

Business in Istanbul 2012