BY HUSNIYE GUNGOR
WHAT WAS THE FIRST REACTION OF ISTANBUL RESIDENTS AFTER THE EARTHQUAKE? DID PEOPLE IMMEDIATELY START LOOKING FOR NEW PLACES?
People have not yet recovered from the shock of the earthquake. I experienced the 1999 earthquake and witnessed the sale of a TRY 80,000 apartment in Avcilar, Istanbul, for TRY 14,000 after the quake. There is no such panic at the moment. People living in fragile districts like Bakirkoy, and Yesilkoy are not acting in a panic to search for a new place. It’s not an official figure, but we estimate that 2 million out of 6 million homes have tenants. If you are a tenant for more than two years, you can find a new place for at least three times higher rental prices. So, people are still on standby.
HOW WILL THE RECENT RELOCATION TREND IN ISTANBUL BE REFLECTED IN THE REAL ESTATE MARKET?
We have been experiencing a shortage in the supply of real estate for rent and for sale in the market for at least three years. The market is still foggy in this sense. Currently, there is no intense trend of relocation from regions with high earthquake risk to regions with low earthquake risk. However, what we experience in the market is that real estate in regions with high earthquake risk such as Bakirkoy, Yesilkoy, Zeytinburnu, Avcilar, Tuzla, and Pendik was rented two days before the quake, but now there is no such demand. Moreover, demand for the northern parts of Istanbul, which have a lower earthquake risk, has increased. We expect this demand for low-risk areas to increase once the dust has settled. The building stock in the north of Istanbul is very low. There are mostly forests and structures inside the forests. That’s the reason for the demand. The districts that cause panic right now are between Eminonu and Buyukcekmece, where there is a fault line.
WHAT CAN BE SAID ABOUT THE BUILDING STOCK OF ISTANBUL IN TERMS OF ITS RESILIENCE TO QUAKES?
This earthquake also extinguished the discourse that the buildings built after the 1999 earthquake were strong. We have seen that they are not healthy. We had the necessary laws even before the 1999 earthquake. Concrete is of good quality, and ready-mixed concrete is used in all buildings, but if bad floors are approved, if the floor is not sufficiently penetrated, or if the columns are not at a sufficient level, that building will collapse. There are approximately 6 million housing stocks in Istanbul. I think that 1.5 million of them should be renewed and 500,000 of them will not be able to withstand the earthquake. I estimate that 10% of the building stock will collapse, and 1.5 million will suffer major damage even if they are not demolished.
WHAT WILL PEOPLE PAY ATTENTION TO WHEN BUYING OR RENTING A HOUSE IN THE POST-QUAKE PERIOD?
Currently, the available building stock in Istanbul is nearly zero. Estates for sale and rent are not even 5% of the total stock. There is a maximum of 50,000 rental places and 100,000 places for sale in the Istanbul market. People with a low budget are looking for an affordable place to buy and ignore the earthquake risk. Those with money are looking for an earthquake-resilient place if possible. Earthquake is the priority for those with money. It is still not a priority for those who are short on money.
HOW DO YOU EVALUATE THE VIOLENT PRICE HIKES AFTER THE EARTHQUAKE? WILL IT CONTINUE IN THE LONG RUN?
We have withdrawn the listings which have increased their prices exorbitantly after the earthquake from all three brands in our portfolio [Coldwell Banker, Century 21, ERA]. We implemented this, especially in Adana, Mersin, Gaziantep, Ankara, and Kayseri, where those affected by the earthquake prefer to move. Almost a third of the properties in our portfolio have risen exorbitantly. But, speaking about general price trends, the increase in home rental prices in the past 1.5 years should not be considered too much. The reason behind the increase is the low-interest rate economic policy of the government. The high inflationist result of this policy left no other choice for those who make a living on their rental incomes. On the sales side, prices increased by nearly 300%. People had to buy real estate for TRY 10m shortly after they refused to buy when the price was TRY 4m. Because there is no other instrument for individual investors that will not lose the value of money. The Turkish real estate market is so big that you can’t even speculate on the market even if you invest all the money in the stock market into the real estate market.
WHAT WILL BE THE PICTURE LIKE IN THE CORPORATE SALES AND RENTAL MARKET?
On the industrial side, there is a very serious earthquake risk, especially in prefabricated buildings. Prefabricated and reinforced concrete are very different. Everyone should know and examine the subject of prefabrication very well. These approvals should not be given too easily. The need and demand for industrial real estate in places outside of Istanbul will increase. New place stocks will also rise.
Industrial facilities will also need to be transformed into quake-resilient facilities. It is not only the life or property to be lost when a factory is destroyed. It is very difficult to regain the same production line and the loss of customers. When you lose an employee, you can find someone else to replace them. You can continue to do the work, which can be carried out by 50 people, with 40 people. But you can’t lose 50 factories. This also affects the supply chain.
HOW DO YOU SEE THE OFFICE MARKET?
Occupancy rates in the office-plaza market have increased in Istanbul. There are very few vacancies. Currently, the number of renovated office spaces in the market is nearly zero. Unmodified places that need investment come with their specific problems. Speaking about the effect of the earthquake on the office market, companies that have offices in regions that may be affected by the earthquake will want to move to more solid places. Therefore, there will be a demand there, and there will be an increase in the price both for rental places and properties for sale.
THE 1999 EARTHQUAKE SEEMS TO HAVE BEEN FORGOTTEN EASILY. WILL WE LEARN FROM OUR MISTAKES AFTER THE LATEST TWIN QUAKES?
We haven’t learned enough from our mistakes. The buildings are not the same as they were before 1999, but this is not enough. But now another page will open up. For the real estate sector, no building should be allowed to be rented or sold without an earthquake-proof report. This needs to be made a necessity. On the construction side, the earthquake conditions should be changed specifically to each location for the buildings to be built afterward. Pros and cons specific to the floor of that location need to be developed. These are a must after the earthquake. If not, this country will collapse on top of all of us. These can be done by in-situ transformation. For a real transformation, additional floor permits must be given when four parcels unite for the renewal of their buildings. With this one-floor addition, you can make parking garages on the lower floors. You can create more recreational space for cities and streets.
WHAT ARE YOUR GROWTH PLANS AS A GROUP IN THE REAL ESTATE MARKET?
We have 320 offices under our group, 220 of which is under Coldwell Banker brand, 60 under Century21 brand, and 40 under Era Real Estate. A total of 3,500 consultants works in these 320 offices, managing 18,000 active portfolios in Turkey. This network made 22,000 sales transactions last year. 19,000 of them were made by Coldwell Banker, 2,000 of them were made by Era and 1,000 of them were made by Century21. We bought Century 21 in May 2022 after the global headquarters cancelled the contract with the Uzel Group in Turkey. We have increased the number offices to 60 from 9 at the end of June. Our current goal is to surpass our biggest competitor Remax by increasing the number of Coldwell Banker offices to 255. In 2025, we aim to grow Century21 so that is surpasses Coldwell Banker.
WHAT OTHER BUSINESSES DOES THE GROUP INVOLVE?
We also have an auction website called muzayede.com, which makes B2B car sales. We sell the cars of fleet rental companies to car showrooms. Our aim is to open it to the end user at the end of the year. Apart from this, we have a company called Premier Yapi. Here, we are considering going into the construction business. We will also start selling land under the name of MasterTurk Arsa, especially outside of Istanbul, by April. We are planning to do real estate development there.
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