NEWSLETTER NEWS FROM THE TURKISH REAL ESTATE MARKET WINTER Dear Clients and Friends,

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1 C O L L I E R S I N T E R N A T I O N A L T U R K E Y NEWSLETTER NEWS FROM THE TURKISH REAL ESTATE MARKET WINTER 21 CONTACT DETAILS Kerim Cin Managing Partner kerim.cin@colliersturkey.com Gizem Burteçin Office Consultant gizem.burtecin@colliersturkey.com Ahmet Özgür Advisory Services ahmet.ozgur@colliersturkey.com EDITOR Eliza Bingül Marketing & PR Manager eliza.bingul@colliersturkey.com Büyükdere Cad. No 18 Enka Binası, Kat Esentepe Istanbul, Turkey Tel Fax Dear Clients and Friends, By the end of 29, the world s financial markets started to show signs of recovery, positively influencing the global real estate market. The Turkish commercial property sector has also started to regain its previous pace, and as a result, some of the projects put on hold in 29 have been restored and are again in the pipeline. Nevertheless, as far as the commercial real estate market in Turkey is concerned, the conditions favourable for tenants and buyers have shown no significant change. We need to mention that the prices of developable land are still relatively high, causing difficulties for developers when adjusting the lease or sale prices to the requirements of the market, which is becoming more and more competitive and tenant-oriented. In the future periods we expect an increased competition among the landlords at least in the A class office sector, as there will be increasing number of commercial projects coming into the market and seeking their ways to attract tenants attention. As we anticipate a significant new supply to be delivered to the market in the end of 21 and in the beginning of 211, tenants, especially those with requirements exceeding 2, sqm, may count on either price reductions or different allowances and incentives to be applied when signing a new lease in 211. Please, feel free to contact us for more information and to schedule an appointment with our brokers, who will assist you in maximizing your profits or reducing costs on your property. Enjoy reading! Eliza Bingül Marketing & PR Manager eliza.bingul@colliersturkey.com Please, do not hesitate to share your opinions and send your feedback on our Newsletter. Feel free to call us for the details of our project development or tenant representation services at: Sign up for our publications: COLLIERS INTERNATIONAL TURKEY NEWSLETTER WINTER 21 PAGE 1

2 RECENT ADVISORY PROJECTS During the last 6 months of 29 and in the first 2 months of 21, Colliers International has accomplished the following: In the neighboring district of Zeytinburnu, a hotel market research and financial feasibility in Güngören, an area which has been under the influence of developments related to tourism; Valuation of Toskana Valley Project in Büyükçekmece and the mixuse project planned in Libadiye by Emaar; In Zeytinburnu, an area which has been positively impacted by the Ataköy Tourism Center Plan and Zeyport Marina Project, a land highest and best use including hotels, offices, and residential prepared for Bayraktar Holding; Market research and feasibility for the planned office project for Dinamik Yapı in the district of Küçük Çamlıca, an area which has started to attract attention due to its close proximity to Altunizade, one of the Asian side s most valuable office districts; Market research and valuation of a warehouse in Izmir-Salhane and two office buildings in the districts of Karaköy and Harbiye in Istanbul for Başak Groupama; Warehouse valuation in the Bağcılar district of Güneşli for Eti Pazarlama and Sanayi A.Ş.; Feasibility and market research for residential, office, retail, and hotels in Izmir and its surrounding areas for Türkerler Inşaat; 17 Real-estate Portfolio valuations including detailed market research in Istanbul, Izmir, Ankara, Antalya, Muğla and Bursa for Torunlar Gayrimenkul Yatırım Ortaklığı A.Ş.; For Dolphin Capital: valuation of the Lavanta Konut Project in Kalkan and five plots in Kundu, Antalya; For Sinpaş: Market research for hotels and residential and land highest and best use in Zeytinburnu; For Sandoz: valuation for the plot of an industrial building in Pendik, Tavşantepe; For Sürmeli Group: hotel valuations in Adana, Ankara, Istanbul and Kuşadası; For Koçman Grubu: Market research and valuation of residential, office, and retail in Istanbul for 5 plots of land in the district of Topkapı; For Emay Inşaat: Market research, highest and best use study, and valuation of a land plot in Ataşehir; COLLIERS INTERNATIONAL TURKEY NEWSLETTER WINTER 21 PAGE 2

3 Istanbul Office Market Q4 29 Disclaimer The opinions, estimates and information given herein or otherwise in relation hereto are made by Colliers International and affiliated companies in their best judgment, in good faith and as far as possible based on data or sources which are believed to be reliable. The material contained herein is not intended to substitute for obtaining individual advice from Colliers International or another advisor able to provide the services of a qualified professional person. Colliers International, its officers, employees and agents expressly disclaim any liability and responsibility to any person, whether a reader of this publication or not, in respect to anything and to the consequences of anything done or omitted to be done by any such person in reliance whether wholly or partially upon the whole or any part of the contents of this publication. COPYRIGHT Colliers International 21 All rights reserved. No part of this work may be reproduced or copied in any form or by any means (graphic, electronic or mechanical, including photocopying, recording, recording taping, or information retrieval systems) without the written permission of Colliers International. COLLIERS INTERNATIONAL TURKEY NEWSLETTER WINTER 21 PAGE 3

4 ISTANBUL OFFICE MARKET Q4 29 UPDATE ıstanbul offıce market Q4 29 vacancy trends District A Class B Class Maslak Taksim Şişli An overview of new A class office rental transactions in Istanbul during the last quarter of 29 indicates that a large portion of these have taken place in projects and buildings on the Asian side of the city. We believe that there are two primary reasons why new lease transactions on the European side are fewer than on the Asian side: first, on the Asian side, especially in newly developing centers like Ümraniye, there are larger and cheaper office area alternatives offered to companies to rent; Etiler Levent Airport Gayrettepe Beşiktaş Kozyatağı % 12.9% 3.1% ISTANBUL Q4 29 OFFICE MARKET AVERAGE VACANCY RATES A CLASS OFFICES 5.2% 16.4% 3.7% 55.2% 3.7% 2.8% 2.4% 22.1% 7.2% Kavacık Altunizade Ümraniye OCCUPIED SPACE VACANT SPACE ıstanbul offıce market Q4 29 vacancy trends Europe A Class Asia A Class 2 ISTANBUL Q4 29 OFFICE MARKET AVERAGE VACANCY RATES B CLASS 13.7% Europe B Class Asia B Class % 23.3% 5% 1.4% 5.2% 6.9% 1.6% 16.7% 9% % 4.5% OCCUPIED SPACE VACANT SPACE ISTANBUL AVERAGE VACANCY RATES A & B CLASS OFFICES Q4 29 UPDATE 2 9.7% % A Class B Class OCCUPIED SPACE VACANT SPACE COLLIERS INTERNATIONAL TURKEY NEWSLETTER WINTER 21 PAGE 4

5 ISTANBUL OFFICE MARKET Q4 29 UPDATE (cont.) ıstanbul offıce market Q4 29 ASKING RENT trends District A Class B Class ISTANBUL Q4 29 AVERAGE ASKING RENTS A CLASS OFFICES $/sqm/month Maslak Taksim Şişli 1 Etiler Levent Airport Gayrettepe ASKING RENT Beşiktaş Kozyatağı Kavacık Altunizade Ümraniye ISTANBUL Q4 29 AVERAGE ASKING RENTS B CLASS OFFICES $/sqm/month ıstanbul offıce market Q4 29 ASKING RENT trends Europe A Class Asia A Class 5 N/A Europe B Class Asia B Class ASKING RENT ISTANBUL AVERAGE ASKING RENTS A & B CLASS OFFICES $/m 2 /month 3 $ $18.4 $12.4 $ ASIA EUROPE A Class B Class second, a larger number of employees of many companies reside on the Asian side, and Bosphorus bridge traffic during rush hours is something many companies trying to avoid for their employees. As a result, we see that, while vacancy on the Asian side has been decreasing in this last quarter, there has been no significant change in vacancy on the European side. This drop in vacancy has caused a slight increase in the rental prices on the Asian side. Despite vacancy remaining stable on the European side during the same period, as Istanbul s most expensive office buildings are located there, the downward pressure on high asking rents on this side, which has started COLLIERS INTERNATIONAL TURKEY NEWSLETTER WINTER 21 PAGE 5

6 ISTANBUL OFFICE MARKET Q4 29 UPDATE (cont.) 4% 35% 3% 25% 2% 15% 1% 5% % ISTANBUL OFFICE MARKET A CLASS OFFICE VACANCY VS. RENT 21 Q3 21 Q4 22 Q1 22 Q2 22 Q3 22 Q4 23 Q1 23 Q2 23 Q3 23 Q4 24 Q1 24 Q2 24 Q3 24 Q4 25 Q1 25 Q2 25 Q3 25 Q4 26 Q1 26 Q2 26 Q3 26 Q4 27 Q1 27 Q2 27 Q3 27 Q4 28 Q1 28 Q2 28 Q3 28 Q4 29 Q1 29 Q2 29 Q3 29 Q4 21 Q4 f 211 Q4 f 212 Q4 f ALTUNIZADE VACANCY (%) ÜMRANIYE KOZYATAĞI KAVACIK AIRPORT MASLAK RENT ($/sqm/month) ISTANBUL A CLASS OFFICE MARKET NET ABSORPTION Q4 29 (sqm) Negative Absorption TAKSIM ETILER Positive Absorption LEVENT G.TEPE BEŞIKTAŞ $ 35 $ 3 $ 25 $ 2 $ 15 $ 1 $ 5 $ ŞIŞLI in mid 28, has continued. As for 21; approximately 2, m 2 of A class office space is expected to enter the market in Istanbul. A large portion of this new stock is expected on the Asian side. Taking this into consideration, it is likely that the current increasing trend in rental prices on the Asian side may not continue. In fact, it is possible that this new stock coming into market will create pressure to reduce rental prices in many new projects. As for the European side; since there is limited new supply expected in 21, we may expect asking rents to be stable. However, in case a significant number of existing tenants on the European side show an interest in the new projects on the Asian side in 21, in order to relocate there to benefit from the lower prices, there is the possibility that there may be a serious increase in vacant office spaces on the European side, as a result, which may cause rental prices to drop further on the European side. When we take a detailed look at new office transactions from 29, we see that tenants on the Asian side were for the most part those who chose to relocate from older buildings on the same side. As there is not a significant margin in rental prices between old and new buildings on the Asian side, and as the infrastructure is substandard in old buildings, relocation is easier and necessary for most companies on this side. The situation is slighlty different on the European side. Due to greater development of new office supply on this side when compared to Asian side, in the 9s and 2s and higher margins between rental prices of old buildings and new ones, need to relocate for existing tenants on this side is lower. General conclusion: in 21, if the expected demand for the new A class office supply in Istanbul results in positive absorption of office space in the market, we can then expect an overall increasing trend, in rental prices, starting from mid 211. On the other hand, if expected activity in 21 results in negative absorption, meaning that if tenants choose to vacate larger office buildings and relocate to smaller ones, the downward pressure on rental prices may still continue into 211 as well. Call us to find out the best office leasing strategies Tel. 9 (212) Fax. 9 (212) COLLIERS INTERNATIONAL TURKEY NEWSLETTER WINTER 21 PAGE 6

7 OFFICE CLASSIFICATION STANDARDS A CLASS OFFICE BUILDINGS CRITERIA Visibility GOOD Accessibility (good location) EASY Age of the building =< 1 years Floor plate area => 6 sqm Gross space/net space (Add-on factor) =< 2% Floor to ceiling height => 2.7 m Parking capacity (number of all parking places per 1 sqm) => 1:1 sqm Elevators Dual power supply and/or power supply system back-up Air conditioning/humidity control system Number of telephone lines per floor => 2 lines Representative lobby Professional management 7/24 Security Access control Green building Access to amenities for tenants (cafe etc.) Underground parking RESEARCH DEFINITIONS Total Inventory (Total Supply/Total Stock): Total completed office space (occupied and vacant), newly built since 1992 or refurbished, A and B class offices comprising speculative office space intended for lease. Public authorities buildings, owneroccupier buildings and buildings under 75 sq m have been excluded from the survey. The total inventory changes over time when the construction of a new building is completed or when an existing building is demolished. Does not include space under construction or planned projects. New supply: Newly built or refurbished buildings ready for commencement and completed in the given period. Includes also build-to-suit developments. Planned supply: Buildings to be delivered to the market in the ongoing period. A-Class office building: Fulfills at least 15 of the above mentioned criteria. B-Class office building: Fulfills at least 11 of the above mentioned criteria. Gross Absorption (Take-up): A gross figure representing the total floor space known to have been let or pre-let, sold or pre-sold to tenants or owner-occupiers over a specified period of time. It does not include space that is under offer. A property is taken up when the contract is signed. Total take-up includes renegotiations and lease extensions, net take-up (absorption) excludes these. Net Absorption: This is the net change in occupied space between two points in time. Another expression for the term net absorption is occupancy growth, and it may be positive or negative in value. Pre-lease: Active pre-leasing for an office building may begin as soon as preliminary design drawings are ready to be shown to prospective tenants. Pre-leasing continues until the completion of construction. Vacancy: The total unoccupied space expressed in sqm Vacancy Rate: The percentage rate derived by dividing the total vacant square meters by the total inventory. Prime rent: The highest rents that relate to new prime, high specification units in prime locations. Asking rent: The list price for rent. Transactional (Contract) Rent: The amount of rent that has been set forth in a lease agreement. Effective rent: The true rent considering rental concessions, spread over the life of the Lease. COLLIERS INTERNATIONAL TURKEY NEWSLETTER WINTER 21 PAGE 7

8 OFFICE SUB-MARKETS DEFINITIONS EUROPE Airport Bayrampaşa Maslak Etiler Levent Şişli - Kağıthane Taksim - Haliç Beşiktaş Gayrettepe ASIA Kavacık Ümraniye Altunizade Kozyatağı Kartal - Pendik OTHER Central business districts Business axes Main communication arteries Colliers International has defined new office submarkets in the Istanbul area taking into consideration the deployment of the properties in the market rather than the administrative divisions. SUB-MARKETS DEFINITIONS District Eastern border Northern border Western border Southern border Altunizade Kavacık Ümraniye Kozyatağı Kartal - Pendik Maslak Levent Inönü Ave., Dereboyu Ave., Karadeniz Ave., Libadiye Ave. Kavacık - Polonezköy Road, Mehmet Akif Ersoy Ave. Osman Gazi Ave., Tokat Ave. Yakacık-Kartal-Samandıra connection road Fatih Ave. The Bosphorus Karanfil Str., Hacı Adil Ave., Çamlık Ave., Faruk Nafız Çamlıbel Str. Çiftlik Ave. The Bosphorus The Bosphorus Bridge ring road Mehmet Yavuz Ave. The Bosphorus Çiftlik Ave., Küçüksu Ave. Küçüksu Ave., FSM Bridge connection road, Şile road The Bosphorus Bridge connection road, Istanbul-Ankara road, Yakacık- Kartal-Samandıra connection road Konak Ave., Narin Ave., Yakuphan Ave., Bosna Ave., Istanbul-Ankara road Pirinçci Köyü road, Büyükdere- Bahçeköy road FSM Bridge connection road Inönü Ave., Dereboyu Ave., Karadeniz Ave., Libadiye Ave. The Bosphorus Bridge ring road Yakacık - Samandıra- Kartal connection road, Spor Ave. Kemerburgaz road Dereboyu Ave., Bahar Str., Şair Çelebi Str., Fatih Sultan Mehmet Street, Bayırca Str., Halil Rahman Ave., Çam Str. Istanbul-Ankara road, Yakacık-Kartal- Samandıra connection road The Marmara Sea The Marmara Sea FSM Bridge connection road Zincirlidere Ave. Etiler The Bosphorus FSM Bridge connection road Gayrettepe Barbaros Ave. Zincirlidere Str. Barbaros Ave., Karanfil Str., Faruk Nafız Çamlıbel Ave., Orgeneral Izzettin Aksular Ave. Prof. Dr. Bülent Tarcan Ave., Vefa Bayırı Str., 2. Taşocağı Ave., Cemal Sururi Str. The Bosphorus Bridge connection road Ayazma Deresi Ave. Beşiktaş The Bosphorus Bridge connection road Ayazma Deresi Ave. Emirhan Ave., Muradiye Bostanı Ave., Hüsrev Gerede Ave., Abdi Ipekçi Ave., Maçka Ave. Bayıldım Ave. The Bosphorus Taksim - Haliç Abdi Ipekçi Ave., Bayıldım Ave. TEM Okmeydanı connection road, Piyalepaşa Ave. Haliç The Bosphorus - Haliç Şişli - Kağıthane Halil Rahman Ave., Bayırca Str., Fatih Sultan Mehmet Str., Şair Çelebi Str., Bahar Str., Dereboyu Ave., Cemal Sururi Str., 2. Taşocağı Ave., Prof. Dr. Bülent Tarcan Ave., Emirhan Ave. FSM Bridge connection road TEM Okmeydanı connection road Hüsrev Gerede Ave., Abdi Ipekçi Ave., Dolapdere Ave., Piyalepaşa Ave., TEM-Okmeydanı connection road Bayrampaşa TEM Okmeydanı connection road FSM Bridge connection road, Adem Yavuz Ave., Mahmutbey Habibler road Gazi Ave., Davutpaşa Otogar Esenler road, General Ali Rıza Gürcan Ave. Çobançeşme-Edirnekapı road, The Bosphorus Bridge connection road Airport Ekrem Kurt Ave., Davutpaşa Esenler road, Gazi Ave. Istoç ring road, 1. Ave., Atatürk Olimpiyat Köyü road The Küçükçekmece Lake The Marmara Sea COLLIERS INTERNATIONAL TURKEY NEWSLETTER WINTER 21 PAGE 8

9 FOR LEASE FROM OUR PORTFOLIO L e v e n t O f f i c e The A-Class Levent Office building is currently being developed in the Levent district, in Istanbul. The Property will be the first building with the LEED certificate in the area. Total leasable office area: 7,963 m² Floor plates: m² Delivery date: Q parking space per 1 m 2 of office space. Contact: Gizem Burteçin Tel Fax gizem.burtecin@colliersturkey.com Colliers International is a representative of the landlord; therefore, it doesn t claim any remuneration from the tenants. COLLIERS INTERNATIONAL TURKEY NEWSLETTER WINTER 21 PAGE 9