Turkey. Sandra Hammond Portfolio Manager, CPP Investment Board. September 27, 2011

Transcription

1 Turkey Sandra Hammond Portfolio Manager, CPP Investment Board September 27, 2011

2 Agenda Brief Overview of CPPIB Turkish Economic Outlook Turkish Property Market Retail, Office CPPIB s Investment in Turkey and Experiences Investment Considerations 2

3 Overview of CPPIB The CPP Investment Board ( CPPIB ) is a Toronto based corporation responsible for investing Canada Pension Plan contributions that are not currently required to pay benefits As of March 31, 2011 the CPPIB fund totalled C$148.3Bn of which C$10.9 billion was invested in real estate. CPPIB is governed and managed independently of the CPP and at arm s length from the government Real Estate is one of three broad investment departments within the CPPIB and invests in real estate globally We work with partners who have the deep, local expertise necessary for success; we act as an investor and portfolio manger not as a real estate developer or operator Following our original major investments in Canada, the department has invested significantly in the U.S., Europe, Australia and, more recently, in select developing countries, including Turkey. 3

4 Turkey s Strengths Good Critical Mass Growth Dynamics Economic Growth Demographic Growth growing population and increasing households Urbanization development of urban cities and growing middle class Retail Context Turkish consumers open to new trends and brands 4

5 Turkish Economy Real GDP Growth Rate (%), % 10.0% 5.0% 0.0% 7.0% 2.6% 0.9% -2.8% 6.0% 12.0% 10.3% 5.2% 9.2% 11.0% -5.0% -10.0% 1Q Q Q Q Q Q Q % 1Q Q % Q Q Q Q Q Q Q Q Q Q Q Q % -14.7% -20.0% GDP 2010: 500 billion, putting Turkey in 16th place in the world. Turkey recorded an impressive growth at 8.9% in 2010 and 11% during Q Latest IMF estimates point to 8.7% and 2.5% GDP growth rates for 2011 and Average annual GDP growth rate of 5%, placing it amongst the fastest growing economies in the world. Turkey s GDP per capita rose by almost 20% between 2005 and 2010 and another 25% is envisaged for the next 5 years. 5

6 Turkish Economy FDI Inflows (Billion USD) 25,000 20,000 19,797 21,873 17,718 15,000 10,000 9,686 7,597 8,899 10,000 5, ,201 1,752 2, Average Source: CBRT * YASED forecasts * Increasing prospects for Turkey to become an investment grade country in

7 Turkish Retail Market In European Context Key market in terms of potential growth Retail spending increase projected at 5% on average over the next 5 years, outpacing major CEE countries. Retail sales growth driven by: GDP growth, demographic growth, urbanization/household formation But also by shift to modern/ organized retail International retailers eager to expand in growth markets Strong demand for modern retail real estate with right fundamentals Retail Turnover Forecast Growth Rate 2010/2011 Source: GFK GeoMarketing 7

8 Turkey Retail Market in the European Context Country Comparison, Retail GLA UK Italy France Germany Russia Spain Turkey Netherlands Poland Sw eden Ukraine Portugal Czech Ireland Finland Romania Hungary Slov akia Belgium Greece Bulgaria Lux embourg 2010 Stock Pipeline Source: Jones Lang LaSalle 8

9 Turkey Retail Market in the European Context Market Density, GLA per 1,000 capita Netherlands Ireland Sw eden Lux embourg Finland UK Spain Portugal France Italy Czech Poland Slov akia Germany Hungary Turkey Belgium Russia Bulgaria Romania Greece Ukraine Source: Jones Lang LaSalle 9

10 Turkish Retail Rental Outlook and Maturing investment market Source: Jones Lang LaSalle Rental Outlook Prime rents decreased from 90 per sqm/month in 2007 to 75 in 2010 as a result of the economic recession. Prime rents are expected to increase to 80 and 85 per sqm/month in 2011 and 2012, respectively. Investment Market: Investment Market gained momentum in 2004/2005 Lack of distressed sales in 2008 and 2009 prevented the market yield to soften substantially. The relatively stable yield pattern made Turkey expensive compared to other young markets in Central and Eastern Europe, but looking more attractive today. 10

11 Turkish Office Market Istanbul Limited Grade A approximately 2.67 million sqm Three office locations: Central Business District, Non CBD Asian Side and Airport Region Prime rent in Istanbul at Euro30/sqm trending positive Take up improving Vacancy in CBD at 2.4% 11

12 Turkish Office Investment Market Istanbul Strata ownership is common throughout market. A challenge to investors Just a few single owned, multioccupied Grade A buildings in CBD Partnership between landowner and developer is common which leads to fragmented ownership as the land owner gets a certain share in the asset. 12

13 CPPIB s Shopping Centre Platform in Turkey Joint venture with Multi Corporation A portfolio of 7 new operational centres across Turkey and 3 development sites in 9 cities across Turkey Total sqm of portfolio is 500,000sqm 13

14 Emerging Market Investment Considerations Partner Selection Financing/Liquidity Legal Risk Political Risk Currency Risk 14

15 Conclusion Positive economic prospects in the short to long term high growth, strong FDI inflows and rising income levels Large, young population and rapid urbanisation Retail sector is the most advanced sector in the commercial real estate market Office & logistics markets are expected to evolve in the short to medium term Investor interest is strong for retail and office investment Turkey is expected to become an investment grade country in 2012, which will cause an influx of significant foreign investment These factors will cause a significant increase in investor and occupier demand with implications on rental and capital growth 15

16 The End Thank You 16