There's currently a 'wait and see' attitude in the Turkish real estate market while the country waits to vote on July 22.
Business circles who defend that fixing an election date has removed ambiguities shadowing the economy and politics of the country are contemplating what will happen to the economy before and after the elections.
The economic stagnation is likely to continue until July 22, the scheduled date for early general elections, but soon after the establishment of a new government and the election of the country's 11th president, everything will return to normal, they say. Many analysts argue that households will lessen their expenditures and that the public sector will hold on to their investments to wait and see what the elections will bring. Seen as less likely, the business world will not welcome coalitions since coalitions drag their feet on many crucial issues.However, if a single party government emerges at the end of the elections -- a situation seen as the most probable by a majority of analysts -- delayed expenditures and investments will pour forth.
According to a recent study conducted by the Anatolia news agency, many business sectors will suffer from stagnancy in the period prior to the elections, whereas a few sectors, like transportation and advertising, will enjoy growth due to the relative increase in demand for these services, related as they are to the elections. The real estate sector, on the other hand, is in a “wait-and-see” mood. Businessmen believe that in such periods exports are forgotten but that the interest of foreign investors will not wane.
Anadolu Group Chairman Tuncay Özilhan points out if the elections end with reasonable results, Turkey will re-enter a period of high growth rates. The establishment of a new government and the presidential election will be completed no earlier than the third quarter, so the economy will normalize after September again, he affirms. “The Turkish economy has proven itself solid amid simmering political tension. Here we see this in currency rates, interest rates and in the stock exchange. Everything is going their own way without deviation from their course. That means reliability prevails in Turkey and that it will go on,” Özilhan says.
The president of Denizbank Financial Services Group, Hakan Ateş, points to the abundance of liquidity in the global economy and claims that within this global conjuncture, Turkey has not been so severely affected by the recent political turmoil. It was the same situation in Thailand when it was hit by a military coup and in Ukraine and Romania despite political turbulence, Ateş notes. “A few months of political instability can have no impact on the Turkish economy,” Ateş claims. “Besides, there is a certain road map for Turkey. Which reforms have to be completed, how many of them have passed and which of them are waiting to be dealt with? We don’t believe much difference will be seen regardless of who emerges -- either a coalition or a single party government.”
Ateş says in an environment in which the government has taken the decision to go for early elections, the Port of İzmir was sold for $1.3 billion and Halkbank’s IPO was greeted with a large demand. These are indications of strength in the economy. “Foreigners see no threat to Turkey’s regime,” Ateş says. Turkey will always offer attractive opportunities to foreign investors with its dynamic, productive and industrious population, he adds.
Murat Salar, vice general manager of A Investment, points to the fact that foreigners’ share in Turkish financial markets has risen in recent years. “This has increased our correlation with what is happening in international markets. Of course domestic developments are still important, but global incidents are much more determining for the decision-makers in Turkish markets,” he says. Whoever comes to power, the economic program will not change significantly, he defends, adding that any government has to continue with the existing economic program, which has proven to be successful over the course of the last five years. Salar also comments that the Turkish lira (YTL) will retain its attractiveness.
Real Estate Investment Companies Association (GYODER) President Bekir Cumurcu claims that the recent developments would definitely have costs but that those costs were not yet reflected in prices. He said a “wait-and-see” policy was dominant in the real estate sector nowadays. “Foreign investors are much calmer than domestic investors at this point in time,” he notes, adding that new projects were postponed.
International Investors Association (YASED) Secretary-General Mustafa Alper, too, comments on the possible consequences of the elections with respect to foreign investment in Turkey. They will not be affected by the elections, Alper claims and says investments will continue. He said the main obstacle against investments was ambiguity and that by making the elections earlier this ambiguity has vanished.
