Mortgage crisis directs foreigners toward commercial property, also in Turkey
Due to the ongoing mortgage crisis in the United States foreign
investors are increasingly interested in investing in commercial real
estate.
Turkey is one of the countries that has started to
emerge as a potential investment target. “Many institutional investors
worldwide are looking for new targets to invest in, especially after
the crisis that emerged in August,” says John Kriz, Managing Director
responsible for Real Estate Finance at Moody's, the international
ratings institution.
Some international investors are focusing
on commercial real estate in East Asia, Latin America and Central and
Eastern Europe. However, there are more investors that are looking to
buy commercial real estate in relatively untouched regions like Turkey.
According to Kriz, especially Istanbul, with its high quality
office buildings, business centers, hotels and shopping malls, is an
unprecedented opportunity for investors. The commercial real estate
sector, when compared to residential real estate, is still healthy and
has notable growth potential.
Real estate investment trusts to become popular:
Real
estate investment trusts (REITs) that invest in real estate projects
with high-income potential are going to become popular. “Turkish
economy needs commercial real estate to grow. You need to invest in
real estate while the economy diversifies. REITs are a good solution to
finance these investments. They provide liquidity for the market and
confidence for investors at the same time,” said Kriz.
“REITs
are global brand names for publicly owned real estate assets. Moody's
has many clients who want to invest in international property that is
not listed on the stock exchange. REITs are the best way to do so.”
Public ownership of commercial real estate:
Moody's
is expecting an increase of public ownership in the commercial real
estate sector, Kriz said. He also noted that publicly owned REITs are
more beneficial in finance when compared to private REITs.
“Publicly
owned REITs are able to invest in more high-quality institutional
assets. They have the chance to reach out to more funds and liquidity.
Private REITs cannot take on public debt as easily as public REITs.
They need to use their own resources. On the other hand, public REITs
can take debt from any kind of capital resource such as treasury,
mortgage markets and private funds.”
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