Propin Property Investment ConsultancyCompany
Propin: Istanbul office market general overview (TR) |
Tuesday 20 July 2010 Propin Property Investment Consultancy, a full-service property consultancy firm providing brokerage services, sales, lease and marketing as well as market reports and property development consultancy for developers and investors in the “office segment”, has prepared 2010 Istanbul Office Market Report covering April, May and June. In the report it is noted that the second quarter of 2010 witnessed an acceleration of transactions in the Istanbul Office Market. Propin expected a market growth in the previous quarter. Propin mentions that many international firms had suspended their search this accelerated the process of searching and gave the office market more of a boost than had been expected. |
THE MOST PROMINENT DISTRICT IN THE LAST TWO YEARS IS UMRANIYE
According to the report, Etiler District, which has experienced no growth for the last five years, is noteworthy. The reasons for office investors and developers focusing on other districts instead of Etiler include residence-based development, lack of commercial land and high prices for available commercial land. Districts that experienced growth of over twofold more than the stock in 2008, in contrast to Etiler, attract particular attention. These include in particular Umraniye, Kavacik, Zincirlikuyu-Esentepe-Gayrettepe (ZEG) and Taksim-Nisantasi office districts. In Kavacik and Umraniye, the other two districts with evident growth, real growth is of issue, due to the entrance of many new or renewed buildings onto the market.
Propin states that on the other hand, after 2008 one notes that general office stock growth fell off very rapidly. In respect of the report, the most prominent district in the last two years is Umraniye, attracting much attention due to its planned development, the possibility to renting large scale office space with wide floor areas, buildings developed pursuant to new regulations, the close position to both sides of Istanbul and quality residence stock developed in the vicinity. The lack of stock to meet demand for space in the Central Business District (CBD), and available stock rentals being at least twofold that of Umraniye District are key. The aforementioned reasons make Umraniye a district a place to evaluate for those users who focus on budget in their search of new offices and who want to make no concessions on quality.
RENTING PROCESSES LIVENED UP
According to the data given in the report, the vacancy rate in Class A office buildings in the Central Business District (CBD) was 11.7% and the vacancy rate in Class B office buildings was 12%. In Class A office buildings, the vacancy rate was 18.9% in Out of CBD-Europe and 14.5% in Out of CBD-Asia. In Class B office buildings, the vacancy rate was 33.7% in Out of CBD-Europe and 19.8% in Out of CBD-Asia.
In the report which was prepared by Propin, as a result of the dynamic market, decreases were seen in vacancy rates for most of the districts. In the second quarter of 2010, the sharpest change in vacancy rates was in Altunizade. In this district the rate was 12.8% in the first quarter and in the second quarter it decreased to 7.2%. The purchase made by the company Banksoft in Vera Plaza in Altunizade, which is represented by Propin, was instrumental in the decrease. While Altunizade is followed by Taksim-Nisantasi district which was 55.6% in the previous quarter. In this quarter the rate decreased to 50.2%.
Propin says that, in Levent, where demand has the highest concentration, vacancies decreased at a rate of 1.1% from the last quarter to 3.3%. The fact that two vacated floors in Kanyon were re-rented at such a speed that they cannot be reflected in this report is a key indicator of demand concentration in Levent District.
Propin states that, the second quarter of 2010, among the four districts in Out of CBD-Asia, only in Umraniye has the vacancy rate increased compared to the previous quarter. While the vacancy rate in Umraniye was 15.7% in the previous quarter, it increased to 19.7% in the second quarter. The addition of new buildings to the stock caused such increases.
Propin informs that, in general, as of the second quarter of 2010, in the CBD, Out of CBD-Europe and Out of CBD-Asia renting processes livened up, and therefore vacancy rates decreased. General vacancy rates in Class A buildings in the CBD decreased in this quarter, compared to the first quarter of 2010. General vacancies in out of CBD-Europe were 19.6% in the previous quarter and in this quarter it was 18.9% according to the data given in the report. Propin states, renting in Taksim-Nisantasi District within the second quarter was instrumental in such a decrease. In Out of CBD-Asia, general vacancy rates displayed a small decrease compared to the previous period. Demand for Class B office buildings that began to increase in the third quarter of 2009 continued in the second quarter of 2010 with demand from new users, who do not want to leave the center.
Propin mentions that, the reasons for the decrease in CBD Class B office vacancy rate include continuing demand and removal of a Class B building within Zincirlikuyu-Esentepe-Gayrettepe District from stock during renovation and repair process. The Class B building vacancy rate in Out of CBD-Europe was 33.7% with a small increase compared to the previous quarter. The vacancy rate for Class B buildings in Out of CBD-Asia was observed at 19.8%. In the previous quarter it was 18.2%. The Class B building vacancy rate in Out of CBD-Asia has continued to increase during the last three quarters.
AN INCREASE WAS OBSERVED IN AVERAGE RENTAL FIGURES IN ALL DISTRICTS
According to the data given in the Istanbul Office Market Report Second Quarter 2010, average rent in Class A office buildings in CBD increased compared to the previous period, and reached 26.5 US$ /m²/month. Average rents in Class A buildings did not experience any change for Out of CBD-Europe and was at 17.7 US$ /m²/month, whereas for Out of CBD-Asia it was at 18.7 US$ /m²/month. The general rent average for Class B buildings in the CBD was 15.9 US$ /m²/month.
In respect of the report, except the small rate of decrease in the Levent District in the CBD, there was an increase in average rental figures in all districts. The highest average rent demanded in Istanbul was in the Levent again. In this district, for the second quarter of 2010, Class A office buildings’ average rent was 33.9 US$ /m²/month.
Propin says that, the most striking change in the CBD was in Class B buildings in the Besiktas-Balmumcu District. In previous quarter it was 15.7%, in this quarter it increased to 21.3%. In direct proportion to the decrease in vacancy rates in Altunizade, an increase was observed in average rents. In the first quarter of 2010, Class A office buildings’ average rent was 18.9 US$ /m²/month; in the second quarter of 2010 it was observed at 19.1 US$/m²/month.
Propin says that no evident increase was observed in Class A general average rents, except in the CBD. Average rents only caught up with average rents seen in the second half 2009, with an increase of 0.6 US$ /m²/month in the CBD.
Propin observed that average rent, which was 17.7 US$ /m²/month in Out of CBD-Europe in the previous quarter, remained at the same level in the second quarter as well, and that a non-considerable decrease was seen in Out of CBD-Asia, with comparison to previous periods.
Propin mentions that, the increase seen in the previous period in the CBD, Out of CBD-Europe and Out of CBD-Asia Class B general average rents carried average rents to levels seen in the last quarter of 2009. While the most evident increase was seen in the CBD, of 1%, when the last four quarters are analyzed by Propin, it is seen that the average rents in Class B buildings are at certain levels and that no big changes have been noted.
Propin does not foresee any prominent decreases or increases in general historical rents for the next quarter. Propin predicts that most of the firms that are currently in search of office space will sign new lease contracts around September at the latest, due to budget approvals they obtained for 2010. Propin foresee that there will be a decrease in vacancy rates in the third and fourth quarters. The fact that most of future demand starts in January 2011 means that the first quarter of 2011 will be mobile. As Propin has stated in the previous quarter, it seems that Umraniye will be the focus of big transactions for the upcoming quarters.
Source: Propin |
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