Q: Given that there is a lot of political instability both involving and surrounding Turkey, has this made your job more difficult?
A: Of course, it is not easy, especially if I talk about my term. I became the president of this agency in May 2015; since then, frankly speaking, I have not one of the luckiest. Since my appointment there have been two elections, in 2015, then the terror attacks in 2016, and the situation with Russia, and the failed coup attempt in July. So if you look at it from that perspective, any country that is coming across those kinds of issues or events would be failing very badly.
But interestingly, thanks to our experience in the region – because unfortunately this part of the world has never been stable – and as Turks, we have been living in this territory for centuries. So you could say that we have developed some skills to deal with the situation, because you are talking about a place that is in between many different markets.
In Turkey itself, the average age is 30 years old, and we are talking about 78 million people. When compared with Europe, it is a huge population. The neighbouring countries are also very interesting, with a young population and very vibrant economies.
Even though there is much instability in the region, when we see signs of stability I am sure the opportunities will multiply, because I always remember the example of Iraq. Normally our main export market and export partner is Germany. In terms of foreign trade and generally, Europe (but especially Germany) is usually number one in our exports. But after the Iraqi operation we saw some stabilisation in Iraq. It suddenly became our number one for a couple of years. So it shows the potential of the region.
Maybe the lack of stability is affecting us. Of course, it is making it difficult for me to talk about foreign investment. But when you look at the FDI, you can see that in 2015, during which we had two elections, we had a 35% increase in FDI. In 2016, especially the first half was very difficult, [but] in the last quarter there has been a fast recovery. And very interestingly, 56% of investment that came to Turkey came after July.
Q: In which sectors are you seeing increased investment or interest?
A: [Largely] in manufacturing but [also] you can see some different sectors, starting from the banking sector and financial sector to machine production, chemicals and real estate. Real estate is an important part of Turkish FDI and is increasing its share every year. In 2015 we had something like $4.1bn coming in as FDI for real estate. This year, even though total FDI decreased, the amount of real estate-generated FDI increased to [about] $4.6bn.
If you look at the construction sector, normally the global average for its share of total gross domestic product is 11% to 12%, but for Turkey it’s 8%. Also, just in Istanbul, for urban projects there are seven million units to be renewed. So for maybe some other real estate markets we can talk about bubbles, but for Istanbul there is real demand. And because of earthquake risk, we have had to renew these houses.
In many areas in different parts of different centres in the world they are talking about development centres outside the city, but for Istanbul it’s the inner city that we are talking about. There is interesting potential. That is why I think when we talk about the real estate sector, especially in the near future, there is no risk. Just the opposite: in the medium and long term, the opportunities are huge. I am sure that more and more FDI will be in real estate in Turkey’s future.