Has the economic slowdown in Turkey affected the appeal of secondary cities for investment in shopping centers?
When I started in this position we checked all the big city malls in Istanbul and Izmir and the net initial yields were terrible, hovering around 6.5%. To me that was not sustainable at all. The second option was to go to places where we would have a cushion when the correction came. We went to second tier cities where the yields were higher than 8%. For Istanbul we decided to wait. When it comes to second tier cities they are even less risky than Istanbul at the moment. As long as there is one or a maximum of two shopping malls in a city of 300 thousand people, you still have 150 thousand people. The main problem in second tier cities is that retailers do have some challenges adapting to local society, prices, quality, and taste. In Ankara, the second biggest city, there is 200 m of shopping center space per thousand people, where in a second tier city you have 150 thousand people for only one shopping mall. Having said that, investors must have in-house management and leasing teams,
