Shopping centers have a bright future in Turkey

The sum invested in Turkey’s shopping centers is likely to reach $50 billion by year 2012, Hakan Kodal, chairman of Turkey’s Council of Shopping Centers, or AYD, said yesterday. At present the total sum invested in Turkey’s 183 shopping centers stands at $30 billion.

"Shopping centers are already and will in the future play an important role in local economy. At present they employ some 350,000 people, which by 2012 may reach 500,000. There are still shopping centers being built that have not yet been affected by the current crisis," Kodal noted.

He also said the shopping center total space is likely to grow from the current 4.5 million square meters to 5.5 million square meters by the end of 2009, or early 2010. "Following the enormous growth period in the past three years, 2009 will surely be a year of digestion for Turkish shopping centers and organized retail," Kodal said.

First conference

Kodal spoke at the first Shopping Center Investments Conference of the AYD. The council was established in January and currently represents about half of Turkey’s shopping centers.

Small centers form a majority among Turkey’s shopping centers - making up 95 of the total of 183. At present there exist only seven very big traditional malls, 17 outlet centers and one retail park.

Throughout 2008, there was a notable growth in the number of shopping centers per 1,000 people, particularly in Ankara. Istanbul, Denizli, Eskişehir and Bursa follow the capital in the ratio of shopping centers per 1,000 residents. Kodal admitted in some areas there is an oversupply. "Growing competition will lead to more diversified business concepts and even out the situation," he said.

On the other hand, the current crisis has not led to a major decline in visits to shopping centers or their turnover, according to AYD data. "People still keep on visiting the centers and because of the various sales campaigns, the total turnover has not experienced any major decline either," Kodal said.

Record levels of development

Yvonne Court, partner at Cushman & Wakefield, noted Turkish shopping center sector is experiencing record levels of development. "In Russia, Turkey and Romania development is still taking place in record levels, as there is still space in the market," Court said. In Russia, however, shopping center floor space in the pipeline, a category in which the country was ranking first, is experiencing significant decline due to a number of projects being called off.

"Today the leader in this category is Poland, followed by Turkey, whilst Russia is ranking third and Italy fourth," Court noted. The future challenges for the sector include finding financing and creating new concepts to pull new customers. "There will be increasing competition in the sector as shopping is transforming into a leisure activity. Challenges will also include security and environmental issues. E-commerce, which is today a small portion of all retail activity, will also come to form a challenge for the sector as we go forward," Court said. "Year 2009 will be a challenging year during which players in the sector will have to focus on their customers and protect their sales and profit margins," she added.