Turkey Real Estate Market Overview Half Year 2022

TURKEY REAL ESTATE MARKET OVERVIEW

Half Year | 2022

CUSHMAN & WAKEFIELD | 1

2 |TURKEY REAL ESTATE OVERVIEW

Contents

2

ECONOMY OVERVIEW OFFICE MARKET OVERVIEW RETAIL OVERVIEW INDUSTRIAL OVERVIEW RESIDENTIAL OVERVIEW HOSPITALITY OVERVIEW

6

10

16

20

24

CUSHMAN & WAKEFIELD | 3

ECONOMY OVERVIEW

4 |TURKEY REAL ESTATE OVERVIEW

MARKET INDICATORS

GDP

INFLATION

INTEREST RATE UNEMPLOYMENT

Growth rates are expected to remain positive until year end following first quarter economic growth.

Remained constant in July and announced at 14% for the seventh time.

The downward trend continued in May, and this rate is expected to remain stable for the end of the year.

The trend in inflation is expected to continue.

The Ukraine-Russia war in the 5th month and ongoing negative impact of the pandemic continue to disrupt global supply chains. This is leading to food and energy price increases. The caused inflation continues to rise at a rate higher than seasonal effects, and as of June, annual inflation was recorded at 78.62% in Turkey. Minimum wage has been raised by 25%, effective from 1 July 2022, and the new net minimum wage has been determined as ₺ 5,500 net to reduce the negative impact of inflation. Inflation is expected to decrease in 2022 but remain at double-digit levels. The pressure on the foreign exchange supply continues to increase due to the concern that the increase in consumer prices will continue. As a precaution, many countries, especially the FED, announced policy rate hikes. In addition, the effect of the war increased European recession concerns, causing the Euro to depreciate. Accordingly, it is anticipated that the contractionary monetary policy will continue within the scope of inflation measures. Turkey, on the other hand, kept the CBRT’s policy rate constant by announcing 14% for the seventh time in July. The dollar Exchange rate, on the other hand, continued its upward trend in the first half of the year and it is expected that this trend will continue in 2022 in the current economic environment. Rising energy and commodity prices continue to increase inflation pressure Recession concerns on the rise

Growth (Q3)

7.3%

FX 14.83

16.22

89% y/y

71% y/y

13%

8% q/q

q/q

Inflation 78.6%

Unemployment (October) 10.9%

Turkish economy to continue growth trend

The Turkish economy grew by 7.3% in the first quarter. Fitch Ratings’ has raised its growth forecast from 2.4% to 4.5% for Turkey in 2022 expecting the growth rate to reach 3% for 2023. Moody’s Analytics, on the other hand, left its forecast for the Turkish economy unchanged and announced a 3.5% growth, predicting a 4% growth for 2023. On the other hand, the IMF revised Turkey’s 2022 growth forecast by raising it from 2.7% to 4% and announced that it increased its 2023 growth forecast from 3% to 3.5%. In addition, the consumer confidence index continued its downward trend since March last year and was announced at 63.36 in June, breaking this trend in July and recording 68.03 with an increase of 7.4%. The economic confidence index, on the other hand, decreased by 3.3% in June 2022 to 93.6. In June 2022, compared to the previous month; decreased from 121.7 to 119.6 in the service sector and from 121.4 to 118.7 in retail trade; In the construction sector, an increase was recorded from 81.6 to 83.

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EXCHANGE RATE PERFORMANCE

10,0 12,0 14,0 16,0

0,0 2,0 4,0 6,0 8,0

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 January June USD/TRY EUR/TRY EUR/USD

ECONOMIC ACTIVITY

-6,0 -3,0 0,0 3,0 6,0 9,0 12,0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (GDP 2022 Q1)

-10,0 10,0 30,0 50,0 70,0

GDP Growth (annual %) - left

CPI (annual %) - right

6 |TURKEY REAL ESTATE OVERVIEW

ECONOMIC SUMMARY

ECONOMIC INDICATORS

2017 2018 2019 2020 2021 2022 T 2023 T

GDP Growth (y/y, %)

11 5,10 1,62

7,4 2,6 0,9

1,8

FDI (y/y, %)

-20.3 17,3 -30,5 -16,2 -12,1 -

-

Fixed Investment (y/y, %) Industrial Production (y/y, %) Unemployment Rate (%) Consumer Price Index (y/y, %)

8,3 -0,3 -12,4 7,2 8,7 1,6 -0,6 1,6

7,2 2,3 3,3 17 7,9 1,9

9,9 12,7 13,1 13,2 11,2 11 10,5 11,9 20,3 11,8 14,6 36,08 69,2 20,5 4,14 5,69 6,36 8,04 10,49 16,82 20,03 3,64 4,84 5,68 7,02 8,90 15,91 18,09 15,5 20,6 10,2 17,6 13,5 10,6 11,1 15,9 15,8 12,8 17,1 25,3 20,4 8

€ : ₺ (average) $ : ₺ (average)

Interest Rates: 3-month (%) Interest Rates: 10-year (%)

F: forecast Source: Moody’s Analytics

ECONOMIC & POLITICAL BREAKDOWN

Population: GDP: Parliament: President:

84.7 million (2021) US$ 180 billion (2022 Q1), US$ 803 billion (2021) AKP Government Recep Tayyip Erdogan

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OFFICE MARKET OVERVIEW

8 |TURKEY REAL ESTATE OVERVIEW

MARKET INDICATORS

PRIME RENTS

PRIME YIELDS

SUPPLY

DEMAND

Although planned office projects are limited, the largest supply will be Istanbul International Finance Center project.

The upward trend in leasing transactions this year maintains its continuity compared to the previous year.

Yields expected to remain stable over the medium term.

It is expected to increase in TRY in the short and medium term.

Overview

In the first half of the year, the Russia-Ukraine war, the ongoing pressure of the pandemic on the economy and the increasing inflationwith disrupted supply chainswere on the agenda all over the world and Turkey in particular. After the Russian invasion of Ukraine in February 2022, the 5th month of the occupation has passed as of June. In this process, many international companies chose to terminate or suspend their activities in Russia. Turkey, has become a priority destination preferred by many companies leaving Russia amid tensions, both due to the advantage of its geopolitical and political position. In the first half of the year, prime rents increased in TRY and US$ terms as a result of increasing inflation and the continued volatility in the exchange rate. In addition, the prime rent in the CBD region, which decreased last year along with the concern created by the floating exchange rate regime, increased with the relatively stable dollar rate this semester. As a result of all these, the process of re-pricing prime rents of the Istanbul sub-market continues. In the first half of 2022, the general supply in the Istanbul office market remained at 6,46 million sq. m. While total leasing transactions in the first quarter of the year reached 123,424 sq. m and 120,892 sq. m in the second quarter. Thus, the total leasing transactions in the first half of the year reached 244,316 sq. m. This is a two-fold increase compared to the same period of the previous year. Lease transactions agreed in the first half mainly comprised new lease agreements with a ratio of 83% and 85%, both in square meters and in numbers respectivley. Lease renewals are on the decline compared to the previous year. Occupier Focus

Vacancy

Supply (Grade A)

19%

6,46 million sqm

Transactions

6 mth 224k sqm

121k

sqm

2022 Q2

Prime Rents

CBD

Out of CBD

$23 $12

₺ 360 / sqm per mth

₺ 190 / sqm per mth

Prime Yields

CBD

Out of CBD

%7.75 %8.25

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In the first half of the year, 30% of the deals on a square meter basis were realized in the CBD, a decrease compared to the same period of the previous year. 43% of the transactions outside the CBD took place on the Anatolian side and 27% on the European side, a significant increase was recorded compared to the same period of the previous year. Among the main new lease transactions; Mercedes Benz (13,857 sq. m, Vadistanbul), Yıldız Teknokent (11,000 sqm , Maslak 1453), Kolektif House (9,800 sq. m, Onur Ofis Park), Eroğlu Group Companies (7,500 sq. m, Skyland), Kolektif House (7,200 sq. m, A+Live), P&G (5,800 sq. m, Nidakule Ataşehir Kuzey) and Amazon (2,738 sq. m, River Plaza).

As a result, the vacancy rate decreased from 20.20% to 19% in the first half of 2022.

PRIME OFFICE RENTS – JUNE 2022

LOCATION

TRY

US$

€

US$

GROWTH %

SQ.M / MTH SQ. M / MTH SQ. M / YR SQ. FT / YR 1YR

5YR CAGR

360

Istanbul (Levent) Istanbul (Esentepe Gayrettepe) Istanbul (Maslak) Istanbul (Asian side)

23.0 12.0 15.0 16.0 13.0 10.0

-8.0 -10.9

258 136 169 179 147 113

25,6

190 235 250 205 157

13.4 -14.3 -13.7

0.0 -11.7

16.7 17.8 14.5 11.1

-5.9

4.2

Izmir

30.0 -1.5 11.1 -10.1

Ankara

PRIME OFFICE YIELDS – JUNE 2022

CURRENT

LAST

LAST

10 YEAR

LOCATION (FIGURES ARE GROSS. %)

Q

Q

Y

HIGH LOW

Istanbul (Levent)

7.75 8.25 8.00 7.75 9.50 9.25

7.75 8.25 8.00 7.75 9.50 9.25

7.75 8.25 8.00 7.75 9.50 9.25

8.00 8.25 8.75 8.75

6.80 7.25 7.25 7.25 9.25 9.25

Istanbul (Esentepe-Gayrettepe)

Istanbul (Maslak) Istanbul (Asian side)

Izmir

10.00 10.00

Ankara

Indicated office prime yields not applicable for fragmented ownership.

Outlook

During the Russia-Ukraine war, Turkey has entered the radar of many foreign companies with its position and the balance policy it has followed. The increase in foreign investor demand, which has increased for both operational management and investment purposes, is expected to continue in the upcoming period. In this context, the investment environment is expected to accelerate in the medium term. With the onset of 2022, the hybrid working model is still preferred, despite the pandemic gradually losing its effect. In this context, efforts to bring employees together in the right place by promoting productivity and emphasizing quality rather than quantity in office space, ensuring the development of innovation, socialization, cooperation and company culture, maintains the high demand for high quality and efficient office space.

10 |TURKEY REAL ESTATE OVERVIEW

As a result of the increasing inflation, the pressure of the landlords on the tenants increased and there was a significant increase in the prime rents on a local currency basis in general in the CBD and other sub-markets. In addition, it was observed that rents, which remained low in dollar terms, increased in the office market in secondary locations. The Istanbul Financial Center Law, which regulates the management and operation of the Istanbul International Financial Center, the activities carried out there and the incentives, discounts, exceptions and exemptions for these activities, entered into force. It is foreseen that the project will be completed in 2022 and approximately 1.4 million sq. m of Office supply will enter the market. More than 50 percent of this supply will be occupied by public banks and financial institutions.

RECENT PERFORMANCE

10,00%

-30,00% -20,00% -10,00% 0,00% 10,00% 20,00% 30,00%

9,00%

Rental Growth (y/y)

8,00%

7,00%

Yields

6,00%

5,00%

Jun11 Jun12 Jun13 Jun14 Jun15 Jun16 Jun17 Jun18 Jun19 Jun20 Jun21 Jun22

Yield - Country Average Yield - Prime Rental Growth - Prime Rental Growth - Country Average

In the first half of the year, there were no significant investment transactions were recorded. Investment transactions are expected to accelerate in the medium and long term. Investment Focus

0 1000 2000 3000 4000 5000 6000 7000

$- $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000

4.132

4.140

4.140

4.132

4.007

3.745

3.362

3.058

2.855

%24,03

2.313

23.6% 24.0% 24.6% 24.8%

%

21,50%

19%

16.6%

16.1%

Thousands

10.6%

2.327

2.327

2.327

2.327

2.173

2.045

1.759

1.620

1.269

1.019

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 H1

Asian Side Supply (sq. m)

European Side Supply (sq. m)

Prime Rent

Vacancy

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RETAIL MARKET OVERVIEW

12 |TURKEY REAL ESTATE OVERVIEW

MARKET INDICATORS

PRIME RENTS

PRIME YIELDS

SUPPLY

DEMAND

Prime rents are expected to remain stable in dollar terms, with increasing concerns about a global recession.

It is expected that projects under construction will be completed and the supply will increase in the medium and long term.

An increase is observed in retailer demand.

Yields expected to remain stable over the medium

Overview

In the first half of 2022, although the international supply chain crisis continued to put pressure on the sector due to increasing inflation, increasing costs and fluctuating exchange rates, the pessimistic atmosphere in the pandemic period dissipated and replaced by a positive environment, which increased customer demand, especially in physical retail. Considering the retail data of shopping malls provided by AYD/Akademetre; In May 2022, a significant increase of 358.3% was observed in the shopping center turnover index compared to the previous year. A significant increase was recorded in all categories compared to the previous year. Clothing and footwear categories increased by 393.9% and 443.0%, respectively, in square meter productivity indexes, and an increase of 12.3% and 13.8% was observed in these categories, respectively, compared to the previous month. On the other hand, while the highest increase was observed in the food and beverage category with a rate of 443.0%, it was observed that the category that increased with a lower acceleration compared to other categories was hypermarket with 173.9%. In addition to all these, an increase of 10.3% was achieved in the number of visitors in May 2022 compared to the previous month, while a significant increase of 258.3% was recorded when compared to the same month of the previous year. On the other hand, calendar adjusted retail sales volume and turnover increased by 20.9% and 139.9%, respectively, in May compared to the same month of the previous year, according to Turkstat data. However, after the downward trend it has experienced since March 2021, the consumer confidence index finally saw the bottom level of 63.4% in June and rose to 68 in July with an increase of 7.4% compared to the previous month.

Supply 13.8 million sqm GLA

440 Shopping Centers

sqm / 1,000 population

164 sqm

Prime Rents (High Street) $90 ISTANBUL

₺ 1.410/sqm per month

Prime Rents (SC)

İSTANBUL

$95 ₺ 1.480/ sqm per month

Prime Yields

SHOPPING CENTER

HIGH STREET 7.25%

8.50%

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In the first half of 2022, it was observed that new store openings gained momentum. In addition, with the Ukraine war that started in February, interest from Russian and Ukrainian brands and investors in Turkey has increased. Occupier focus

In the first half of the year, activity increased in the retail area with the removal of all restrictions. Demand for both, shopping centers and high street stores increased significantly and new entries were recorded. Turkish fashion retailer Les Benjamins opened its flagship store on Bağdat Avenue. Beymen, another fashion retailer, opened a store at Galataport. TeknoSA, a Turkish electronics rertailer, opened its first concept store at City’s Nişantaşı and announced plans to transform 6 of its stores into new concepts by the end of the year. In addition, German electronics retailer MediaMarkt opened a new store at Kartal İstMarina AVM in Istanbul. Turkish furniture and homeware retailer Evidea has announced that it will continue its growth strategy in 2022. Turkey’s largest grocery retailers, Migros and CarrefourSA continued their growth strategies in this quarter as well. While coffee chains continue their growth, Costa Coffee opened its first store in Turkey at Boyner Cadde, on Bağdat Avenue. Coffee chains Kahve Dünyası and Starbucks have announced that their expansion policies will continue for the upcoming periods. In addition, while restaurant chain Tavuk Dünyası continues its expansion in the food and beverage sector, Godiva has opened its new branch in Nişantaşı City’s shopping center. In addition, New York-based chain Magnolia Bakery announced that it will open its first branch in Vadistanbul. Italian footwear and clothing brand Geox has announced that it will return to Turkey again in cooperation with Derimod. In the first quarter of the year, while there was no shopping center opening; In the second quarter, a new supply entry of 60,250 sq. m to the market was realized with Isparta Meydan AVM. Thus, the total supply reached 13.8 million sq. m with 440 shopping malls. In addition, Metrocity AVM, located in Levent, announced its plan to turn into a Premium Outlet Center.

14 |TURKEY REAL ESTATE OVERVIEW

RECENT PERFORMANCE

11,00%

-30,00% -20,00% -10,00% 0,00% 10,00% 20,00% 30,00%

9,00%

Rental Growth (y/y)

7,00%

Yields

5,00%

3,00%

Jun 09 Jun 10 Jun 11 Jun 12 Jun 13 Jun 14 Jun 15 Jun 16 Jun 17 Jun 18 Jun 19 Jun 20 Jun 21 Jun 22

Yield - Country Average Yield - Prime Rental Growth - Prime Rental Growth - Country Average

PRIME RETAIL RENTS – JUNE 2022

HIGH STREET SHOPS

TRY GROWTH % SQ.M/MTH SQ.M/MTH SQ.M/YR SQ.FT/YR 1YR 5YR CAGR US$ € US$

1,410

Istanbul

90

1,083

100

0.00 -16.37

705

Izmir

45

542

50

0.00 -14.76

860

Ankara

55

661

61

-8.33 -16.44

PRIME RETAIL YIELDS – JUNE 2022

CURRENT

LAST

LAST

10 YEAR

HIGH STREET SHOPS (FIGURES ARE GROSS, %)

Q

Q

Y

HIGH LOW

Istanbul

7.25

7.25

7.50

7.50 5.80

Izmir

8.25

8.25

8.50

10.25 7.50

Ankara

8.25

8.25

8.50

9.75 7.00

CURRENT

LAST

LAST

10 YEAR

SHOPPING CENTRES (FIGURES ARE GROSS, %)

Q

Q

Y

HIGH LOW

Turkey

8.50

8.00

8.00

8.50

7.00

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Investment Focus

Retail investment activities, in the first half of the year, include the sale of French REIT Klepierre’s Ada Outlet in Sakarya. On the other hand, the part sale of Kayaşehir Shopping Center located in the Nidapark Kayaşehir project to Isra Group Cons. Inc. for ₺ 300 million has been recorded.

Investment activities are expected to gain momentum in the medium term.

Overview

After the sanctions against Russia, many foreign companies focused on Turkey for expansion. It was noteworthy that especially the US origin retail brands located in Russia announced their expansion plans in the Turkish market. In addition, many foreign companies leaving Russia have started to be replaced by Turkish retailers with their expansion. In the first half of the year, fashion retailer Marks & Spencer, announced that it was withdrawing from Russia and announced that it had handed over its Russian operation to Fiba Holding. Again, in the clothing category, Reebok announced that its Russian unit was acquired by Turkish footwear chain FLO. It is foreseen that expansion in the short and medium term will increase with the continuation of the war. Turkish retail brands, which come to the forefront with their competitive structure as a result of the supply chain problem and increasing production costs in global retail, continue their expansion strategies, especially in Europe. In the first half of the year, ready-to-wear brand DeFacto announced that it will invest in nearly 50 new stores in foreign markets. Restaurant chain Tavuk Dünyası has announced that it will enter Europe with the first branch in Spain. In the first half of the year, a significant increase was observed in the occupancy rates of shopping centers as a result of the improvement and acceleration in the sector. As the latest data of AYD shows, with the effect of shopping center turnovers, which increased 3.5 times compared to last year; The concept of “Turnover Rent”, which has not been on the agenda for many years, has once again entered the agenda of retailers. Despite all this, the increase in input costs in parallel with the increase in turnover slows down the improvement in the sector. The food and beverage industry, which was one of the leading sectors before the pandemic, entered a period of stagnation during the pandemic period. After the pandemic, it quickly returned to its upward trend and increased more than 4 times compared to the same period of the previous year, especially considering the category-based turnover rates announced by AYD. It is predicted that the revenue increase in the Food & Beverage category will continue to grow in the upcoming period. While digitalization gained momentum in the retail market during the pandemic, retailers focused on the experience store concept by strengthening their technology infrastructure in their physical stores. With the revival observed after the pandemic, it is predicted that concepts that offer useful, unique and targeted experiences will maintain their popularity and become widespread.

16 |TURKEY REAL ESTATE OVERVIEW

TOTAL SHOPPING CENTRE GLA AND NUMBERS BY YEARS

500

10 12 14 16

400

300

0 2 4 6 8

200

GLA (millions)

No of SC

100

0

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 1.H.

2022 (F)

GLA (sqm)

No of SC

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INDUSTRIAL & LOGISTICS OVERVIEW

18 |TURKEY REAL ESTATE OVERVIEW

MARKET INDICATORS

PRIME RENTS

PRIME YIELDS

SUPPLY

DEMAND

Despite the increase in construction costs, logistics facility development activities gained momentum. Supply is expected to increase in the short and medium term.

It is predicted that the increasing demand will continue this trend with the Russia-Ukraine war, the prominence of the concept of the near shore and the rise of e-commerce.

Yields are expected to remain stable in the short and medium term.

There is an upward trend in rents in terms of TRY ( ₺ ) and US ($) in the short term.

Overview

In the first half of 2022, the export trade volume stood at US$102.5 billion in the January – May 2022 period, a significant increase of 20.4% over the same period of the previous year. Import trade volume was recorded as US$145.7 billion in the same period, an increase of 40.8% compared to the previous year. However, in the January – May 2022 period, the foreign trade deficit increased by 136.0% to US$10.7 billion. Even though the pandemic started to lose its effect in the first half of the year, customer demand was limited due to the Russia Ukraine war and price increases deterred buyers and negatively affected production. The PMI value of 49.2 measured in May decreased to 48.1 in June. In the first quarter of the year, warehouse transactions reached 327,637 sq. m, while in the second quarter, it reached 124,334 sq. m. Thus, the total transaction volume in the first half of the year was recorded at 451.971 sq. m. Currently, the supply of quality warehouse space is limited and the demand for large warehouse space is high. As in the previous quarter, the increasing demand for quality warehouse space and the limited supply in this quarter caused a significant increase of 20% in prime rents compared to the previous year. Occupier Focus

Prime Rents Istanbul

$6.00

₺ 95 /sqm per month

Prime Yields Istanbul

8.50%

Transactions

452k sqm 6 mth

124k sqm 2022 Q2

3PL and e-commerce were the most active industries in the first half of 2022. major lease transactions in the second quarter of the year included DSV Air and Sea Transportation Inc. (13,300 sq. m, Istanbul/Esenyurt), Seferim Güvende Platform Lojistik A.Sh. (9,750 sq. m, Kocaeli/Çayirova), Progıda Agricultural Products (6,400 sq. m, Giresun/Piraziz), Talha Nakliyat (5,200 sq. m, Kocaeli/Çayirova), Siemens (5,000 sq. m, Kocaeli/Çayirova) and ETT Lojistik Ticaret Ltd. Şti.(3.250 sq. m, Kocaeli/Çayirova) In addition, inflation pressure and the increase in construction costs were another reason for the increase in rents. It is foreseen that this net increase will continue in the upcoming period as warehouse demand Will continue in the short to medium term.

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RECENT PERFORMANCE

-30,00% -20,00% -10,00% 0,00% 10,00% 20,00% 30,00%

10,00%

9,00%

Rental Growth (y/y)

8,00%

7,00%

Yields

6,00%

5,00%

Jun 11 Jun 12 Jun 13 Jun 14 Jun 15 Jun 16 Jun 17 Jun 18 Jun 19 Jun 20 Jun 21 Jun 22

Yield - Country Average Yield - Prime Rental Growth - Prime Rental Growth - Country Average

PRIME INDUSTRIAL RENTS –JUNE 2022

LOGISTICS LOCATIONS TRY US$

€

US$

GROWTH %

SQ. M MTH

SQ. M MTH

SQ. M YR

SQ. FT YR

1YR 5YR CAGR

Istanbul Ankara

68 34

6.69 20.00

-0.81 -4.36

95 6.00 46 3.00

3.34

9.09

PRIME INDUSTRIAL YIELDS – JUNE 2022

LOGISTICS LOCATION (FIGURES ARE GROSS, %)

CURRENT LAST

LAST 10 YEAR

Q

Q

Y HIGH LOW

Istanbul

8.50

9.00

9.00 9.25 8.75

Ankara

9.50 10.25

10.25 10.25 9.50

Investment Focus

Transactions in 2022 consist of land acquisitions due to the increase in demand for warehouse areas and the limited supply of available warehouses. Among the biggest investment transactions in the first half were sale of the land belonging to Batı Söke Çimento Sanayi in Aydın Söke to Batı Kipaş Kağıt Sanayi for ₺ 62 million (203,510 sq. m), the land belonging to İttifak Holding in Konya Meram, for ₺ 72 million. Tekkeli Gıda Sanayi (194,108 sq. m) and Reysaş REIT’s ₺ 23 million land acquisition in Adana Sarıçam (46,032 sq. m).

20 |TURKEY REAL ESTATE OVERVIEW

Outlook

The demand for warehouses has gained momentum with the increase in producers’ storage needs together with the rising inflation. In addition, the increasing construction costs and the gradual increase in prime rents push the users to complete the contract processes beforehand. In addition, a 20% increase was recorded in prime rents in this quarter compared to the previous quarter. In this context, it is foreseen that prime rents will increase in the short-medium term in the face of supply shortages and increasing demand. After the start of the Russia-Ukraine war, many manufacturers in this region took Turkey on their radar especially since the export volumes of these companies are high, their demand for logistics and industrial areas in free zones is higher than in other regions. The demand for industry and logistics areas in the Thrace region, which has the advantage of accessing Europe in terms of location for land logistics, has gained momentum and this mobility is expected to increase in the medium term. The 1915 Çanakkale Bridge, which was opened on March 18 and also forms an important part of the highway ring being built to the Marmara Region; It is expected to relieve the Marmara region, which has no other alternative other than the bridges in Istanbul on the trade line from Anatolia to Europe. With the bridge, which offers great advantages in terms of both logistics and commercial mobility, the demand for the surrounding logistics and industrial areas is expected to increase. The search for solutions to the disruptions in the supply chain all over the world during the pandemic period is expected to create an opportunity for international investors who want to take advantage of Turkey’s advantageous geopolitical position in the long run. However, in the first quarter of the year, the US world automotive giant Ford and Volkswagen announced that they will produce Kocaeli for their new commercial vehicle, which they will launch in cooperation with. In the first quarter of the year, the Chinese electronics and smartphone manufacturer Xiaomi and its partner Salcomp opened the factory in Avcilar, Istanbul, where it will produce. In addition, national companies operating in the fields of insulation and paper-cement are getting ready to make production in various provinces of Anatolia by increasing their investments. Habas is planning to establish the World’s largest air separation plant in Bilecik. Qua Granite, on the other hand, plans to gradually complete three new production lines, which it started in 2020, 2021 and 2022 to meet the increasing demand. In addition, Chery, a Chinese automotive brand in the automotive industry, announced that it plans to enter the Turkish market in the last quarter of 2022. Investments in industry and logistics are expected to continue to improve in the following periods of the year.

NORTH MARMARA LOGISTIC SUBMARKETS - PRIME RENTS

100 120

0 20 40 60 80

(₺/sq. m/month)

Corlu - Cerkezköy

Catalca - Silivri

Esenyurt - Hadimköy

Ikitelli - Yenibosna

Dudullu Kartal - Samandİra

Tuzla - Gebze

Dilovasi

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RESIDENTIAL OVERVIEW

22 |TURKEY REAL ESTATE OVERVIEW

MARKET INDICATORS

RESIDENTIAL SALES:

MORTGAGED SALES:

SALES TO FOREIGNERS:

2021 H1 thousand

553

170 104

35 20

2022 H1

726

thousand

In the first half of 2022, the effects of the ongoing Russia-Ukraine war created a shortage in the housing supply in Turkey, while high construction costs along with the exchange rate fluctuations made its impact on housing sales. It was realized as 726 thousand 398 units with an increase of 4%, thus the highest half-year sales rate of all time was recorded. In addition, in line with the reductions in housing loan interest rates, mortgage sales increased by 63.50% compared to the same period of the previous year and amounted to 170,317. Sales to foreigners, on the other hand, increased by 72.7% compared to the same period of the previous year and reached 35 thousand 383, and Istanbul ranked first in this category, as in total housing sales. However, compared to the same period of the previous year, first-hand house sales were recorded as 208 thousand 451 with an increase of 24.2%, while second-hand house sales were recorded as 517 thousand 947 with an increase of 34.6%. In the January - June 2022 period in building permits, the number of flats in the building permits was recorded as 125,854, while a 27.95% decrease was observed compared to the same period of the previous year. In terms of building occupancy permits, the number of flats decreased by 2.41% compared to the same period of the previous year and was recorded as 155,305. While the total area was recorded as 26.9 million sq. m in the building permit this semester, the total area was recorded as 30.4 million sq. m in the occupancy permit. In the sales made to foreigners, the effects of the war between Russia and Ukraine showed itself with Russia (5,849) taking the first place, followed by Iran (4,884), Iraq (4,025), Kazakhstan (1,417) and Germany (1,414), respectively. Overview

Residential Sales 6mth 726 thousand 2022 Q1 31% y/y 

2021 Q2 406k 51% y/y

320k 19% y/y





With Mortgages

2022 H1 63% 

2022 Q1 45% 

2022 Q2 80% 

Sales to Foreigners

21,039 35,383 2022 H1 2022 Q2

BUILDING PERMITS

400

1.500

300

1.000

200

500

100

Millions

0

0

Thousands

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2021 Q1 2022 Q1 Total floor area (sqm) Construction permit Total floor area (occupancy permit)

No of Dwellings (construction permit)

No of Dwellings (occupancy permit)

CUSHMAN & WAKEFIELD | 23

TURKEY RESIDENTIAL SALES

0,0 0,3 0,6 0,9 1,2 1,5 2016 2017 2018 2019 2019 2020 2021 2021 January - June 2022 January - June Millions Mortgaged Sales Other Sales

2022 January-June

RESIDENTIAL SALES

Turkey

Istanbul

Ankara

Izmir

Antalya Bursa

Total Sales

726,398

134,312

66,323

42,973

38,239

26,463

1 st Hand Sales

208,451

28,643

8,888

9,252

10,466

6,041

2 nd Hand Sales

517,947

74,917

37,194

22,924

22,275

13,779

Mortgaged Sales

170,317

30,752

20,241

10,797

5,498

6,643

Sales to Foreigners

35,383

14,895

1,762

746

9,836

968

SALES TO FOREIGNERS - 2022 JANUARY-JUNE

Russia Iran Iraq Kazakhstan Germany Afghanistan Ukraine Yemen China Palestine Kuwait United States…

0

2.000

4.000

6.000

8.000

24 |TURKEY REAL ESTATE OVERVIEW

CUSHMAN & WAKEFIELD | 25 2

HOSPITALITY OVERVIEW

26 |TURKEY REAL ESTATE OVERVIEW

MARKET INDICATORS

FOREIGN VISITORS

ADR:

REVPAR:

OCCUPANCY:

62% / June +71% / y/y

€93 / June +42% / y/y

€58 / June +143% / y/y

11,3 M / May YTD

TURKEY

+207% / y/y

69% / June +95% / y/y

€113 / June +45% / y/y

€78 / June

5,28 M / May +213% / y/y

ISTANBUL

+181% / y/y

Performance

In the first half of 2022, hotel occupancy rates in Turkey increased by 71% compared to the same period of the previous year, and were recorded at 62%; In Istanbul, it increased by 95% and was recorded as 69%. The average daily price of rooms sold increased, on the other hand, in the first 6 months of 2022 in Turkey and Istanbul, respectively, to €93 and €113. In Europe, in the first 6 months of 2022; The average occupancy rate was 58.3%, below the average of Turkey. The average daily price of rooms sold in Europe was €121, and Turkey lagged behind Europe with the room price recorded in the same period. In the first half of 2022, the number of facilities with operating licenses throughout Turkey reached 5,888. In the January–May 2022 period, the number of facilities with operating licenses in Istanbul increased to 702, while five In the first 5 months of 2022, the number of foreign visitors to Turkey was recorded as 11.3 million, with a marked increase of 207% compared to the same period of the previous year. On the other hand, 5.28 million foreign visitors came to Istanbul, an increase of 213% compared to the same period of the previous year. However, in the ranking of the countries sending the most visitors in the January-May period of the year, Germany (1,308,721) ranked first, Bulgaria (945,976) was second and Russia (853,590) was third, followed by Iran and Great Britain, respectively. In Istanbul, in the ranking of the countries sending the most visitors in the January-May period of 2022, Germany (101.352) ranks first, Iran (88.171) second, Russia (60.044) third, followed by Great Britain and the USA, respectively. is following. Visitors Supply

Foreign Visitors

TURKEY

5.28 ISTANBUL million 5 mth

207% y/y

213% y/y

11.3 milllion 5 mth

ADR

€78 TURKEY

€97 ISTANBUL

33% y/y

30% y/y

6 mth

6 mth

Occupancy

57% TURKEY 6 mth

64% ISTANBUL 6 mth

60% y/y

83% y/y

5* Hotels #

TURKEY

122 ISTANBUL

2,5% y/y

2%

773

y/y

CUSHMAN & WAKEFIELD | 27

The total number of passengers at airports across Turkey increased by 87% compared to the same period of the previous year and reached 75 million. While the total passenger traffic at Istanbul Airport was recorded as 27.6 million for the same period, the total passenger traffic at Sabiha Gökçen Airport was realized as 13.7 million, with a significant increase of 126% and 55%, respectively, compared to the previous year. Passenger Count

TURKEY TRADING PERFORMANCE

100 120

80,0%

60,0%

0 20 40 60 80

40,0%

20,0%

Occupancy

(Euro)

0,0%

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 January - June

ADR (€)

RevPar (€)

Occupancy (%)

ISTANBUL TRADING PERFORMANCE

100 120 140 160

0% 20% 40% 60% 80%

0 20 40 60 80

(Euro)

Occupancy

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 January-June

ADR (€)

RevPar (€)

Occupancy (%)

HOTEL SUPPLY

0 1.000 2.000 3.000 4.000 5.000 6.000

1.500

1.000

500

0

Number of Beds

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 H.1.

No of Establishments

No of Establishments

No of Beds

28 |TURKEY REAL ESTATE OVERVIEW

CUSHMAN & WAKEFIELD | 29 26

30 |TURKEY REAL ESTATE OVERVIEW

TUĞRA GÖNDEN International Partner, Head of Turkey Büyükdere Cd. 13, River Plaza, 15, Levent 34394 İstanbul/Turkey Phone: +90 212 334 78 00 tugra.gonden@cushwake.com

GIZEM NAZ INCI Consultant, Research

Büyükdere Cd. 13, River Plaza, 15, Levent 34394 İstanbul/Turkey

Phone: +90 212 334 78 00 gizem.inci@cushwake.com

This report has been produced by Cushman & Wakefield LLP for use by those with an interest in commercial property solely for information purposes. It is not intended to be a complete description of the markets or developments to which it refers. The report uses information obtained from public sources which Cushman & Wakefield LLP believe to be reliable, but we have not verified such information and cannot guarantee that it is accurate and complete. No warranty or representation, express or implied, is made as to the accuracy or completeness of any of the information contained herein and Cushman & Wakefield LLP shall not be liable to any reader of this report or any third party in any way whatsoever. All expressions of opinion are subject to change. Our prior written consent is required before this report can be reproduced in whole or in part. ©2021 Cushman & Wakefield LLP. All rights reserved.. Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 50,000 employees in over 400 offices and 60 countries. In 2021, the firm had revenue of US$9,4 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. To learn more, visit www.cushmanwakefield.com or follow @CushWakeTurkiye on Twitter. Our Research Services Cushman & Wakefield (C&W) is known the world over as an industry knowledge leader. Through the delivery of timely, accurate, high-quality research reports on the leading trends, markets around the world and business issues of the day, we aim to assist our clients in making property decisions that meet their objectives and enhance their competitive position. In addition to producing regular reports such as global rankings and local quarterly updates available on a regular basis, C&W also provides customized studies to meet specific information needs of owners, occupiers and investors.

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32 |TURKEY REAL ESTATE OVERVIEW