Turkey : Istanbul office market2015 overview
- The letting market showed strong resilience despite political and economic uncertainties
Investment down by 35% in 2015
The investment activity in Istanbul slowed down in 2015 compared to 2014, dampened by the negative effect of economic and political uncertainties. Activity reduced with total investment in Istanbul 35% lower than in 2014 and within this period national investors dominated the market. On the other hand, take- up volume was well above its trend line recorded over the last 10 years.
Rents are adjusting down reflecting the abundance of new supply
Following over 800,000 m² of office completion in 2014, some 340,000 m² of new office space was delivered in 2015 and total stock reached 4.99 million m² in Istanbul. The rapid stock increase in 2014 boosted the vacancy rate, climbing from 9% to 16.7%. It fell back to 15.5% in 2015 despite economic uncertainties. According to projects in the pipeline, 688,000 m² of new offices will be added in 2016 and 376,000 m² in 2017.
Although the prime rent remained stable du- ring 2015, the increase in US Dollar versus Euro rate and the amount of new office completions exceeding demand affected rents negatively.The prime office yield in the CBD of Istanbul reached 6.50% at the end of 2015. A noticeable trend is the convergence between prime yields in the CBD and outside the CBD. In 2015, yields were almost as low as those recorded during the pre-crises levels before 2008.