Turkish lira plunge sees Gulf property investors flock to Istanbul

Foreigners bought 5,367 properties in Turkey during the first quarter of 2018, compared to 4,316 last year. (AP)
Updated 25 August 2018

Turkish lira plunge sees Gulf property investors flock to Istanbul

LONDON: The plunge in the value of the Turkish lira has fueled a foreign investor buying spree for Istanbul apartments, with the most interest coming from Gulf countries, according to market observers interviewed by Arab News.
Investors from the region are seeking to exploit the near 40 percent depreciation of the local currency against the dollar since January as a political spat with the US and market concern about the fragile Turkish economy has stoked a massive sell-off of the lira.
In an interview with Arab News, Cameron Deggin, founder of PropertyTurkey.com said: “In the last few weeks, unique visitor traffic to our site has more than doubled to over 5,000 a day. We can see from the data that most of the interest is from GCC countries, with Saudi Arabia — as the most populous GCC state — in the lead by a significant margin.”
Some of the Saudi interest, but not all, was from people who originally came from other Middle East states such as Jordan, Iraq and Tunisia, but who have had residency rights in KSA for many years, and in some cases are the children of families who arrived one two generations ago.
Over the past five years, Deggin said that Gulf investors had flocked to Istanbul, buying up apartments as second homes. This was more because they felt an affinity with Turkey as a Muslim country with a cultural vibe that they found appealing, rather than because they saw real estate as a canny investment, although the weakening lira has helped. That trend has accelerated this year as the currency crisis has intensified.
“You ask why GCC nationals are buying apartments that may fall further in value, and have already dropped about 35 percent? Well, my answer is that it’s because GCC investors are buying from the heart,” Deggin said. “At each training session, I tell my guys that GCC buyers might be saying they want an investment, but for 90 percent of them, the real motive is lifestyle. They just want a place in Istanbul. Investment is a secondary motive.
“Turkey is a stable country socially, culturally and demographically.”
Deggin predicted that when the lira stabilizes, the buying surge from outside the country will double as some investors with deep pockets were waiting on the sidelines as they were more risk averse.
Up to 2017, he said “if you had dollars in your pocket your investment was going up in value because the price increase was on average higher than the depreciation of lira.”
The big question now is what happens if the crisis worsens with a further cranking up of tensions between the US and Ankara.
Kate Everett-Allen, of global property consultancy Knight Frank, told Arab News: “Turkey has faced a number of political, economic and financial crises in recent years and yet, despite this, foreign interest has proved largely stable.”
Between January and March 2017, there were 4,316 sales to foreign buyers, in the same three-month period in 2018 this figure increased to 5,367 according to data from the Turkish Statistics Office, Turkstat.
For foreign investors, a 10 million-lira villa that would have cost roughly $1.9 million a few weeks ago, would now set them back only $1.57 million, a hypothetical saving of more than $300,000, according to Julian Walker, director of Spot Blue International Property, a London-based Turkish real estate portal, cited in a report by Mansion Global.
Walker said that tourism fuels the property market and this year had already been exceptional in spite of the state’s woes. Turkey logged a record 11.5 million foreign tourists in the first five months of 2018, a 30 percent jump over the same period last year, according to the Culture and Tourism Ministry.
Turkey saw a 22 percent spike in home sales to foreign buyers in 2017, according to a year-end report from the Turkish Statistical Institute.
However, not everyone is relaxed about the Turkish property market. The Guardian warned in a report on Aug. 23 that Turkey’s construction boom was built on cheap foreign loans and that with many construction materials sold in dollars, a crash could be round the corner with developers going bust.
Citing Kajin Bulut, who has worked in senior positions in forecasting and sales for a number of Turkish construction firms, told the Guardian: “The construction sector is like the head of a train — if it goes, the whole country goes.”


INTERVIEW: Saadia Zahidi — A woman’s voice amid the macho power players at Davos

Updated 21 January 2019

INTERVIEW: Saadia Zahidi — A woman’s voice amid the macho power players at Davos

  • Saadia Zahidi, 38-years-old, is a member of the WEF’s managing board
  • She agrees that the WEF has a challenge on the low level of female participation at Davos

DAVOS: The annual meeting of the World Economic Forum (WEF), which kicks off tomorrow in the Swiss resort of Davos, is predominantly a late-middle-aged male affair. About 78 percent of the attendees in 2019 are men, with an average age of 54.
Saadia Zahidi is a breath of Alpine fresh air in this clubby world of macho power players. The 38-year-old member of the WEF’s managing board, and head of its Center for the New Economy and Society, is a rising star at the forum, and a key shaper of its thinking on social, gender and employment issues.
She agrees that the WEF has a challenge on the low level of female participation at Davos. But she believes that only reflects the wider world, where despite years of recognizing the need for gender equality in politics, business and society at large, women are still a minority when it comes to the commanding heights of the policymaking process.
“There’s a long way to go to get to 50/50 participation at Davos, but that reflects a global problem, reflecting the practices of global leadership,” she said. Only single-digit percentage proportions of the leaders of the world’s biggest corporations are female, while only a slightly bigger number of heads of state are women, she said, adding: “We have quite a way to go.”
As she recognizes, it is not just a WEF problem. Last year, she published a seminal work on gender equality as it especially related to the Middle East and the wider Muslim world. It is entitled “Fifty Million Rising,” a reference to the number of women that have joined the workforce in Islamic economies.
The work was optimistic in tone, charting the progress of women as more equal participants in their economies, be they McDonald’s workers in Pakistan, IT technicians in Egypt, or running big conglomerates in Saudi Arabia. The underlying message was that the empowerment of women was inexorable.
By the end of last year, Zahidi seemed to have lost some of that positivity. A report authored by her for the WEF on the gender gap — the difference in pay and conditions for men and women doing more or less the same job — found that on average, female workers were paid just 63 percent of men’s wages for the same job.

The overall picture is that gender equality has stalled. The future of our labor market may not be as equal as the trajectory we thought we were on.

At current rates of progress, it would take 202 years to close that gap, leading her to conclude: “The overall picture is that gender equality has stalled. The future of our labor market may not be as equal as the trajectory we thought we were on.”
So what has gone wrong in the movement to empower women?
Zahidi identifies two main reasons for the lack of progress. “There have been big shifts in the labor market with greater use of technology and automation, and women have borne the greater brunt associated with those changes,” she said.
“There’s a perception that blue-collar men in manufacturing are being put out of work by automation, but many women in service sectors, especially in the emerging world, are feeling the effects just as much if not more.”
More women than ever are graduating from universities, but many are not qualified in the skills required in the modern digital world, in science, technology and maths.
The second reason is that many countries and societies are still not balancing domestic roles more efficiently between men and women. “It still seems to be women who have the main responsibility for unpaid care work, be it in child care, elder care or other aspects of home life,” she said.
“So women are less present in the paid economy than they are in the unpaid economy. It’s a structural factor, but you shouldn’t really need a business case to move forward on gender equality, because there’s also a very clear moral argument to be made.”
The movement for gender equality and female empowerment has been a factor in social and economic policymaking in many Arab Gulf economies, particularly in Saudi Arabia, where it is a prominent feature of the Vision 2030 reform plan.



Born in Lahore, Pakistan, 1980


•Smith College, Massachusetts, US — economics degree

•Graduate Institute, Geneva, Switzerland — master’s in international economics

•Harvard Kennedy School — master’s in public administration


•Joined WEF as economist, 2003

•Currently head of WEF’s Center for the New Economy and Society; •member of managing board


Zahidi agrees that there has been some progress in recent decades, with greater investment in girls’ education leading to more skilled women in employment and all the social and cultural changes that brings. That advancement can also lead to “pushback” by women against some of the cultural and social restraints imposed on them by conservative societies.
“It’s not surprising now that there are more questions being asked about the viability of something like the (Saudi) guardianship laws,” she said. “Largely speaking, the guardianship laws are an additional barrier, whether it’s a question of transport, the ability to get from point A to point B. Is it a question of availability of transport, or because you don’t have the permission of one person? It’s a barrier that women will face and men won’t face.”
Although probably best known for her work at the WEF on gender and employment issues, last year her role was broadened to take responsibility for the “new economics” that the forum views as essential in the age of the Fourth Industrial Revolution — the confluence of digital, technological and communications factors that the WEF sees as having a profound effect on economic relations.
In October 2018, Zahidi led a study group at a WEF meeting in Dubai on the subject of the new economy. Those deliberations resulted in the recent publication of a WEF white paper on the subject. Her enthusiasm on the topic is obvious and infectious.
“It was an exercise in how to offer newer as well as the traditional voices on how we manage and direct our economy,” she said. She believes that modern economies, under pressure from digitalization and technological change amid volatile geo-economic conditions, have to seek answers to four big questions.
“First, do we need to fundamentally rethink what constitutes economic value, and what practical avenues exist for doing so?” she asked. She believes that new types of assets and economic activity are not well understood, and that new sources of consumer welfare are not adequately measured.
“What’s the value of the open knowledge on Wikipedia, or the toll taken by the incursion of digital technology into our private lives?” she asked. The answers will have fundamental repercussions for traditional methods of valuing economic activity, such as gross domestic product (GDP) and the price mechanism, she believes.
Second, Zahidi posed the question of whether, in the age of Big Data, we need to address the issue of the market concentration created by online platforms. Digital platforms bring undoubted benefits in terms of new services, greater choice, faster access and lower costs.


There’s a long way to go to get to 50/50 participation or men and women at Davos, but that reflects a global problem.

“Yet at the same time, scale and the resulting concentration of market power can offset some of these benefits, with potential repercussions on innovation, quality and distributional outcomes,” she said, adding that we need to think again about the regulatory regimes that govern the digital economy.
Third, the new economics must consider whether policymakers need to put in place practical measures for job creation. Technology and automation are forcing major transformations on employment practices. “If managed wisely, these transformations could lead to a new age of good work, good jobs and improved quality of life for all. If managed poorly, they pose the risk of greater inequality and broader polarization,” she wrote in the white paper.
Finally, the new economics must consider the need for new social “safety nets” for those who get left behind by the rapidly changing digital transformation. “In developed economies, the efficacy of social insurance policies tied to formal work and stable employment contracts is depleting, as increasing numbers of people become displaced or experience insecure work, low pay and unequal access to good jobs,” she said.
“In developing economies, where work has largely been diverse and informal, technological advances look set to continue that trend and offer additional flexible work opportunities, leaving open the question of what a future social protection model might look like.”
These issues will be among the questions considered at Davos 2019. Despite the withdrawal from the annual meeting of some prominent regular attendees — most of the US government sector, for example — Zahidi is confident that it will be another success. “My main aim this year is to raise and discuss issues that are starting to pose challenges, and to build coalitions to tackle them,” she said.