I wish to talk about what has been going on especially in the ‘residential’ sector over the past 10 years, as someone who has welcomed her 15th year at the different desks of the real property sector as of last week. You may find my opinion of the story that has been going on, in chronological order below.

- I recall a residential story that started in Istanbul in 2005 and gradually spread all over the country later on… Even branded residential projects… sales made as based on mock-ups… there were even times that I had queued up to take share of this story…

- Branded residential projects, the initial ripples of which we had started to feel in 2005, started to roll in like thunder in 2007 and afterwards… One television commercial followed another, we saw so many mock-ups that mock-ups started to haunt our dreams. As you may all guess, both the commercials and the mock-ups had certain basic characteristics… The weather was always nice; the panoramas were fabulous in all these new projects… It was almost as if you could not find a spot with a poor betterment when you looked at the mock-ups, they were all overlooking a beautiful view, usually the sea and if not, definitely to the greens… And yet, that green was out of the ordinary… vast as far as the eyes could see… You would almost believe that the night never fell and especially it never rained/snowed in those estates.

- The projects that were up to sale between 2005 and 2010 were the projects that generated the highest yields and/or value increases, when we look back today. Certainly, there were too many variables that ensured this. Let us recall several of these that were - in my opinion - important in this story. Speaking for myself, we all witnessed a process where the project developer also learned in the initial projects… Such projects were being built in such areas for the first time... no one knew whether they would sell or not, and if sold, how much they would sell for because there were no previous equivalents, etc… The ultimate consumers were equally willing to make a residential investment... it made no difference whether it was for investment or residence purposes. They managed to find the ways and means, putting together some housing loan, a little down-payment, some jewelry from the wedding and a bit of support from the family, and peacefully chose and bought their residential units on mock-ups. This group we also deeply satisfied with these investments. Because very nice profits were achieved in the residential units purchased during that period… Even Istanbul did not probably know its actual value exactly during that period. The prices in many projects, which correspond to that period, generated 100% profit from the time the project started up to when it was completed. We may recall projects that increased by 4-fold in value within 10 years, if you were able to retain your investment for some time after the project was completed.

- Some things were starting to change as of 2011, but how aware was the consumer about this change? There are times when some things start to simmer but no one is able to name what they are exactly. It was sort of like that... It was a transition from ‘mock-up is coming’ to a ‘home is coming’ period, so to say… But, some of those who bought homes were unhappy, while some started to complain about the high sales values in the new projects that were put up for sale. But, the share of such complaints was so small in the total that… no one heard them yet.

- When we reached 2013, the interest rates in housing loans saw their lowest values in history during the period until May, and the citizen who used a housing loan with an interest rate of 0.69 on monthly basis, virtually looked for a partner to share his happiness with. Everyone was able to see, tell about the good course of the events also with statistical data, since the residential sales statistics had started to be announced. Of course, the projects that were being built everywhere, different project models everywhere started to worry the end consumers a little bit as of 2013, but this still was not a matter that was worth to talk about too much. The built projects were still sold on mock-ups, and the gross-net differences in the sold flats reached the levels of 40-50%. And, the gross-net differences in each new project started to become a critically important question for us, as consultants. The ultimate consumer also started to bring this matter on the agenda somewhat. Receiving homes that were actually so small that it would be difficult to fit a wardrobe in a room, while they dreamed of the wide rooms in the homes they purchased, caused them to contemplate a little.

- An amendment was made in the Consumer Law when we reached 2014, as an attempt to prevent sales on mock-ups even before a construction license was received, and it became compulsory to write the gross-net areas clearly in materials such as announcements, promotions, and advertisements in order not to mislead the ultimate consumers.

- It became harder to find plots to develop new projects starting with 2014, so projects were either shifted to new development areas or ways were sought and successfully found to develop projects at central locations within the scope of urban transformation. However, there was one fact that really started to be felt fully. Were residential projects unable to achieve us much value increases as those in the past? In the meantime, another problem started to emerge for the owners: the new threat for the owner to have to tolerate ‘common area expenses/estate maintenance charges’ if he did not accept the paid lease rates, because the lease revenues dropped below the expected levels as the residential units that were added to the stock and were expected to bring in a lot of revenues for the investor started to be leased out. The property owner either had to bear with the common area expenses or consent to lease his property even if the lease value was low.

- As we reached 2015, customer dissatisfactions started to emerge in some projects, while some projects managed to add new ones to their very successful performances. These were the times that were recorded in residential investment history as the times when the investors were not happy with the value increase rates in the residential units they bought, and started to question ‘I wonder whether I would have been better off if I had evaluated my money in deposits or foreign exchange?’. As the year ended with the country’s agenda, the elections, etc., we were left with residential units that were produced in the same way for same segment, high estate contributions, homes acquired by getting indebted in our hands. The common characteristic of this segment was the certain level of saturation reached regarding homeownership. Of course, we were also learning by experiencing another matter we did know much about, and that was the projects that were composed of 1000 – 2000 and even more residential stocks… There were many questions, which we had not thought of before, in our minds now… Were we really happy to live all together like a crowded commune? Did we need 1+1 flats so much? How happy would those, who bought larger flats for residential purposes, feel about living in the same block as these 1+1 flats? And, the nameplates in estates where purchases by foreigners were more weighted, added new sub-headings, which we were not used to talk about such as common area usages, to all this confusion, as if it were not enough in itself.

- When we reached 2016, the year indicated a period of very clear change, a period when we started to talk about a decline in the trend to purchase residential units above a certain value, and a trend for the investor to evaluate alternative investment instruments rather than residential investment. And, the year ended as a year when we demonstrated an example of the huge synergy we could generate with a feeling of national solidarity, unity during the second half.

- … and we reached the present day. Today, we have reached the period when we have to handle all stories known in the residential sector carefully, with utmost diligence. We started the year with numerous questions in our minds… Are we starting all over again? Will the story that worked over the last 10 years work for this year also? How much excitement does the residential market, and especially branded residential projects generate today? And, as we reach the end of the year, we all are face to face with certain facts. We all are experiencing a period when copy-paste stories, projects that fail to go beyond the ordinary no longer work out. And, we practically are not talking at all about projects expressed with figures in thousands.

- If you were to ask what will happen from now on… There is no doubt that the story I have told above constitutes a very small part of the total residential market in our country. This story was about a market that formed 10% - 15% of the total residential production… the story of residential units that were branded and produced for the same segment in general… The statistical data in our country offer so positive statistics for the residential demand in our country to be alive in our country that it is almost impossible for the demand for residential units in the cities to decrease, considering the population, marriages, divorces, migrations, etc… In the dynamism of this demand, which stories will be in premium from now on? Will gain currency… Hopefully, we will handle that in our next article… may you never be left without homes and love …