By Massoud A. Derhally
Agaoglu has already sold about $350m worth of residential property to Arab investors
Agaoglu Group, a construction and real estate company, one of Turkey's largest, aims to more than double residential and commercial sales this year from Gulf investors, capitalising on legislation that allows foreigners to own property in the country, the company's president Ali Agaoglu said.
"We believe we will be selling about $500m," Agaoglu, who is ranked as Turkey's tenth richest man by Forbes magazine with a fortune of $2.1bn, said in an interview with Arabian Business.
Agaoglu Group has already sold about $350m worth of residential property to investors from the Arab world since a reciprocity law was enacted last year paving the way for sale of real estate to foreigners.
Agaoglu, founded in 1981, expects sales to increase further once additional portions of the his 322,000 square meter Maslak 1453 project are put on the market.
"We have ongoing negotiations with some corporate investors from the Gulf region and we are planning to sell towers," he said, adding "I believe we will be concluding the negotiations to sell three towers in the coming week."
The housing market in Turkey, particularly in Istanbul, is booming on the back of a growing population, high domestic demand and higher income level of households, said Alp Sen of the Ernst & Young consultancy.
Istanbul's real-estate sales number reached 24,244 in the fourth quarter of last year with a 24.8 percent increase from the third quarter, according to official government figures. Turkey's property market is ranked among Europe's top five according to studies by PricewaterhouseCoopers and Ernst & Young.
Agaoglu has so far completed about 15 percent of the Maslak 1453 project which it expects to deliver in 2015. Of the 4,800 residential units in the project Agaoglu sold 2,200 in 15 days only.
"Even a shop that sells socks cannot sell 2,200 socks in a week," Agaoglu said. "I think it's a very good indicator of how dynamic the market is."
He dismissed the possibility of a housing bubble and said Agaoglu may have an initial public offering on the Istanbul Stock Exchange next year, without offering additional details.
"When it comes to Turkey we are a population of 75m people and we have a very dynamic market and growing internal demand," he said. "As a construction sector we are developing and selling 350,00 to 400,000 residences per year. That being the case we are not expecting such a risk."
The construction industry accounts for about 4 percent of Turkey's GDP.
Agaoglu plans to issue $2bn in sukuk, or Islamic bonds, starting next month to help with the financing of his company's portion of the construction of Istanbul's international Financial Centre, Agaoglu said. Aktiv Bank is advising the group and Agaoglu will issue the Islamic debt in a series of tranches of $250m, he said.
The government of Prime Minister Recep Tayyip Erdogan wants to position Istanbul as an international financial hub by 2023 marking the country’s 100th anniversary as a republic. Turkey’s economy today, in stark contrast to its economic woes of the late 1990s and 2001, is booming, unemployment is declining and industries are expanding.
Turkey's gross domestic product is estimated to have grown 3 percent last year due to the debt crisis in Europe and contracting economies there. In 2011, Turkey recorded GDP growth of about 8.5 percent and 9.2 percent the year before.
The country, which is the 16th largest economy in the world, attracted about $16bn in foreign direct investment in 2011, according to the United Nations Conference on Trade and Development. That's more than the inflows to countries like Korea, Malaysia, Argentina, Peru, Belgium, Denmark and Portugal.