AYD President Şapkacı: Not investing in new shopping malls harms retail

Shopping Center Investors Association (AYD) President Nuri Şapkacı said that not being able to provide space for national brands that want to grow, having to turn away brands that want to enter the Turkish market from abroad, and not being able to replace inefficient stores due to long termination periods, harms the retail sector. In this way, our shopping malls lag behind their counterparts and trends abroad in terms of the brands they offer. "Even though we provide high quality service as a sector, it is inevitable that this situation will negatively affect shopping tourism in the medium and long term," he said.
Shopping Center Investors Association (AYD) held its Broadly Participated Board Meeting at Piyalepaşa Han Spaces on Thursday, October 10, 2024.
Speaking at the meeting, AYD President Nuri Şapkacı emphasized that, contrary to the practices in developed countries, there is a much more protective system in commercial real estate in Turkey than in social housing.
Şapkacı said, “Current legislation differs greatly from international norms, especially regarding contract termination periods at the end of lease periods. Statements made to the public about exorbitant rent increases above inflation in shopping malls do not reflect the truth. Rent increases are based on inflation rates determined by the state. Ninety percent of the remaining increases are determined by investors and retailers reaching an agreement on the rental rate as a result of good-faith and equitable negotiations. If an agreement cannot be reached between the parties, a rent increase other than the inflation rate may only be possible by filing a rent determination lawsuit at the end of the fifth lease year. In such a case, the increase is made at the rates determined by the court, which are generally 10-15 percent below the current rental price.  "In a well-functioning shopping mall where the retailer makes a profit, determining the rental fee according to the legal rules is necessary not only for equity but also for the continuity of these large investments that also provide employment," he said.

“It is imperative to establish commercial real estate legislation in line with international norms.”
In his speech, Şapkacı emphasized that urgent measures should be taken to ensure the continuity of these large investments, which benefit the GDP with the income generated and also create employment, and continued: "The most negative cost of this process is the abandonment of investments. Currently, only 10 percent of the investments made in the past are made in the sector. The reason for this is that return periods have become much longer compared to the previous period due to changes made in the legislation against investors. These investments have lost their appeal not only for shopping malls but also for foreign investors who invest in other elements of commercial real estate, especially in foreign currency. Since financing has become both limited and very expensive, investors are hesitant about making new investments.” Şapkacı said that it would be beneficial not to consider investments in the sector only as shopping mall investments but to see that there is investment potential in all areas of commercial real estate and added: “For this reason, first of all, by applying international norms, the commercial real estate rental regime should be separated from the social housing rental regime and in the long term, freedom of contract should be secured by law, both in domestic and local "It is important for the continuation of investments and attracting foreign investment to Turkey." he said. 
“It is imperative to establish commercial real estate legislation in line with international norms.”
In his speech, Şapkacı emphasized that urgent measures should be taken to ensure the continuity of these large investments, which benefit the GDP with the income generated and also create employment, and continued: "The most negative cost of this process is the abandonment of investments. Currently, only 10 percent of the investments made in the past are made in the sector. The reason for this is that return periods have become much longer compared to the previous period due to changes made in the legislation against investors. These investments have lost their appeal not only for shopping malls but also for foreign investors who invest in other elements of commercial real estate, especially in foreign currency. Since financing has become both limited and very expensive, investors are hesitant about making new investments.” Şapkacı said that it would be beneficial not to consider investments in the sector only as shopping mall investments but to see that there is investment potential in all areas of commercial real estate and added: “For this reason, first of all, by applying international norms, the commercial real estate rental regime should be separated from the social housing rental regime and in the long term, freedom of contract should be secured by law, both in domestic and local "It is important for the continuation of investments and attracting foreign investment to Turkey." he said.
“Turnover declaration must be subject to Ministry inspection”
At the AYD board meeting with wide participation, the problems experienced in declaration of turnover came to the fore as another topic. Nuri Şapkacı; “We estimate that the annual retailer turnover in shopping malls is approximately 50 billion USD. There are incomplete and/or incorrect turnover reports of up to 10-15 percent. We observe that a significant part of this is caused by non-institutional tenants. Since there is no control or practice regarding the declaration of turnover rents in the legislation of the Ministry of Commerce, as AYD, our negotiations with the Ministry of Finance continue on this issue. We think that if these audits are carried out and turnover is detected to be missed, investors should be given the right to terminate. On the other hand, it is obvious that under-declaring turnover also creates doubt about the figures declared to the public. "All these negative situations that investors are exposed to negatively affect new investments in the commercial real estate sector." he said. 
Şapkacı added that it would be much more beneficial for the common future of the sector if some retail representatives, who achieved serious turnover and profit increases especially after the pandemic, cooperated with the investors in shopping malls on how to increase turnover in the current conjuncture and optimizations, instead of constantly complaining.

https://www.dunya.com/sektorler/ayd-baskani-sapkaci-yeni-avm-yatirimi-yapilmamasi-perakendeye-zarar-veriyor-haberi-749724