Europe -  Istanbul, Turkey

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HVS In-Depth Europe Hotel Valuation Index:   2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | 2002 | 2001

Istanbul is Turkey’s most populous city and the country’s cultural and financial centre. The city’s hotel market benefits from a variety of tourist attractions, such as the Grand Bazaar, the Aya Sofya (Church of the Divine Wisdom) and the Sultan Afmet Mosque (the Blue Mosque), amongst others, which attract leisure demand. Additionally, the city attracts both domestic and international corporate travellers. The Levent and Maslak financial districts are home to the headquarters of Turkey’s largest companies and banks, as well as the local headquarters of global giants in the financial sector such as Citibank, Merrill Lynch, JP Morgan and HSBC. Consequently, Istanbul benefits from being a MICE destination as well as a cultural attraction.

A crash in hotel performance was recorded in 2016 as RevPAR dramatically dropped by more than 40% in euro terms due to terrorist activity, Turkey’s involvement in the Syrian civil war and its unstable relationship with Russia. 2017 was overall a year of recovery for the city; however, currency dynamics continued to have a significant impact as Istanbul made a dual appearance in both the top five (local currency) and bottom five (euro) in our index for that year. 2018 has been a year of further growth for the market and its hotel values, especially in local currency (+44.7%), with more moderate growth in euro terms (+4.3%). The Turkish lira depreciated even further in 2018 (-30%) and boosted demand to Istanbul, mainly derived by visitors from Russia, Asia and the Middle East who now perceive Turkey as an affordable destination. This rebound in visitation led to RevPAR growth of more than 20% in euro (more than 70% in local currency) in 2018.

The city has benefitted from the return of Russian tourism after the flight ban was lifted in September 2016. Economic and political instability, which is seen also through high consumer price inflation and fluctuating GDP forecasts, paired with hotel performance volatility, prevents Istanbul from being a prime investment location. Although hotel performance has significantly improved, property values remain far lower compared to other European cities.

Although development activity in the city is at a standstill, there are several properties under construction in proximity to Istanbul, especially leisure establishments on the nearby beaches of which many are due to open their doors later this year or throughout 2020; these include the 130-room Mandarin Oriental Bosphorus.

Finally, owing to the current tense and unstable situation, the number of hotel transactions in the city has understandably decreased, with no major single asset or portfolio sales since 2010.

The widespread impact of the coronavirus (COVID-19) has had an unprecedented impact on hotels and hotel values worldwide. Consequently, the latest HVI analysis may no longer reflect the most current measure of lodging industry strength or the hospitality investment market.

In each of our offices across the globe, we are working tirelessly to analyze the impact of recent events and provide timely insights to help you navigate these uncharted waters. Because it is unclear how long the pandemic will last or how long related restrictions will be in place, we are updating our analyses on a weekly basis using the most current data.

Additionally, examination of value trends in prior cycles can provide useful information. Historical patterns, together with an understanding of the market’s current expectations for the eventual recovery of the industry and its performance, can provide insights on the likely trajectory of decline and recovery for hotel values.

For the Latest Information and Analysis on the Impact of COVID-19Click Here

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For more information, please contact:

Sophie Perret, MRICS, MBA
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Magali Castells
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