ISTANBUL: Nurol GYO, a Turkish real estate investment trust, is in talks to sell a hotel tower in Istanbul for about $50 million (Dh183 million), according to the company’s chief executive officer, who says it’s a sign that foreign interest in the Turkish property market is recovering.

“We expect a significant rise in interest in Turkish real estate from foreign nationals starting this summer,” Samim Hatipoglu told Bloomberg in an interview in Istanbul on Thursday. Turkish home sales to foreign nationals declined 20 per cent to 18,189 units last year even as the lira weakened 21 per cent against the dollar, making Turkish assets cheaper for investors abroad. The trend has reversed since then, with foreign sales rising 5.1 per cent in the first four months of 2017.

Hatipoglu, 51, says he keeps a close eye on Turkey’s 2043 Eurobonds, and that this year’s 11 per cent rally indicates optimism for the nation’s prospects after a failed coup attempt, numerous terror attacks and a military incursion into Syria roiled the market last year. But the property market has been a laggard, with real estate trusts gaining 4.3 per cent on the Istanbul stock market this year, compared with a 25 per cent gain on the broader index.

Nurol received two letters of intent from hotel chains based in Singapore and Germany to operate one tower in the Nurol Park project in Istanbul’s Gunesli district, Hatipoglu said. An investor from the Gulf is “very eager” to purchase the tower and then pick one of the hotel groups, he said, declining to give names. A sale could be priced at about 180 million liras ($50.4 million), more than half of the REIT’s market capitalisation as of Thursday.

Rental income

Nurol will open Oasis, a designer outlet, at Nurol Park in a month, Hatipoglu said. About 90 per cent of the 110 stores have already been leased, with retailers including Crate & Barrel, Brooks Brothers and Mavi Jeans serving as “anchors,” he said. Hatipoglu sees about $6 million in rental income by the mall’s third year.

Revenue in 2017 will be boosted by office rental income at Nurol’s three projects in Istanbul, Hatipoglu said. The REIT will start to implement office sharing, too. “We won’t necessarily wait for big tenants,” he said. “This is the global trend.”

Deliveries at the 502-residence Nurol Life project will start in July and may be completed by September, Hatipoglu said. His focus remains on Istanbul, “Turkey’s only international property market,” he said. “With rental income providing almost 45 per cent of our revenue, foreign investors are important.”

Nurol GYO reported a loss of 19.4 million liras in the first quarter, though Hatipoglu expects a profitable 2017 on rising rental income. “We have created added value and liquidity. Dividend payments will come up over the next years,” he said.