Turkey’s shopping mall boom going bust

Turkey’s shopping mall industry, which has attracted $53.5 billion in investment since it inception in 1988, is at risk of going bust, with dozens of malls currently in financial bottleneck or headed for closure, according to an Al-Monitor piece. Currently, consumer spending is on the decline in Turkey, and the material deprivation rate is going up — meaning it is becoming more difficult for Turks to buy basic appliances. Also, in the aftermath of the coup attempt, Erdogan has seized numerous businesses and even an entire shopping mall between Istanbul and Ankara. But, possibly the largest factor in the financial problems of Turkish shopping malls is that they have a widespread practice of dollar- or euro-denominated rents, which has sparked a flurry of store closures as the lira has plunged. Now Turkey is headed in the direction Deputy PM Ali Babacan warned about of “becoming an economy that builds very luxurious buildings, spending its money on stone and concrete, without producing.”

 

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