Turkey is also a country where there is a lot of domestic inflation, thus if we were to analyze the market in Turkish lira, we would see that, actually, the high-end has almost doubled its value in local currency over the year, increasing by about 100%. Overall, this is a very promising region, and we estimate that the Turkish one is a dynamic market for luxury with various likely future scenarios, but one that we project to grow in the near future as well.

This optimism is partly dictated by the increase in arrivals of high-spending tourists from Russia and other countries, but also by the awakening of the local customers. The country, whose gdp is expected to exceed 900 billion by 2024, has indeed benefited from the increase in domestic consumption, with Turks themselves beginning to invest more in luxury goods both because the supply has expanded and partly because, with rising inflation, they have preferred to buy now to prevent possible list adjustments by brands.

The increasing tourist influx has also been further boosting luxury consumption, with many arrivals of affluent travellers from the Middle East, especially from Saudi Arabia who could not travel during the pandemic. The Russians registered the highest surge, attracted by one of the few countries with open borders. ”They certainly catalyzed in Turkey part of the purchases that were traditionally made in other European nations and visibly affected the luxury consumption of these countries on the old continent”.

Russia will remain significant under a consumption point of view in the near future is the fact that some Russians have taken advantage of this series of facilities to move their mega yachts there, but more importantly that many have purchased real estate that allows them to apply for citizenship permits. Nevertheless, with more and more oligarchs targeted by sanctions, the growth trend may slow down at some point, especially if the war in Ukraine is not over before mid 2023.

There are also many challenges too, including logistics. In fact, opening a store or operating a local branch in this market is not so easy today, Bain explained, which is why in many cases finding the right local partner can be a way to take the first steps. Turkey is a difficult country operationally as well as in terms of customs management.

And then there are several limitations at the real estate level, because Istanbul still accounts for the bulk of the market but with few locations and luxury shopping centers or districts, then there are some other areas with a high concentration of resorts, such as Bodrum or Antalya, where there is some concentration of luxury shopping, but it is still a minimal share compared to Istanbul

The main retail model is open-air malls within the city’s various districts. Open for more than a decade, the main ones are Istinye Park and Zorlu, while the most recent opening is Galataport. Bodrum’s luxury retail is concentrated at the Yalikavak Marina. The Nisantasi district is the only pedestrian luxury shopping area, anchored by St Regis, Park Hyatt and the soon to open Vakko Hotel & Residences (Feb. 2023). But, there are currently no further luxury retail developments in the pipeline for the immediate future.

For this reason, although the main brands have about two or three boutiques, Turkey is still for all intents and purposes an emerging or unexplored markets for many fashion brands. ”We are positive because it is a country that, from the finished product point of view, we think will continue to grow fueled by this dual local and tourist soul. The same goes for the manufacturing aspect”, the expert concluded.

The opening of The Peninsula Istanbul this coming February (14 Feb. 2023) marks a very significant moment in the development of Istanbul’s luxury hotel sector. The impressive Peninsula Hotel which boasts 132 rooms and 45 suites is the result of meticulous reconstruction works of several heritage buildings in the vibrant Karaköy / Beyoğlu district, just on Galataport. With several weak direct competitors, The Peninsula Istanbul will most likely achieve a very high ranking quickly after opening.

adapted from Bain / Altagamma / Bloomberg / Reuters

Joshua Wanders

Hermes store at Istinye Park Istanbul

Hermes store at Istinye Park Istanbul