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Turks do not appear confident that better times are ahead and are bracing for lira weakness. Their domestic holdings of foreign currency have risen more than 10% to a record $171bn over the past six months. Lira options traders are at their most bearish since October.
In its favour, Turkey is enjoying rising exports thanks to the severe economic rebalancing caused by its recession and a tourism recovery.
Real estate trust to wait out soft market
In an example of the tightening pressures on businesses in Turkey, the country’s largest private real estate trust said on March 12 that it will wait out this year's soft housing market and high borrowing costs by selling stock, reducing debt and focusing on foreign buyers until business starts to improve next year.
"We will aim to complete investments which we have already started and reduce debt during 2019-2021. New investment is difficult with the current financing costs," Aziz Torun, chairman of Torunlar Real Estate Investment Trust, told an investor conference, Reuters reported.
Torunlar REIT's net assets were worth Turkish lira (TRY) 7.6bn ($1.39bn) and net debt was TRY4bn at end-2018.
The central bank last year hiked its benchmark interest rate to 24% to address inflation, which spiked higher than 25% last October but now stands at slightly less than 20%. After the major tightening, the construction sector – long a driver of Turkey's credit-fuelled expansion – contracted 8.7% in the fourth quarter as demand slowed.
Torunlar REIT's chief financial officer, Ismail Kazanc, said the real estate market was expected to be "weak" this year. "The primary client will be foreigners. We are more optimistic for the housing market in 2020-2021," he said.
In what could set the tone for 2019, housing sales in January decreased by 24.8% y/y. Sales with mortgage loans fell by 77.2%, Turkish official data showed.
Turkey's new homes stock was 1.06mn units at the end of last year.
Stefan Mandachi will shut down his chain of 40 Spartan fast food outlets (pictured) for 15 minutes as he ups the pressure on Bucharest to invest into better road infrastructure for Romania's eastern regions.
Romanian businessman builds single metre of motorway to protest lack of infrastructure
Carmen Simion in Bucharest
A
of motorway to protest the lack of infra- structure in Romania, especially in the eastern part of the country.
Stefan Mandachi, owner of the Spartan fast-food chain, is on a mission to shame the government into investing into better roads. Romania’s eastern region in particular lacks modern infrastructure and as a consequence it finds it difficult to attract investors.
Mandachi says he has built the very first metre of motorway in Romania’s historic Moldova region at a cost of €4,500, reported local newspaper Monitorul
de Suceava. The “motorway” was inaugurated on March 15.
Mandachi also said that all his 40 fast food shops would stop serving for 15 minutes on March 15, and expressed hope that other businesspeople in Roma- nia will join his protest.
“We are learning that we will have a motorway in 2026 ... If I tell one of my
young Romanian businessman from the northeastern town of
Suceava has built a single metre
employees that I will offer him safer, better and better paid conditions as of 2026, he will slap me and immediately leave the company. But, the state asks me to fully pay taxes on the 25th [of the month] and will offer me better conditions as of 2026,” Mandachi wrote on his blog in February. “I have restaurants all over the country and transport costs ... matter.”
While there are a number of highway construction projects underway in Romania, many have been plagued
by delays. Investors have repeatedly complained about the lack of modern infrastructure, which affects productivity and is a disincentive. In 2016, Romania lost out on a €500mn investment from German car producer Daimler because of its weak infrastructure, former economy minister Costin Borc said
at the time.
Mandachi has already printed 3mn paper tray covers and millions of napkins reading “Romania wants motorways” to handed out to his customers, according to his blog.
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