AN international conference in Istanbul on retail real estate highlights, once again, the huge differences in the property arena between the developed and developing world.
Neil Fraser
April 22, 2005
MY first impression of Istanbul came as we levelled off just before the wheels made contact with the runway. We appeared to be in a slight dip, flying level with red-rooftops stretching away to the horizon that in turn was broken by innumerable projecting domes and minarets of mosques.
That visual impression was reinforced on numerous occasions as I travelled about this huge and unique city. Huge because it has a population of 14 million people, and growing daily by about 250 people, or by seven percent per annum. Unique because it is the only city in the world that has one foot in Europe and one in Asia.
The city is split by the Bosphorus, with the business centre and some 'inner city' residential on the European side, and a large amount of middle to upper income residential and green space across the river, on the Asian side. Our guide, who lives on the Asian side and works on the European side, told us that on a Sunday it takes literally five minutes to drive from one side to the other over the soaring Ataturk Bridge which, at 1560 metres, is the world's sixth longest suspension bridge, rising some 64 metres above the river. In rush hour, during the week, the same trip can take up to two hours.
What am I doing here? Well, Istanbul is the venue for the 'Retail Real Estate World Summit 2005' and I was invited by the International Council of Shopping Centres Inc to take part in a panel discussion regarding shopping centres and downtowns - more of that later.
Following the normal formal words of welcome, a Dr Bernard Kouchner delivered a provocative address appealing to the gathered retail community to 'open their hearts' to the chronically ill of the developing world.
Doctors without Borders
Dr Kouchner is the co-founder and former president of Doctors without Borders, a Paris based non-profit humanitarian organisation made up of voluntary medical personnel who contribute their time and expertise in providing medical care in the developing world. He has held a number of ministerial posts in the French government, most recently as Minister of Health.
His organisation was in fact one of three recipients sharing a generous million-dollar donation from the International Council of Shopping Centres for tsunami relief work. Whilst not belittling the generosity of his hosts, he posed the question as to whether the largest outpouring of money the world has ever witnessed in response to a disaster wasn't because the extensive TV coverage reflected the plight of thousands of western holidaymakers who were predominantly white. Had they been black and had the tragedy taken place in Africa, he mused, there probably wouldn't even have been TV coverage! The Darfur atrocities numbered more people slaughtered whilst as many people die monthly on the African continent of HIV/Aids - but the cameras are generally silent and funding is a trickle.
He spoke passionately for the Doctors without Borders philosophy, which took many years to find acceptance, to now be complemented with a further philosophy, that of Patients without Borders. The world needs such voices of courage and commitment.
The panel discussion I took part in was with the mayors of two US cities, Boston and Akron, Ohio: David Feehan, President of the International Downtown Association, and Yaromir Steiner, a Turkish-born shopping centre developer living and working in the US. As the only non-American based participant, I tried to stress some of the unique issues we face and it was generally an interesting debate.
The conference has attracted about 750 delegates from all over the world and, whilst it has one day to go as I write this on Thursday evening (with the city echoing to the sounds of the faithful being called to prayer), it has proved to be incredibly interesting and thought provoking.
It has highlighted again to me the huge differences that exist in the property development arena between the developed and developing world. However, projections provided to us yesterday show clearly how the world economy is shifting. Whilst neither China nor India were in the top four in the world economy in 2000, China will be in fourth place by the end of this year, second by 2016 and first by 2050 if not earlier. The US will then be in second place followed by India!
There is a shopping centre building frenzy in China driven largely by local government as shopping trends move from traditional to western-style retail. There are 400 malls already established or under construction in China with hundreds more planned. India has less than 20 malls currently but there will be 93 by 2006 and 300 by 2010.
We also had a presentation on the Dubai Mall, currently under construction. It is part of a 300 acre precinct named the Burj Dubai which, when completed in 2007, will comprise 40 residential high-rise buildings set in a landscaped parkland together with the mall and the Burj Dubai Tower, a spectacular tapering glass and stainless steel tower which will become the tallest building in the world when completed. The mall will contain 550 000m² of retail and entertainment of which 85 000 will be devoted to fashion, 4 000 devoted to hair care and beauty services and 500m² to bridal wear. A 10 000m² supermarket and a 6 500m² gourmet supermarket as well as a three level indoor aquarium, the world's largest gold souk (a marketplace of 27 000m² over three levels topped by a 180 metre high gold dome), cinemas, bowling lanes and an Olympic sized skating rink, and so on.
But this is just one of four mega malls under development in Dubai. The $2,5-billion Dubai Festival City with 220 000m² of retail in 700 000m² of development; the 320 000m² Gardens Mall; the 650 000m² Mall of Arabia set in a Disneyland park setting and the Mall of the Emirates at 400 000m². By 2010 Dubai will boast over 3 000 000m² of retail space.
For me the contrast between Dr Kouchner's scenario of the have-nots could not be more vivid - and alarming!
The Grand Bazaar
But back to Istanbul. Interestingly, there could not be a more appropriate city to host a conference on retail, particularly relative to shopping centres or malls.
The city is the site of the world's first shopping centre, still operating and now nearly 600 years old! The city was situated on the ancient spice route and became the crossroads of all the trade routes in the ancient world. In the 15th century, Mehmet II, the Conqueror ordered that a covered Grand Bazaar be built so that traders would have a safe place to store their wares. From storage, it quickly developed into trading and consisted of 4500 smallish shops covering 300 000m² with 18 entrances on to 65 streets and, today, drawing 100 000 people daily, locals and tourists.
From its very beginning so many centuries ago, its internal streets were divided amongst different types of retail in order to make the shops easily accessible to customers. So strictly was the system of restricting certain streets to particular wares enforced that the shopkeeper was not allowed to display or even keep other types of goods on his premises. Today there still is a leather-goods area, Turkish-carpet area, and so on.
For 500 years after its establishment the shop owners of the Grand Bazaar gathered together every morning to pray. The basic principle they espoused was not to envy a neighbour's success but to rejoice in it. A shopkeeper would send his second customer to a neighbour who had not had a customer that day. Indifference to profit, lack of greed for gain and being satisfied with a little were all principles that were accepted as part of trading in the bazaar. A fixed and fair price policy was adopted and bargaining was regarded as shameful. Shop owners left their shops unlocked to signify trust between neighbours.
All of that has changed except that I did notice that the shopkeepers, in comparison with those in many other such markets I've visited, don't overly hassle you, if at all. In fact at Wednesday evening's welcoming cocktail party held in the Grand Bazaar, and kept open for that purpose, one shopkeeper was overheard to suggest that a visit to his shop would result in your being cheated far less than visits to his fellow traders! But one of the centuries' old practices that is still in existence is that two retailers are chosen by their peers to act as 'judges' in the People's Court of the Grand Bazaar when conflict arises between traders and to prevent it escalating into a court case.
What have I learnt that we can apply? Certainly much food for thought but we'll look at that next week, till then "Hosca kalm",
Neil
