Istanbul City Review Insights

ISTANBUL CITY REVIEW
Euromonitor International
February 2013

ISTANBUL CITY REVIEW Passport I

LIST OF CONTENTS AND TABLES
Istanbul Review at A Glance ........................................................................................................ 1
Understanding Istanbul Review Structure ................................................................................. 1
Chart 1 Overview ...................................................................................................... 1
Key Facts on Istanbul ............................................................................................................... 1
Summary 1 Key Facts On Istanbul 2006, 2011, 2020 ..................................................... 1
Istanbul Highlights ........................................................................................................................ 2
History ...................................................................................................................................... 2
Delimitation of the Metropolitan Region .................................................................................... 2
Chart 2 Map Of Istanbul Metropolitan Area ............................................................... 3
Main Business Districts............................................................................................................. 3
Economy of the City ..................................................................................................................... 4
Industrial Make-up .................................................................................................................... 4
Chart 3 GDP By Economic Sector 2011 ................................................................... 4
Chart 4 Industrial Composition Of Istanbul 2011....................................................... 4
Productivity ............................................................................................................................... 5
Chart 5 Productivity By Economic Sector 2011......................................................... 5
Recent Developments and Outlook .......................................................................................... 7
Chart 6 Dynamics Of Real GDP In Turkey And Istanbul 2006-2020 ......................... 7
Chart 7 Dynamics Of Real GDP And Population In Istanbul 2006-2020 ................... 7
Chart 8 Sources Of GDP Growth 2006-2011 ............................................................ 7
Consumer Profile .......................................................................................................................... 8
City Demographics ................................................................................................................... 8
Chart 9 Population By Age 2011 ............................................................................... 8
Chart 10 Drivers Of Population Growth In Istanbul 2006-2011 ................................... 9
Chart 11 Working Age Population (15-64): Selected Cities 2011................................ 9
Household Income .................................................................................................................. 10
Chart 12 Household Distribution By Income In Istanbul 2011 And 2020 ................... 10
Chart 13 Household Distribution By Income In Istanbul 2011 ................................... 10
Consumer Expenditure ............................................................................................................... 11
Structure of Household Budget ............................................................................................... 11
Summary 2 Istanbul Household Budget Structure By Consumer Expenditure Item,
% of total .................................................................................................... 11
Chart 14 Comparison Of Household Expenditure in Istanbul and Turkey ................. 12
City Lifestyle ........................................................................................................................... 12
City Affordability ...................................................................................................................... 13
Chart 15 Household Expenditure On Housing: Selected Cities 2011 ....................... 13
Chart 16 Household Expenditure On Transport: Selected Cities 2011 ..................... 14
Definitions................................................................................................................................... 15
Appendix .................................................................................................................................... 17
Summary 3 GDP Development, 2006, 2011, 2016, 2020.............................................. 17
Summary 4 GDP By Origin, Current Prices, TL, Million, 2006-2011.............................. 17

© Euromonitor International

ISTANBUL CITY REVIEW Passport II

Summary 5 Population And Labour Force, 2006-2011.................................................. 18
Summary 6 Employed population by economic sector, % of total, 2006-2011 .............. 18
Summary 7 Population By Sex And Broad Age Groups, „000, 2006-2011 .................... 19
Summary 8 Population Growth, 2006-2011 ................................................................... 19
Summary 9 Total Population, 2012-2016, 2020 ............................................................ 20
Summary 10 Population By Educational Attainment, 2006-2011 .................................... 20
Summary 11 Structure Of Consumer Expenditure By Main Category, 2006-2011 .......... 20
Summary 12 Consumer Expenditure By Main Category, Per Household, Constant
(2011) Prices, TL, 2006, 2011, 2016, 2020 ................................................ 21
Summary 13 Households By Income Band, % Of Total, Constant (2011) Prices
2006, 2011, 2016, 2020 ............................................................................. 22
Summary 14 Households By Income Band, „000, Current Prices 2006-2011 ................. 23
Summary 15 Inflation, 2006-2011.................................................................................... 24
Summary 16 Transport indicators, 2006-2011 ................................................................ 24
Summary 17 Tourism 2006-2011 .................................................................................... 25
Summary 18 Air Pollution, concentration in micrograms per cubic metre, 2006-2011..... 25


ISTANBUL CITY REVIEW Passport 1

ISTANBUL CITY REVIEW
ISTANBUL REVIEW AT A GLANCE

Understanding Istanbul Review Structure

Chart 1 Overview

Source: Euromonitor International

Key Facts on Istanbul

Summary 1 Key Facts On Istanbul 2006, 2011, 2020
Indicator 2006 2011 2020
Share of Services (% 62.2 65.8 -
of total GDP)
Total GDP (TL 208,554 362,465 962,822
million, current
prices)
Real GDP Growth 7.3 9.2 5.1
(%)
Unemployment Rate 11.3 11.8 -
(%)
Population: January 11,333 13,256 16,388
1st ('000)



ISTANBUL HIGHLIGHTS
Economy of the city:
 Istanbul is one of the most manufacturing-orientated cities in the world: the share of the
workforce employed in manufacturing is comparable only to major cities in China;
 Business services are emerging as the main driver of economic growth, even though the
category employed only 12% of Istanbul's workforce in 2011;
 Healthy economic growth in Istanbul over 2006-2011 did not offer jobs to all those willing to
work: the number of workplaces increased by 0.4 million over the review period, while at the
same time the city's labour force expanded by 0.7 million.

Consumer profile:
 Over 2006-2011, Istanbul's total number of inhabitants expanded by 17%, due to a positive
natural increase and internal migration; by 2020, the city's population should reach 16 million;
 The city's inhabitants are the youngest on average among Europe's key cities;
 In 2011, thanks to Istanbul's higher labour productivity and favourable demographics (larger
share of working age population), average disposable income per household was 50% higher
than in the remaining parts of Turkey.

Consumer expenditure:
 In 2011, as a result of Istanbul's typically higher incomes, the proportion of household
expenditure on food and non-alcoholic drinks was lower in the city (18% of the average
household budget) compared to the rest of the country (23%);
 Housing constitutes the single largest expenditure item in the city, with prices being 55% more
expensive in Istanbul than in the rest of the country;
 Tourists and affluent households in the city drive consumer expenditure on restaurants and
hotels in Istanbul: measured per household, in 2011 it was 90% higher than in the rest of
Turkey.

History
Istanbul's key urban areas are located around the Bosphorus strait, in the lowlands of the
region. That is where the first inhabitants settled in the Ottoman era. The upper part of Istanbul
is occupied by forests, water catchments and other natural assets that need to be preserved in
order to maintain the city.
The population of the city has been increasing rapidly since the 1970s, due to active internal
migration in Turkey from east to west. The migration soon expanded the city into nearby villages
and forests, making it a truly global metropolitan region.
In order to achieve further sustainable growth of the city, there are plans to decentralise the
urban development of Istanbul and convert it into a polycentric metropolitan region. The city's
authorities are conducting a strategy of creating residential and employment sub-centres and
redeveloping the city's transportation. This should keep the commuting flows away from the
natural sources in the city's north.

Delimitation of the Metropolitan Region
Due to conflicts between the Turkish army and the Kurdish Worker's Party in the 1990s,
refugees migrated towards the larger cities and urban centres of Turkey. Today, Turkey is highly
urbanised (76% of the population live in urban areas), and has a relatively low level of rural
population.



The urban population is not distributed evenly in Turkey. Turkey consists of 81 provinces,
Istanbul being the most populous among them. Apart from Istanbul, the provinces of Ankara and
Izmir also serve as key urban centres. All three of these provinces are located in the western
half of the country, with Ankara being close to the centre.
According to the Metropolitan Municipal Law, Istanbul Metropolitan Municipality has exactly
the same boundaries as Istanbul province, with an area of 5,343 sq km. The Metropolitan
Municipality consists of 32 districts, which form separate local authority areas. In 2011,
Istanbul's population was 13 million people - 15% of the country's total.

Chart 2 Map Of Istanbul Metropolitan Area


Main Business Districts
Out of six million sq m of Class A office space in Istanbul, around 65% is clustered in the
European side of the city, while the remaining 35% of office space supply is scattered on the
Asian side. The office market on the European side contains the Istanbul Central Business
District, as well as other important clusters of business activities around the city's airport. The



East (Asia) side is generally cheaper than the European: rent per sq m in the Asian side totals
US$25-30, and US$35-45 on the European (except for the airport). Recently, the Asian side has
been expanding rapidly, and many new projects have been completed in the Umraniye district.
At least up until 2009, Istanbul was prone to political swings in the city's government, and the
emphasis on particular development projects depended on the city's mayor's political party. At
the moment, the two most important business districts in Istanbul are the Maslak and Levent
financial districts (on the European side of the city). The two districts are close geographically,
but being in different municipalities (local authority areas) they often rival each other in
skyscraper building. The highest skyscraper in Turkey at the moment - Sapphire Tower - was
built in Levent district in 2010, and is 261m high.
Teknopark Istanbul is a major development effort, initiated by the Ministry of Defence and the
Istanbul Chamber of Commerce. The completion of the first buildings, with 62,000 sq m of office
space, is scheduled for the beginning of 2013. By 2020, Teknopark should create YTL10 billion
(US$6.3 billion) in annual GDP, host 30,000 employees and provide of 950,000 sq m of office
space.

ECONOMY OF THE CITY
 Istanbul is one of the most manufacturing-orientated cities in the world: the share of the
workforce employed in manufacturing is comparable only to major cities in China;
 Business services are emerging as the main driver of economic growth, even though the
category employed only 12% of Istanbul's workforce in 2011;
 Healthy economic growth in Istanbul over 2006-2011 did not offer jobs to all those willing to
work: the number of workplaces increased by 0.4 million over the review period, while at the
same time the city's labour force expanded by 0.7 million.

Industrial Make-up

Chart 3 GDP By Economic Sector 2011

As % of country total


Chart 4 Industrial Composition Of Istanbul 2011

As % of total



Istanbul, which positions itself as the economic centre of Turkey, accounted for around 30%
of the country's GDP in 2011. Istanbul boasts sizeable categories of commerce and
manufacturing, employing over 30% of the city's workforce each.
Istanbul is home to most of the country's high value-added activities. Business services
activities in the city accounted for 46% of Turkey's sectorial GDP. For comparison, Ankara, the
second largest city in Turkey, created only 12% of the country's GDP in business services.
Istanbul is strengthening its position as a top business location for the offices of the world's
largest companies, as well as a convention destination. Istanbul is attractive due to its role as a
bridge between the West and the East. Turkey's rapid economic growth is another reason for
rising global interest in the city.

Productivity

Chart 5 Productivity By Economic Sector 2011

GDP produced per employee in TL

In 2011, productivity (GDP per employee) - a measure of economic efficiency - reached
YTL76,000 (US$45,000) on average in Istanbul, and was 81% higher than elsewhere in Turkey.
Business services push up the city's labour productivity particularly strongly, as GDP per
employee in business services in Istanbul is twice higher than in the rest of the country.
Istanbul's geographic position and the accumulated investment in transport infrastructure
definitely benefits the city, and reduces costs for those manufacturers focusing on exports. In
2011, 46% of the country's exports originated from Istanbul, and many exporters chose to locate
in the city due to its convenient seaports - eg, Ambarli handled 2.7 million twenty-foot equivalent
units (TEUs) in 2011 and ranked 48th worldwide by cargo volume.
In 2011, Istanbul recorded investment in R&D activities of YTL2 billion (US$1.3 billion), up
from YTL1.6 billion (US$1 billion) in 2010, and 36,000 people were registered as employed in
R&D. Spending on R&D in Istanbul constituted 19% of total Turkey's expenditure (Bursa in
Dogu Marmara region and Ankara are two other centres for R&D in the country), and supported
the development of high-value added service activities in the city.



Manufacturing
Manufacturing in Turkey is concentrated in Istanbul. The share of Istanbul's workforce
employed in the category (33%) is significantly higher than in the country overall (21%), or in
other major cities in the world. The share of the workforce employed in manufacturing is only
comparable to the largest cities in China (35-45%). In 2011, the city's manufacturing exports
reached US$59 billion.
Istanbul is a frequent choice for multinational companies wishing to transfer part of their
manufacturing to Turkey. The automotive industry is particularly well represented in Istanbul.
Examples of subsidiaries of multinationals operating in the region include Ford Otosan, Anadolu
Isuzu, MAN Otomotiv and Mercedes Benz Türk . The city has contributed to Turkey's becoming
the largest commercial vehicle manufacturer in Europe (560,000 units were produced in 2012).
Istanbul benefits from the growing importance of high value-added production by the
pharmaceutical and defence industries. Abdi Ibrahim, headquartered in the city, is a leading
pharmaceutical company in Turkey, and also one of the largest employers in the industry, with
nearly 3,500 employees. The newly opened Teknopark Istanbul is expected to become one of
the leading defence R&D centres in Europe, hosting more than 1,000 companies, with a total
workforce of 30,000.
The traditional textile and food processing industries remain important in the city as well. Ulker
(chocolate producer) and Marsan (margarine and other food producer) operate major plants in
the city.

Commerce
In 2011, commerce GDP in Istanbul amounted to over YTL101 billion (US$60 billion). The
category employed more than 1.3 million (or 32%) of the city's workforce, similar to the 33%
employed by manufacturing. The proportion of employment in commerce is slightly higher in
Istanbul than in the capital city Ankara (28%), and the share is comparable with that in other
largest cities in the world.
In 2009, out of the 22 largest Turkey's entities in logistics and transportation in terms of
revenues, 19 were located in Istanbul. Turkish Airlines topped the ranking with turnover of
YTL12.8 billion (US$8 billion) in 2012, up from YTL6 billion (US$3.8 billion) in 2009. The airline
carried nearly 33 million passengers and over 375,000 tonnes of cargo in 2011.
The transportation industry is facilitated by the key infrastructure assets of the city. Istanbul
Atatürk Airport, one of the busiest airports globally, handled over 37 million passengers in 2011.
As for sea transport, the Turkish Straits constitute one of the busiest waterways worldwide
(50,000 vessels per year), and suffer from chronic overload. An Istanbul Canal project,
introduced in 2011, could contribute to improving traffic in the Bosphorus, reduce transportation
costs and allow larger vessels to pass through.
Turkey's growing tourism industry is closely related to Istanbul: it is one of the most visited
cities in the country, as well as globally. Congress tourism is an important area: in 2011, Istanbul
was ranked ninth in the list of the world's top convention cities, having hosted 113 international
association meetings (compare with 76 meetings in 2006)., The city boasts a number of
convention and exhibition centres located in three clusters: the Airport area, the Conference
Valley and the Golden Horn. In 2010, the total closed area of existing convention and exhibition
centres was 335,000 sq m, providing auditorium capacity for up to 15,000 people.

Business services
Turkey's services category has emerged as one of the largest contributors to the country's
economy, and Istanbul is leading the charge. The city accounted for 47% of GDP growth in
Turkey's business services over 2006-2011.



In 2011, business services was still the smallest category in terms of employment in Istanbul.
Only 12% of the city's workers were employed in business services, a relatively low percentage
by world standards. The employment structure in the city is changing fast though: the total
Istanbul workforce expanded by 11% over 2006-2011, while the number of workers employed in
business services grew by 42%.
Istanbul is home to the headquarters of several of Turkey's and the world's largest banks,
such as Garanti Bank and Isbank, as well as a stock exchange. According to the city authorities,
Istanbul aspires to become the financial hub of the region spanning the Middle East and the
Balkans.
Istanbul aims to intensify its R&D activities in certain fields prioritised by the government, such
as defence or biomedicine. The city also houses a number of R&D centres of the world's largest
companies, such as Unilever and Huawei. R&D activities are supported by the growing share of
the city's population with higher education. The share increased from less than 7% of the
population aged 15 and above in 2006 to 9% in 2011.

Recent Developments and Outlook

Chart 6 Dynamics Of Real GDP In Turkey And Istanbul 2006-2020

2006 = 100


Chart 7 Dynamics Of Real GDP And Population In Istanbul 2006-2020

2006 = 100


Chart 8 Sources Of GDP Growth 2006-2011



% contribution to total growth

Both Istanbul and the rest of the country saw their real GDP growth slowing down in 2007,
and in 2009 growth turned into a contraction of 4-5%. The situation improved in 2010, with 9%
growth in the city as well as elsewhere in Turkey.
The city's labour force size expanded from nearly 4.3 million in 2006 to 4.8 million in 2011, in
part due to substantial migration to the city. Over 2006-2011, the city saw a net increase of 0.7
million in the number of immigrants.
Over the review period, Istanbul created 0.4 million new job places, which was too few to
accommodate the increasing labour force. Due to economic cycles, the unemployment rate
fluctuated between a low of 10% in 2007 and a peak of 17% in 2009. In 2011, unemployment
fell to 12% in the city; however, the rate remained higher than elsewhere in Turkey (9%).
Business services and public services provided most of the new jobs in the city.
GDP growth levels remained comparable in Istanbul and elsewhere in Turkey during the
review period. Over the upcoming decade, the trend is likely to change, with Istanbul
increasingly outpacing the rest of the country. By 2020, Istanbul's real GDP is predicted to have
grown by nearly 66% compared to 2011, while the figure for the rest of the country will only
stand at 37%.

CONSUMER PROFILE
 Over 2006-2011, Istanbul's total number of inhabitants expanded by 17%, due to a positive
natural increase and internal migration; by 2020, the city's population should reach 16 million;
 The city's inhabitants are the youngest on average among Europe's key cities;
 In 2011, thanks to Istanbul's higher labour productivity and favourable demographics (larger
share of working age population), average disposable income per household was 50% higher
than in the remaining parts of Turkey.

City Demographics

Chart 9 Population By Age 2011

% of total




Chart 10 Drivers Of Population Growth In Istanbul 2006-2011

% contribution to total growth


Chart 11 Working Age Population (15-64): Selected Cities 2011

As % of total

Over the 2006-2011 period, the population of Istanbul increased by 17%, which was more
than three times faster than in the rest of Turkey. The city's population reached 13 million in
2011. By 2020, the city's total number of inhabitants is projected to expand by a further 24% and
amount to 16 million.
Natural increase and net migration have both boosted Istanbul's population. Each year
between 2006 and 2011, the number of people born exceeded the death count at least fourfold.
Partly, the reason was Istanbul's relatively good healthcare service: in 2011, the Istanbul
metropolitan region had the lowest infant mortality rate among other first level administrative
regions in Turkey.
A demographic transition is clearly on the way in Istanbul. The crude birth rate fell from 18 per
1,000 population in 2006 to 17 in 2011. Age at first marriage was the highest in Istanbul among
Turkish regions, and a trend to delay marriage was increasingly evident in the city. In 2011,
males married aged 28 on average, compared to 27 in 2006, and females at 25, compared to 24
in 2006.



Internal migration to Istanbul is particularly significant. Between 2009 and 2011, Istanbul had
the greatest net (im)migration rate among Turkish regions. The majority of new arrivals come
from the Black Sea region, on the north coast of Turkey, mainly due to the region's geographical
proximity and the wage premium in Istanbul.
Istanbul's inhabitants are the youngest among major cities in Europe. In 2011, the population
aged 0-14 represented 24% of the city's total number of inhabitants compared to an average of
16% in the key European cities. The share of the elderly (aged 65+) constituted 6% of the total
in the metropolitan region, in comparison to 16% on average in Europe's main cities.

Household Income

Chart 12 Household Distribution By Income In Istanbul 2011 And 2020

Number of households


Chart 13 Household Distribution By Income In Istanbul 2011

Number of Istanbul‟s households in respective Turkey income decile

Note: Country income decile 1 corresponds to 10% poorest country households by income, decile 2 – to
second 10% poorest, etc.



In 2011, Istanbul's average disposable income per household reached YTL67,000,
(US$40,000) or 50% above the average in the rest of the country. The structure of Istanbul's
economy and favourable demographics lead to higher incomes in the city.
The city is responsible for a large share of the country's most value added activities, for
example, in 2011, 46% of GDP in business services in Turkey was produced in Istanbul. The
city's relatively large economically active population (determined by large immigrant inflows)
further boosts the city's employment rate and average income.
Istanbul hosts a large share of the country's most affluent population. In 2011, 20% of the
country's total households resided in Istanbul; however, among those with incomes of
US$100,000 and above, the share rose significantly, to 32% (or 128,000 households out of
402,000 in Turkey). In comparison, Ankara hosted 7% of all Turkey's households and 8% of
those with income above US$100,000.

CONSUMER EXPENDITURE
 In 2011, as a result of Istanbul's typically higher incomes, the proportion of household
expenditure on food and non-alcoholic drinks was lower in the city (18% of the average
household budget) compared to the rest of the country (23%);
 Housing constitutes the single largest expenditure item in the city, with prices being 55% more
expensive in Istanbul than in the rest of the country;
 Tourists and affluent households in the city drive consumer expenditure on restaurants and
hotels in Istanbul: measured per household, in 2011 it was 90% higher than in the rest of
Turkey.

Structure of Household Budget

Summary 2 Istanbul Household Budget Structure By Consumer Expenditure Item, % of
total
Expenditure Item 2006 2011 2020
Food and Non- 18.0 17.5 16.8
Alcoholic Drinks
Alcoholic Drink, 3.1 3.5 3.9
Tobacco etc
Clothing and 5.4 4.1 3.4
Footwear
Housing 20.6 25.5 25.4
Household Goods 6.5 6.4 6.8
and Services
Health 5.2 4.3 4.3
Transport 15.5 12.6 13.4
Communication 4.3 4.9 5.6
Recreation and 4.6 4.6 4.1
Culture
Education 1.5 1.9 2.0
Restaurants and 8.7 7.7 7.1
Hotels
Miscellaneous Goods 6.6 7.0 7.2



and Services

Chart 14 Comparison Of Household Expenditure in Istanbul and Turkey

Difference in spending per household between Istanbul and the rest of Turkey, in %

The gap in average disposable income per household between Istanbul and other regions in
Turkey determines the key trends in consumer spending. Expenditure on necessities, such as
food and non-alcoholic drinks, accounts for a relatively small share of household spending in the
metropolitan region. In 2011, food and non-alcoholic drinks constituted 18% of the average
household budget in Istanbul and 23% in the rest of Turkey. This gap in average disposable
income per household is expected to expand further.
Higher incomes in Istanbul do not wholly compensate for high prices of real estate in the city.
In 2011, expenditure on housing accounted for 26% of consumer spending in Istanbul and 20%
in other regions of the country. According to the latest survey in 2008, the average price of
consumer goods and services in Istanbul was 14% higher than in the rest of Turkey, while
comparable housing services were 55% more expensive.
Discretionary spending (or total expenditure less spending on housing and food) has a
considerably higher share of the household budget in Istanbul than in the rest of Turkey. For
example, measured per household, expenditure on recreation and culture was 55% higher in
Istanbul than in the rest of the country in 2011. The corresponding difference in spending on
restaurants and hotels was 90%.

City Lifestyle

Istanbul: A New Attraction For Arab Tourists
The number of Arab tourists visiting Istanbul rises every year, with significant inflows during
Ramadan. In 2011, the number of visitors to Istanbul from Arab countries during Ramadan
surged by 20% compared to the previous year, to 62,000. The increasing popularity of Istanbul
among Arab tourists is partly a result of the Istanbul 2010 European Capital of Culture Agency's
promotional events. Istanbul is also becoming a popular destination for groups of Arab women



who enjoy shopping on their own accompanied only by a male chaperone. Istanbul expects a
further increase in Arab tourists over the upcoming years.
Istanbul is responding to increased tourist inflows from Arabic nations. For example, the
Turkish Ministry of Tourism is providing more tourist information in Arabic. Several of the city's
restaurants have already translated their menus into Arabic. Meanwhile, a restaurant that is
located in one of the most popular shopping malls, Forum Istanbul, has removed all pork meals
from its menu.
Istanbul is seeing overall growth in tourism. In the first half of 2012, the number of visitors
hosted by Istanbul rose by 70% from the same period of 2011. The booming tourism industry
contributes positively to spending on hotels and restaurants. In 2011, average spending per
household on hotels and restaurants in Istanbul was double that in the rest of Turkey.

Istanbul In Great Need Of Neighbourhood Regeneration
In the case of a strong earthquake, the numerous obsolete and unsafe apartments in Istanbul
pose a threat to millions of dwellers in 400 neighbourhoods. A large proportion of the city's
neighbourhoods are characterised by old, poor quality apartment blocks. According to the
Japanese International Co-operation Agency (JICA), more than a million homes must be
demolished or rebuilt over the upcoming 10-20 years. JICA has warned that any major
earthquake might cause around 90,000 deaths, 135,000 serious injuries and the devastation or
serious damage of 170,000 buildings.
The required reconstruction estimated by the JICA would displace nearly five million people,
the majority of these being poor tenants. Unless the Turkish government introduces subsidies
for rented housing, the resistance to neighbourhood regeneration is likely to be significant.
The need for neighbourhood redevelopment opens business opportunities for property
developers. According to PricewaterhouseCoopers' property markets analysis in 2012, Istanbul
is among the primary choices for real estate investors, as much of Western Europe continues to
struggle with the sovereign debt crisis.

Grand Bazaar - The Ancestor Of Shopping Malls
With 5,000 stores scattered over 60 streets, the Grand Bazaar (Kapalicarsi) in Istanbul is one
of the world's largest covered markets. Open since 1461, the Grand Bazaar is also renowned as
the oldest shopping mall in the world. Every day, the bazaar attracts between 250,000 and
400,000 visitors. The historic complex is home to a wide range of speciality shops, including
antique stores and jewellery boutiques which are said to be among the best in the city.
The bazaar offers not only a unique place to shop, but also provides numerous entertainment
opportunities. Visitors to the bazaar can enjoy a leisurely afternoon, sitting in cafés and
restaurants and watching people passing by. The complex hosts several fine restaurants,
including the grill house Gaziantep Bure Ocakbasi and kebab restaurant Kara Mehmet Kebap
Salonu. Moreover, active bargaining for the best purchase prices is considered among the best
ways to get experience the atmosphere of ancient Istanbul.

City Affordability

Housing

Chart 15 Household Expenditure On Housing: Selected Cities 2011

As % of total



Housing in Istanbul is considerably more expensive than elsewhere in Turkey. In 2011, the
average Istanbul household spent YTL16,000 (US$9,500) on housing, while in the rest of
Turkey average housing costs were only YTL9,400 (US$5,600). Housing expenditure is forecast
to increase in line with rising incomes: in 2020, housing is predicted to constitute 25% of
household expenditure, just as in 2011, despite a 23% increase in incomes.
The large share of young immigrants, the hectic pace of life and the high real estate prices
dictate household housing preferences. Only 58% of dwellings are owner-occupied in Istanbul,
compared to 68% in the rest of Turkey. According to a Colliers International report in 2012, prior
to the worldwide financial downturn in 2008, many of the high-end residential projects in
Istanbul's central locations were sold out as capital investment and supplemented the rental
market of the city. Today, many professionals with high incomes aim to purchase the
apartments for their own use, and demand for high-end residence development remains high.
The urban development of Istanbul is in its most intense phase, and the landscape of the city
is changing fast. There are around 50 neighbourhoods in which various projects are planned to
take place. For example, the Talarbasi renewal project includes demolishing almost 300
buildings to build new homes, hotels and other facilities.

Transport

Chart 16 Household Expenditure On Transport: Selected Cities 2011

As % of total

The average household in Istanbul spends 12.6% of its total budget on transport. The share
was as high as 15.5% in 2006, but the recent hike in unemployment in 2009 slashed the
spending allocated to transport. By 2020, driven by rising incomes, the proportion of expenditure
on transport should inch up to 13.4%.
The ancient city was not planned for cars, but it was truly meant for pedestrians. In 2011,
Istanbul suffered from major traffic congestion: research by TomTom (the Dutch developer and
producer of global positioning systems) listed the city as the most congested in Europe. Facing
the population and car ownership growth, government officials say the answer is a third
Bosphorus bridge. Many residents and experts remain sceptical, saying that more roads have
been shown simply to increase demand for cars. There are indications that, for example, an



additional bridge would only increase congestion levels and cause even greater traffic inflows to
the city.
Traffic conditions in this densely populated city are getting worse, while construction of a
modern mass transit system is only progressing slowly. Infrastructure projects include the
Marmaray undersea rail tunnel, which is part of a major planned upgrade of Istanbul's public
transport network. It will create a 13km long connection between the east and west of the
city.Currently, the city's rail system consists of four metro lines (75km network), and three tram
lines (36km).
With almost 2.9 million vehicles (of which 1.9 million are passenger cars), the city is struggling
to curb its pollution emissions. Since the 1990s, the industrial sulphur dioxide pollution has
decreased nine-fold, while traffic has emerged as the main emitter of carbon monoxide and
nitrogen oxides. PM10 pollution is primarily due to old-fashioned domestic heating.
The city's pervasive pollution issues are evident in the key air quality indicators. In 2010, the
annual mean concentration of large particulate matter (PM10) reached 50 micrograms per cubic
metre, well above the World Health Organization (WHO) recommendations (20 micrograms).
The 24-hour mean of PM10 (or the peak values of PM10) reached 266 micrograms, again
significantly above the WHO recommended 50 micrograms.

DEFINITIONS
The definitions given are meant to disambiguate the references in the City Review reports.
The definitions are shortened versions and are more widely discussed in the Passport database.

Territorial Definitions:
 Metropolitan region (or metropolitan area) – the terms refer to an urban agglomeration (the
contiguous, built-up area) with zones not necessarily urban in character, but closely bound to
the centre by employment. The metropolitan region is referred to as “the city” written in lower
case in the City Review reports (ie New York city, London city). By default, all statistical data
in the report are provided for the whole metropolitan region (unless specified otherwise).
 Core city (or core urban area/central city) – refers to territory that emerged historically as the
most prominent in the urban area. Almost without exception, the name of the core city is also
shared with the urban area and the metropolitan area. In most cases, core city is a separate
municipality or local authority area. If the statistical data or discussion in the report apply only
to core city area, the text specifically indicates the territorial scope of the data discussed.
When the core city is referred to in the text, the term is always capitalised (ie “New York City”,
as opposed to “New York city”)

Employment:
 Working age population – population aged 15-64 years.
 Labour force (or Economically Active population) – all persons who furnish the supply of
labour for the production of economic goods and services (the total number of people
employed plus unemployed).
 Labour force participation rate - all persons in labour force as a percentage of working age
population.
 Employed population – the "employed" comprise all persons above a specific age who during
a specified period, were either in: (A) "paid employment"; (B) "self-employment".
 Unemployed population – the ILO international standard definition of unemployment is based
on the following three criteria which should be satisfied simultaneously: "without work";
"currently available for work"; and "seeking work".



 Unemployment rate – represents unemployed population as a percentage of the total labour
force.

Economic growth:
 Real GDP – refers to inflation-adjusted measures that reflect the value of all goods and
services produced in a given year, expressed in base-year prices. The base year is 2011.

Sectors of economy:
Euromonitor International City reviews divide economic sectors into six broad aggregations,
which, in turn, are based on United Nations International Standards of Industrial Classification
revision 3.1 ISIC rev. 3.1). Aggregation of industries by ISIC rev. 3.1 is implemented as follows:
 Agriculture includes sectors A (agriculture) and B (fishing);
 Manufacturing includes sectors C (mining and quarrying), D (manufacturing) and E (electricity,
gas and water supply);
 Construction includes sector F (construction);
 Commerce includes sectors G (wholesale and retail trade; repair of motor vehicles,
motorcycles and personal and household goods), H (hotels and restaurants) and I (transport,
storage and communications);
 Business services include sectors J (financial intermediation) and K (real estate, renting and
business activities);
 Public services include sectors L (public administration and defence; compulsory social
security), M (education), N (health and social work), O (other community, social and personal
service activities), P (activities of private households as employers and undifferentiated
production activities of private households) and Q (extraterritorial organisations and bodies).

Consumer spending:
 Real disposable income per household - refers to inflation-adjusted household income,
expressed in base-year prices. The base year is 2011.
 Disposable income – gross income (including earnings from employment, investments,
benefits and other sources such as remittances) minus social security contributions and
income taxes.
 Necessity spending (or non-discretionary spending) – the proportion of household budget
used to purchase basic necessities: housing and food. Housing includes shelter and utilities,
while food excludes restaurant expenditure.
 Discretionary spending (or discretionary income) – the amount of household income that is
left for spending, investing or saving after taxes and necessity spending (such as food and
housing) have been paid.
 Gini coefficient – a standard economic measure of income inequality, based on a Lorenz
curve. A society that scores 0 on the Gini index has perfect equality, where every inhabitant
has the same income. The higher the number over 0, the higher the inequality, and a score of
100 indicates total inequality, where only one person receives all the income. In reality, cities
and countries tend to fall between 25 and 60.
 City affordability – burden of expenditure on housing and transport in household budget.
Density and building constraints often result in inflated housing prices in cities. Similarly,
inefficient infrastructure and urban sprawl may boost expenditure on transport. The combined
share of housing and transport expenditure corresponds to a measure of city affordability –
the lower the share, the more affordable the metropolitan area.



APPENDIX
Summary 3 GDP Development, 2006, 2011, 2016, 2020
2006 2011 2016 2020
Real GDP 7.3 9.2 6.8 5.1
Growth (%)
Real GDP per 4.5 6.4 4.4 2.8
Capita Growth
(%)
Total GDP (TL 208,554 362,465 649,613 962,822
million, current
prices)
Annual 127,030 250,489 430,886 673,325
Disposable
Income of
Households (TL
million, current
prices)
Income per 41,040 66,594 97,626 135,361
Household (TL,
current prices)

Summary 4 GDP By Origin, Current Prices, TL, Million, 2006-2011
2006 2007 2008 2009 2010 2011
GDP 208,554 234,902 262,824 265,336 304,845 362,465
Taxes and 24,742 24,738 26,531 24,543 32,626 42,936
Subsidies
Total GVA 183,812 210,164 236,293 240,793 272,219 319,529
(gross
value
added)
GVA in 552 508 492 704 834 969
Agriculture
GVA in 46,527 49,674 54,386 43,780 55,384 70,088
Manufactur
ing
GVA in 6,963 8,111 8,725 5,935 7,965 10,147
Constructi
on
GVA in 64,763 66,694 77,219 76,194 87,242 101,981
Commerce
GVA in 48,950 67,435 75,622 91,106 95,169 106,716
Business
Services
GVA in 16,057 17,742 19,849 23,075 25,625 29,629
Public
Services




Summary 5 Population And Labour Force, 2006-2011
2006 2007 2008 2009 2010 2011
Total 11,333 11,954 12,574 12,697 12,915 13,256
Population
('000)
Population 7,861 8,325 8,788 8,936 9,098 9,357
Aged 15-
64 ('000)
Labour 4,295 4,294 4,416 4,479 4,604 4,773
Force
('000)
Labour 54.6 51.6 50.2 50.1 50.6 51.0
Force
Participatio
n Rate (out
of aged
15-64) (%)
Unemploy 487 447 493 753 657 562
ed ('000)
Unemploy 11.3 10.4 11.2 16.8 14.3 11.8
ment Rate
(%)

Summary 6 Employed population by economic sector, % of total, 2006-2011
2006 2007 2008 2009 2010 2011
Employed 3,808 3,847 3,923 3,726 3,947 4,211
population
('000)
Employme 0.3 0.3 0.3 0.3 0.4 0.5
nt in
Agriculture
Employme 34.9 33.4 33.5 31.0 32.9 32.8
nt in
Manufactur
ing
Employme 6.3 6.6 6.4 6.7 7.1 7.1
nt in
Constructi
on
Employme 33.8 34.6 33.8 33.0 30.8 32.0
nt in
Commerce
Employme 9.3 9.8 10.3 11.7 12.4 12.0
nt in
Business
Services



Employme 15.5 15.4 15.7 17.4 16.4 15.7
nt in Public
Services

Summary 7 Population By Sex And Broad Age Groups, „000, 2006-2011
2006 2007 2008 2009 2010 2011
Total Male 5,684 5,988 6,292 6,387 6,499 6,655
Population
Males 1,496 1,532 1,568 1,595 1,607 1,631
Aged 0-14
Males 3,970 4,197 4,424 4,514 4,600 4,717
Aged 15-
64
Males 218 259 300 279 292 307
Aged 65+
Total 5,649 5,966 6,282 6,310 6,416 6,601
Female
Population
Females 1,452 1,464 1,477 1,501 1,515 1,536
Aged 0-14
Females 3,891 4,127 4,364 4,422 4,498 4,640
Aged 15-
64
Females 307 374 441 387 403 425
Aged 65+

Summary 8 Population Growth, 2006-2011
2006 2007 2008 2009 2010 2011
Total 11,333 11,954 12,574 12,697 12,915 13,256
Population
('000)
Average 3.7 3.6 3.6 3.6 3.6 3.5
Household
Size
(number of
persons)
Population 2,181 2,301 2,420 2,444 2,486 2,551
Density
(persons
per sq km)
Births 207 221 225 209 211 222
('000)
Birth Rate 18.3 18.5 17.9 16.5 16.3 16.8
(per 1000)
Deaths 50.4 50.8 50.4 53.7 52.7 57.4



('000)
Death 4.5 4.3 4.0 4.2 4.1 4.3
Rate (per
1000)
Net 210 205 26.7 39.5 103 122
Migration
('000)
Migration 18.5 17.1 2.1 3.1 7.9 9.2
Rate (per
1000)

Summary 9 Total Population, 2012-2016, 2020
2012 2013 2014 2015 2016 2020
Total 13,588 13,931 14,278 14,629 14,975 16,388
Population
('000)
Total 3,885 4,014 4,145 4,280 4,414 4,974
Household
s ('000)
Average 3.5 3.5 3.4 3.4 3.4 3.3
Household
Size
(number of
persons)

Summary 10 Population By Educational Attainment, 2006-2011
2006 2007 2008 2009 2010 2011
Total 8,386 8,957 9,529 9,601 9,794 10,089
Population
15+
No 446 462 474 461 446 372
Education
Primary 3,662 3,908 4,154 4,181 4,380 4,428
Education
Secondary 2,652 2,872 3,100 3,163 3,224 3,468
Education
Tertiary 763 831 900 924 1,092 1,190
Education

Summary 11 Structure Of Consumer Expenditure By Main Category, 2006-2011
2006 2007 2008 2009 2010 2011
Total 129,683 148,355 185,902 181,667 198,918 236,559
Expenditur



e (TL
million,
current
prices)
Food and 18.0 18.0 18.1 18.6 18.5 17.5
Non-
Alcoholic
Drinks (%)
Alcoholic 3.1 3.4 3.0 3.0 3.6 3.5
Drink,
Tobacco
etc (%)
Clothing 5.4 4.9 4.8 4.2 4.5 4.1
and
Footwear
(%)
Housing 20.6 22.0 23.0 26.1 24.8 25.5
(%)
Household 6.5 6.4 6.2 6.0 6.1 6.4
Goods and
Services
(%)
Health (%) 5.2 5.0 4.8 4.6 4.0 4.3
Transport 15.5 14.2 14.2 11.8 12.8 12.6
(%)
Communic 4.3 4.6 4.2 4.4 4.9 4.9
ation (%)
Recreation 4.6 4.1 4.0 4.2 4.3 4.6
and
Culture
(%)
Education 1.5 1.5 1.7 1.8 1.8 1.9
(%)
Restaurant 8.7 8.6 8.4 8.5 8.0 7.7
s and
Hotels (%)
Miscellane 6.6 7.3 7.7 6.8 6.8 7.0
ous Goods
and
Services
(%)

Summary 12 Consumer Expenditure By Main Category, Per Household, Constant (2011)
Prices, TL, 2006, 2011, 2016, 2020
2006 2011 2016 2020
Total 61,831 62,891 64,864 73,514
Expenditure
Food and Non- 11,133 11,028 11,009 12,322
Alcoholic Drinks



Alcoholic Drink, 1,901 2,193 2,397 2,836
Tobacco etc
Clothing and 3,328 2,566 2,405 2,499
Footwear
Housing 12,758 16,028 16,539 18,676
Household 4,040 4,032 4,351 5,025
Goods and
Services
Health 3,217 2,678 2,801 3,185
Transport 9,557 7,929 8,487 9,820
Communication 2,647 3,097 3,484 4,111
Recreation and 2,874 2,874 2,813 3,044
Culture
Education 898 1,196 1,258 1,446
Restaurants and 5,389 4,845 4,679 5,232
Hotels
Miscellaneous 4,089 4,425 4,641 5,317
Goods and
Services

Summary 13 Households By Income Band, % Of Total, Constant (2011) Prices 2006, 2011,
2016, 2020
2006 2011 2016 2020
Over US$500 100 100 100 100
Over US$750 100 100 100 100
Over US$1,000 100 100 100 100
Over US$1,750 100 100 100 100
Over US$2,500 100 100 100 100
Over US$5,000 99.3 100 100 100
Over US$7,500 97.9 98.8 98.4 98.4
Over US$10,000 95.3 97.0 96.4 96.0
Over US$15,000 86.3 89.8 88.6 86.8
Over US$25,000 59.6 64.3 63.1 57.4
Over US$35,000 36.8 39.8 39.4 33.5
Over US$45,000 22.9 24.5 24.4 20.2
Over US$55,000 15.0 15.9 15.9 13.1
Over US$65,000 10.5 11.0 11.0 9.1
Over US$75,000 7.7 8.1 8.1 6.7
Over 4.3 4.5 4.5 3.9
US$100,000
Over 2.9 3.1 3.1 2.7



US$125,000
Over 2.3 2.4 2.4 2.2
US$150,000
Over 1.6 1.7 1.7 1.5
US$200,000
Over 1.2 1.3 1.2 1.1
US$250,000
Over 1.0 1.0 1.0 0.9
US$300,000

Summary 14 Households By Income Band, „000, Current Prices 2006-2011
2006 2007 2008 2009 2010 2011
Over 3,095 3,293 3,490 3,550 3,635 3,761
US$500
Over 3,095 3,293 3,490 3,550 3,635 3,761
US$750
Over 3,095 3,293 3,490 3,549 3,635 3,761
US$1,000
Over 3,093 3,292 3,490 3,549 3,634 3,761
US$1,750
Over 3,090 3,291 3,489 3,547 3,633 3,760
US$2,500
Over 3,056 3,280 3,476 3,530 3,621 3,749
US$5,000
Over 2,971 3,245 3,443 3,479 3,587 3,717
US$7,500
Over 2,824 3,175 3,379 3,376 3,519 3,655
US$10,000
Over 2,366 2,903 3,140 2,988 3,255 3,408
US$15,000
Over 1,349 1,992 2,313 1,860 2,337 2,513
US$25,000
Over 735 1,191 1,486 1,045 1,465 1,611
US$35,000
Over 433 722 938 620 916 1,019
US$45,000
Over 197 323 426 280 420 469
US$55,000
Over 27.6 39.0 46.3 37.0 47.2 51.0
US$65,000
Over 148 237 311 209 309 345
US$75,000
Over 89.5 135 171 123 173 191
US$100,00
0



Over 66.0 94.0 115 88.8 117 128
US$125,00
0
Over 52.5 74.5 88.2 70.6 89.9 97.3
US$150,00
0
Over 36.6 51.7 61.3 49.1 62.6 67.6
US$200,00
0
Over 27.6 39.0 46.3 37.0 47.2 51.0
US$250,00
0
Over 22.0 30.9 36.7 29.4 37.5 40.5
US$300,00
0

Summary 15 Inflation, 2006-2011
2006 2007 2008 2009 2010 2011
Inflation 9.6 8.8 10.4 6.3 8.6 6.5

Summary 16 Transport indicators, 2006-2011
2006 2007 2008 2009 2010 2011
Passenger 1,657 1,712 1,759 1,775 1,822 1,873
Cars in
Use ('000)
Commerci 641 701 747 756 774 809
al Vehicles
in Use
('000)
Two- 110 130 152 164 175 192
Wheelers
in Use
('000)
National 186 186 186 186 186 186
Highways
(kilometres
)
Road 85.9 99.1 98.7 95.9 92.4 87.5
Injury
Accidents
(per
100,000
inhabitants
)



Summary 17 Tourism 2006-2011
2006 2007 2008 2009 2010 2011
Hotel Bed - - - - - -
Occupancy
Rates (%
of beds
occupied)
Internation 3,283 4,729 4,038 3,530 5,106 5,264
al Tourist
Arrivals
(number)
Number of - - - - - -
Hotels
('000
nights)
Tourist - - - - - -
Nights
('000)

Summary 18 Air Pollution, concentration in micrograms per cubic metre, 2006-2011
2006 2007 2008 2009 2010 2011
SO2 - - 8.4 9.6 6.5 -
Annual
mean
PM10 - - 58.4 53.4 50.4 -
Annual
mean


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