Turnover rental contracts start to be issued at malls

Published 04.10.2018 00:36

As the deadline on converting foreign currency rental contracts to the Turkish lira nears - as directed by a presidential decree - turnover lease contracts are being introduced.

Chain Stores Association (KMD) Chairman and Mediamarkt Turkey CEO Yenal Gökyıldırım said that the directive has brought great relief. "It was issued at a time when rental payments were putting a heavy burden on costs," he said.

He added that shopping mall and store managers have started to offer turnover lease contracts. "The turmoil in the sector will end this way. As retailers earn, they will also help shopping malls earn. This is the best model at the moment."

Last month, President Recep Tayyip Erdoğan signed a decree that demanded the use of Turkish lira for buying, selling and renting real estate and vehicles.

The decision put an end to such deals in foreign currencies - the latest in a series of steps Turkey has taken since August to support the Turkish lira.

Real estate sales and rental contracts in foreign currency are common in Turkey, particularly in the retail sector. The decision on transactions also includes contracts for business and services. According to the decree, the contracts cannot be agreed on or indexed in a foreign currency.

It added that the current foreign currency contracts will be redefined in Turkish lira within a month and the terms of the decree will be executed by the Finance and Treasury Ministry.

Gökyıldırım noted that there was an unanswered question regarding the foreign exchange which will be clarified in the next 10 days. However, if the owners start to offer a turnover lease, neither the dollar and the euro, nor the inflation will matter in the future.

"This win-win approach will delight both sides," he said. Indicating that the ratio of rental payments to turnovers varies between 2 percent to 9 percent by sectors, he said that some shopping malls are already following this model and that all shopping malls will prefer to switch to this model after the Turkish lira is introduced.

TeknoSA General Manager Bülent Gürcan said that shopping mall managements have a good opinion of the new lease model and many lease contracts are being renewed this way.

He highlighted that they have to reflect the price increase of 40 percent for imported products. "Despite a 15 percent fall in sales of imported products, there is a significant increase in the sales of domestic products in particular," Gürcan said.

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