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Contents : http://www.referansgazetesi.com/haber.aspx HBR KOD 98611 Referans Newspaper June 6th 2008 Real estate investors to TOKI: hands off from housing production by B lent Yolda translated by Didem Tuzun MBA According to the report prepared by American Affordable Housing Institute upon the request of GYODER government should shift from housing production to financing. TOKI representatives pointed out that TOKI itself needs financing too. The American Affordable Housing Institute which has designed models for countries including Egypt Kenya and South Africa to enable low income people to own houses generated a roadmap for Turkey. The Affordable Housing Institute report prepared upon the request of GYODER mentions that in Turkey where there is a demand for 600 000 housing units each year for 10 years government should only provide financing and incentives to the private sector. David Smith the president of the Affordable Housing Institute said "TOKI should stop producing housing. It should focus on financing only". TOKI Strategy Development Office President Mehmet Fatih Kara replied to this recommendation saying: We are producing housing for low income people by going to areas where the private sector does not. Furthermore we need financing too. 80% cannot afford housing Having put forward that in Turkey 80% of the people in need of housing cannot afford it Smith summarized his recommendations: TOKI should shift from housing production to housing financing in order to support the private sector. As in Mexico and in GSEs in the US it is critical that TOKI is diversified from just the supply side to include the demand side also. Moreover private mortgage banks should be catalyzed by creating new financial products that complement the market. Smith highlighting the importance of allowing municipal governments to obtain nationally owned land and of creating a national gecekondu transformation pilot program said: Consumer earthquake-reinforcement loans for sale through mortgage banks should be developed. For long-term affordable apartments a rental housing association model should be developed as well. Pointing out that the government in Turkey like in all other countries around the world should play an active role in developing affordable housing Smith mentioned that TOKI is not that successful in formalization and registration of housing as it is in incentives and regulations for new housing. Smith said: If TOKI allows re-cadastralization of urban areas this method would make a lot of money. This would not cost anything to government. On the contrary lands would create value. The most efficient method is that municipal governments offer lands to private companies. TOKI should take over the mission of offering lands to municipal governments without getting into competition. We need financing too TOKI Strategy Development Office President Mehmet Fatih Kara answered the stop producing housing shift to financing recommendation of the private sector: Like the private sector TOKI needs financing. We are in touch with the financial institutions abroad but the borrowing costs are very high. The fact that the rating institutions are giving Turkey lower grades than Mexico and Brazil increases our borrowing costs. I do not oppose the idea of having another structure while TOKI continues its current activities rather than changing the activities of TOKI. Kara touched on the point that TOKI has a mission to have projects for different income groups and said: Although there has been some improvement in the last couple of years there ise still a lot of painful work to do. Thus there are not many alternatives offered to low income people. Private companies in the industry do not find the solutions profitable enough. This makes the solution even more complicated. TOKI meets 10% of the housing demand. TOKI realizes its activities by using lands and sales from its buildings without getting any money from the government budget. Istanbul Mortgage General Manager Bahadir Teker put forward that Turkey needs 6-8 Million houses until 2015 and that the their value makes $ 200-400 Million saying: It is impossible for government to transfer billions of dollars in the next 7-8 years. TOKI does not have such a resource. This directs us to look abroad. The real interest of getting all the financing from abroad is around 10%.

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