Hundreds of posh shopping malls that mushroomed across Turkey under the Justice and Development Party (AKP) are in deep trouble, hit by the meltdown of the Turkish lira and declining sales. The once bustling malls — the symbol of the country’s consumption craze — are faced with a decreasing footfall amid signs of a looming recession. Many shops have already closed, and those that remain open are struggling to pay exorbitant rents.

The bankruptcy threat hovering over tenants stems largely from the dramatic depreciation of the Turkish lira. Rent contracts at shopping malls are usually indexed to the dollar or the euro, and many of them have now become untenable due to the sharp increase in foreign exchange rates. In the past six months, the prices of the dollar and the euro have shot up by more than 50%. On Sept. 21, the greenback traded for 6.27 liras and the euro for 7.39 liras, compared to 3.92 and 4.87 liras, respectively, on March 20. The corresponding increase in the rents has forced many to pull down the shutters, while the empty shops, in turn, have put strains on the mall owners. Rent payments in some shopping malls have been fixed to exchange rates of up to 20% below market rates, but this has hardly resolved the problems of tenants.

On Sept. 12, President Recep Tayyip Erdogan issued a decree stipulating that property sales and rental contracts must be made in lira, and any contracts previously made in foreign currency must be converted into lira within 30 days. A mere conversion, however, does not lessen the rent burden, as the exchange rates are already very high and, in many malls, property owners insist on using the daily market rates for the conversion.

Aydin Demir is among those who have recently closed shop due to the currency crisis. For three years, he paid a monthly rent of 4,000 euros for a small shop in a mall in the resort town of Bodrum, a favorite of both local and foreign tourists. “When I was renting the place, a euro was worth about 3 liras; now it is more than 7 liras. Add to this the cost of the staff, and my monthly earnings could no longer cover the expenses,” Demir told Al-Monitor. He added, “I asked the owner of the mall to reduce the rent and fix it in Turkish liras, but he refused, saying he was indebted to banks and his debt was in euros. So I was forced to close down the shop.”