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.