BRIDGE. June, 2020 No:3. made by

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made by

No:3

June, 2020

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GETTING LONELY, BUT HAPPILY

In this issue of our newsletter, we have discussed digitalization. Due to the known coronavirus pandemic, some of the employers are still working at home while others can only go to their workplaces by turns. In this case, in addition to business meetings, daily social needs such as shopping, education, entertainment, etc. can be met by utilizing the possibilities offered by the electronic environment. In an environment where a computer, a modem, and even just a smartphone is sufficient for everything, the enterprises, institutions, individuals are naturally performing the exhibition, promotion, and sales of the goods and services they have been producing.

Due to the fast and continuous technological developments, the archive services have long evolved from the environment where the files were physically in captivity on dusty shelves to the dynamic electronic environments where all kinds of documents can be reached via remote access without any distance limitation by being scanned. By means of keeping the archives in the electronic environments, information and documents can now be reached at lower costs and rapidly. Although limited numbers of staffs are working in huge archiving areas, they are also working at their computers.

Briefly, the comfort of human beings is increasing each passing day. Analyzing the products and services interested by users on the internet pages they entered, alternatives regarding what they can purchase, what movie to watch, where to go for a holiday, in which hotels they can stay are now automatically being offered; price comparisons are already being made, there is no insufficiency at that point. Well then, although we are satisfied with the situation we live in, is the same in the real situation? Because it seems like that the increase of comfort in the life cycle is not much good for the human being in the medium-long terms. Namely, doesn’t each increase in comfort situations shape the opinion and activities of the human being rather by computers and make human being as a being who doesn’t use his mind and logic, whose reasoning in solving daily problems was bereaved from him? I regret to say that if we have enough time to observe our surroundings by distancing from the daily concerns of life, I think what we will observe will deeply surprise us.

On the other hand, the human being who needs to continuously renew himself and adapt to the new situations by both digitalization and technological developments faces the problem of the new age, named stress. We witness that the technological solutions which we think are definitely beneficial for us rather blunt the ability of human being to produce solutions, decrease physical activities, lose his emotional health due to the psychological pressure created by the efforts of renewing, developing himself and adapting to the new situations.

Despite it seems utopic, my wish is that such a day will emerge when an eco-system in which developing technology will be used in the production of goods and services through the machine learning, artificial intelligence and robots and also human being will live a simple life, close to nature, in proportion to his nature. Who knows?

Wishing you healthy days…

www.dengedegerleme.com

Baki BUDAKOĞLU

Denge Değerleme

Chairman of the Board

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Annual Growth Rate

%

4,50

_{1.071 Billion TL}

Dolar $

Euro €

%6,82

%7,59

Exchange Rate

Change in The Residential

Property Sales

Apr’20

Average Increase Rate of

the Housing Price Index

%

18,00

(Q1’20) (Q1’20)

%

1,5

Growth Rate In The

Construction Sector

(Q 1’20)

Unemployment

Rate

%

13,2

Mar’20 May’20

ECONOMICAL DATA

Residential Market

May’19

91.937

May’20 Ma y’20

50.936 -%

45 %

11,13

Mortgage Interest Rates

Tourism

Mall

Urban Transformation

Number of Total Visitors

Apr’20

Turkey

2,2K Istanbul960

Hotel Occupancy Rate

Apr’20 Istanbul -%

89,6

Turkey -%

46,1

Q4’19

Total Leaseble Area

GLA

Malls Under

Construction

44 Malls

13,50 million m²

Jan’20

Visitor Index

103

621.641

The Number of Independent Units Subject to Urban Transformation

505.618

The Number of Building Subject to Renovation

1.040.337

The Number of Buildings Acquired Energy Efficiency Certificate

9.174

The Number of Registered Monumental Trees

Consumer Price Index (CPI)

Producer Price Index (PPI)

CPI / PPI May’20

%11,39

%5,53

2 36% Mortaged Sales

Gross Domestic

Product

(GDP)

454 Malls

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*The data in 2020 shows the change in the same month of the previous year.

CHANGE IN RESIDENTIAL PROPERTY SALES

Rate of Change

in the

Number of Sales

3

Comparing with the data of May 2019, it is observed that there was a decrease compared to the previous year except for 4 provinces; the average decrease was 45% across the country. We will be witnessing the highest sales figure in our history when the decrease will become an increase after the improvement in the

housing interest rate and payment conditions.

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%59 - %23

%23 - %3

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%3 - %-1

(2)

%-1 - %-12

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%-12 - %-25 (17)

%-25 - %-37 (14)

%-37 - %-46 (15)

%-46 - %-53 (12)

%-53 - %-69 (11)

%-69 - %-70 (2)

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*The data in 2020 shows the change in the same month of the previous year.

Value

Index

PRICE CHANGES IN RESIDENTIAL PROPERTIES

4

Despite the decline in the number of housing sales, it is observed that the rate of change of value has reached the ratios above the inflation rate in Turkey and brings an actual rate of return.

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%26 - %25

%25 - %21 (6)

%21 - %20 (8)

%20 - %19 (4)

%19 - %18 (8)

%18 - %17 (7)

%17 - %16 (9)

%16 - %14 (12)

%14 - %13 (19)

%13 - %12 (1)

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0 50.000 100.000 150.000 200.000

Total Number of First Hand Sales Total Number of Second Hand Sales

*_{Compared to the same month last year, the} number of first hand house sales decreased by 55 % in May 2020, in Turkey

*_{Compared to the same month last year, the} number of second hand house sales

decreased by 38% in May 2020, in Turkey

0 50.000 100.000 150.000 200.000

Total Number of Mortgaged Sales Total Number of the House Sales The Ratio of the Mortgaged Sales

*_{Compared to the same month last year,} the number of the mortgaged house sales increase 24% in May 2020, in Turkey.

*The ratio of the mortgaged house sales is 36% in May 2020

RESIDENTIAL PROPERTY SALE FIGURES

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*Source: TURKSTAT *Source: TURKSTAT www.dengedegerleme.com

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37.246 54.691 91.937 23.265 38.090 61.355 38.931 63.305 102.236 40.634 69.904 110.538 51.393 95.510 146.903 50.181 92.629 142.810 48.909 89.463 138.372 75.480 126.594 202.074 36.040 77.575 113.615 37.303 81.450 118.753 34.089 74.581 108.670 14.848 27.935 42.783 16.860 34.076 50.936 14.916 91.937 _7.319 _61.355 13.064 102.236 34.148 _110.538 57.811 146.903 50.411 142.810 43.911 138.372 50.278 202.074 42.237 _113.615 43.733 _118.753 43.329 108.670 11,9% 12,8% 30,9% 39,4% 16,2% 35,3% _31,7% 24,9% 37,2% _36,8% 39,9% 39,9% 36,3% 17.088 42.783 18.483 50.936

May.19 Jun.19 July.19 Aug.19 Sep.19 Oct.19 Nov.19 Dec.19 Jan.20 Feb.20 Mar.20 Apr.20 May.20

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*_{Compared to the same month last} year, the number of total foreign sales decreased by 78% in May 2020.

*_{The ratio of the foreign sales in} total sales was calculated as 2% in May 2020.

İstanbul

Antalya

Ankara

İzmir

Mersin

Top 5 Cities in Terms of Foreign Investor Transactions

Iran

Iraq

Afghanistan

China

Azerbaijan

Houses Sold to the Foreign Investors Ratio In In The Total Houses Sales

0 0,0% 1.000 2.000 3.000 4.000 5.000 1,0% 1,5% 0,5% 2,0% 2,5% 3,0% 3,5% 4,0% 4,5% 5,0% 5,5%

HOUSING SALE TO THE FOREIGNERS IN TURKEY

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The Top 5 Countries in Residential Property Transactions www.dengedegerleme.com *Source: TURKSTAT

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3.925 2.689 4.192 3.604 4.177 4.272 3.988 5.298 3.907 4.005 3.036 709 860 4,3% 4,4% 4,1% 3,3% 2,8% 3,0% 2,9% 2,6% 3,4% 3,4% 2,8% 1,7% 1,7%

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PIZZA – REAL ESTATE INDEX

100 301,37 100 227,55

Kadıköy

Maltepe

100 _234,24

Beylikdüzü

100 283,67

Üsküdar

Before the Epidemic (Jan, Feb, Mar) After the Epidemic (Apr)

It has been tried to calculate the rental load of pizzas based pieces, by means of relating the number of pizza sales of the enterprises operating in the pizza business

in Kadikoy, Maltepe, Beylikduzu and Uskudar districts of Istanbul and real estate rents, without considering other expenses, before and after the epidemic.

Although the number of product sales of the regions varies before the epidemic, the index base month has been taken so as to be the average of January, February,

and March as 100 and the regions were separated. According to the rental load index depending on the number of pizza orders, it has been observed that there

was an average increase of 283.67 including an increase of 301.37 in Kadikoy Region, an increase of 227.55 in Beylikduzu Region, an increase of 234.24 in Maltepe

Region, 283.67 in Uskudar Region according to the months before the epidemic.

Considering the first month before and after the epidemic in this index, it has been observed that the real estate load increased by an average of approx. 2.62 times

per unit pizza according to the rental load index calculated on the basis of the real property rents.

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Mehmet Metin OKUR

Chairman of Sefamerve

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The transformation in the retail sector had begun long ago with the change in the hyperbolic discounting preference (the fact that people prefer short term low returns to long term high returns). The comfort zone of the retail sector has not recently narrowed for the following reasons. It was realized that it could no longer survive by changing; it is now necessary to break and transform.

1. The price awareness of consumers has increased. The fact that e-commerce is a platform where prices are easily comparable has brought the trend for transparency of prices and worth to pay for.

2. Speed has started to become effective in every field. … Lack of time leads consumers to fast shopping and solution in a short time. Supply chains are getting to be broken. We have reached to the short-term product development model of trial and error from the long-term planned supply. Customers in stores are tried to be met the product with the highest purchasing trend.

3. Omni Channel Marketing enables us to have more data about customers, to understand customers’ intentions in each channel and offer products according to this, to equate the right product and customer in the right channel with intelligent algorithms. Customers decide to purchase after seeing the product 12 times online. Everything means to be visible in all channels. The faster recovery of retail in China compared to other countries indicates that the OTO concept (offline to online) is an absolute necessity of being involved in every channel.

4. Micro is fully escalating while Macro is struggling to survive. Microtrends in marketing have considerably increased. Product marketing to everyone through TV is being replaced by personalized products and targeting single-person. Targeting criteria have much shrunk due to social media. Location, sex, age, weather condition, and visual product that may be degraded to a single-person became involved.

Wholesale was replaced by micro-retail sales and the macro production was replaced by the micro distributed production.

Digital advertising is also affected by the micro trend. Instead of advertising to the account with 100K followers on Instagram, it is 4-5 times more efficient to advertise to 10 accounts with 10 k followers..

5. Artificial Intelligence… Chatbot virtual assistants, messaging and voice assist platforms in customer services, product sale transactions will meet the need without requiring humans in the implementation of the fast analytical decision based on date and in the recommendation of A1 product to the X target audience. Artificial intelligence will also be employed in interpreting the intention of customers and

in digital security subjects.

The transformation in retail, which started selling products on our hands in the market around 300 BC, began with the market booth that transformed into a shop, shops into stores, stores into multi-storey stores, multi-storey stores to the stores with 1.000 sqm located at the bottom floor and finally to the stores with 300-400 sqm by being diminished. Today, the evolution continues with only change in the environment compared to the first day we started and is transforming into the individual sale and social commerce through digital. With the digital sale and social commerce, we have returned to the point we had started with the product sale on our hands.

As a result of the above-mentioned approaches, in the environment where China has found a solution for both unemployment and easily digitalized, if we cannot adapt to the Conversational Commerce concept and social commerce, instead of the model where only large digital advertisement channels earn money, we are going to face big destruction.

While the marketplace Lazada in the Philippines had a 65% market, it has today a 35% market share despite it has grown double. Lazada has 100 thousand suppliers while suppliers selling 40 million individual products in the Philippines are making business on social platforms. We are transforming into a world where intermediaries disappear, everything that is smaller becomes efficient and faster, customers and producers are closer.

Table toppled; we need to create new models.

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Emir AKIN

MNG Airlines

Logistics Director

The sectors that are considered to be popular in the forthcoming period can be listed as energy, health, agriculture, information and communication technologies, and logistics.

Today, I will shortly refer to the interaction and relation of the logistics and information sectors which are two popular sectors, with each other.

Logistics, with the simplest expression, refers to whole processes of a product such as transportation, storage, customs clearance, packaging, distribution, from the first manufacturer to final consumer. In other definition, logistics is to offer the right product, at the right place, at the right time, in the right amount, in the right way, and at a competitive price.

Digitalization enables the increase of demand and interest in the logistics activities through e-commerce and e-shopping channels; on the other hand, it has provided opportunities for the logistics activities to be performed in a faster way, more efficiently, and more effectively.

We can briefly list the areas of the digitalization that are used in logistics as warehouse and inventory management, barcode and RFID systems, optimization of vehicle occupancy rates, route planning, cargo tracking process, vehicle tracking applications, fuel tracking applications, after-service feedbacks and improvement processes, customer service management.

While the party receiving service demands for his product to be delivered as safe, fast, and in the right manner, he/she wants to know, be informed about in what stage the product he/she ordered is. To achieve this, service providers enable their customers to track their cargos by means of using RFID and similar technologies.

Technology and digitalization allow reducing costs with Sorter Systems, robotic storage systems, fork-lift trucks and provide services less requiring manpower. Although these systems seem to have high initial investment costs, they amortize themselves in a reasonable time.

If I need to summarize the issue, there will always be logistics activities as long as there is a need for transporting cargo from one place to another. Today logistics experienced much digitalization from robotic warehouses to unmanned truck and rail transports, from cargo deliveries with drones to cargo tracking through mobile phones and there will be many different transport and storage applications with the new Technologies we will learn. And even logistics has so great vision and limitless horizons that if teleportation technology is invented one day, it will also have a logistics.

Stay safe….

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With the transition from the Industrial Revolution, which started from the invention of the steam train, to the digital age where digitalization is rapidly experienced, this process has led to rapid transformation and change also in the tourism sector as well as experienced in many sectors. With the widespread use of internet in the whole world in this digitalization process, many new concepts such as “Industry 4.0”, “Artificial Intelligence”, “Augmented Reality”, “3D Printers”, “Internet of Things”, “Big Data” and “Block Chain” involve in our life. While in the tourism sector, the effects of this transformation, together with the technological innovations taking place in tourism and travel enterprises to increase the personalized experiences of touristic consumers, take place in the form of presenting various digital applications to consumers.

According to the data published by Internet World Stats in the 1st quarter of 2020, 59.6% of the population across the world uses the internet. In the report that was projected by the Association of Turkish Travel Agencies (TURSAB) and Turkish Informatics Foundation (TBV) and created by Ernst & Young Turkish Consultancy Services on the basis of 2018 data, TURSAB Chairman Firuz B. Baglikaya states that mobile reservations that were made by consumers using the internet to benefit from the tourism activities have reached 40% and voice class reached to the level of 25%, in addition, advertisement activities are now carried out by the influencer, recommendations of friends and blogger comments. In addition to this, research conducted by the European Commission reveals that more than 95% of

travelers use digital resources during their travels. (Atacan ve Düzbastılar, 2020).

Evaluating the purposes of the digital applications that are being used after the transformation of digitalization took place in the tourism sector in terms of consumers, these purposes are for benefiting from tourism activities, making holiday plans from tourism destinations, creating personal experiences, etc. while the purposes of the tourism and travel enterprises are implementing marketing activities, management of customer loyalty programs, increasing competitive advantage through the use of digital applications, making profit according to the average of the sector, etc.

Among the areas and applications which technological renovations are used in the tourism sector, there are many technological applications and fields of use such as mobile devices, kiosk machines, robot receptionist and officers in the reservation, ticketing and accommodation processes of hotel enterprises, travel agencies and airline enterprises (For example, Henn na Hotel-Tokyo

(www.turizmgunlugu.com, 14.06.2020), smart door-lock systems, intelligent hotel implementations, augmented reality and virtual applications used by hotel managements, museum and archeological sites and tour operators; digital menus, intelligent table and intelligent plate applications offered by restaurants; 360 degree videos offered for use of consumers; hotel rooms created by “3D Printers” by being designed in digital environment (For example, Lewis Grand Hotel- Philippines (www.forbes.com, 14.06.2020)), foods and products; “Artificial Intelligence” and “Machine Learning” and social media platforms, web pages, tourism and travel blogs used in various shopping malls, hotel managements, airline enterprises and restaurants, “Big Data Analysis” used in the analysis of the information submitted by social media influencers to consumers.

Creating additional value in the tourism sector, the digitalization process both ensures tourism management to gain competitive advantage and make profits and plays a role in shaping the individual experiences of touristic consumers.

DIGITALIZED TOURISM SECTOR IN THE DIGITALIZED WORLD

Prof. Dr. Oktay EMİR

Anadolu University

Dean, Faculty of Tourism Trakya UniversityFaculty of Economics & Administrative Sciences, Department of Business Administration

Re. As.

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Peter J. LOCKS

Northcroft Middle East

Chief Executive Officer

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Northcroft Middle East is a Chartered Quantity Surveying and Construction Consultancy, operating from its head office in Doha, the State of Qatar. With a heritage that goes back to Northcroft being established in the United Kingdom in the 1840’s. Northcroft Middle East has successfully operated from it's Doha office which was established in 1976, with the Abu Dhabi, United Arab Emirates office being established in 1978.

Throughout the last 44 years, Northcroft Middle East has collaborated with and supported a broad range of construction and engineering clientele across the world. Regulated by the Royal Institution of Chartered Surveyors (RICS) Northcroft’s diverse range of services allows it to assist at any stage of construction, whether this be producing cost estimates at concept design through to detailed bills of quantities in accordance with recognised international measurement standards, tender proposal and tender award, drafting of contract agreements, post contract commercial and contract management, claims and dispute resolution, inclusive of forensic delay analysis and expert services.

During our tenure in the middle east, we have noted a significant industry and market sway, driven also by client demands, towards a centralized and digitalized strategy that is increasingly less focused upon the actual product but more focused upon the service itself. Stakeholders in the construction industry demand and require project partners that can integrate rapidly to their evolving

expectations.

This evolvement requires the parties to recognise and adopt digitilization within the construction arena, an area which is yet to mature, despite the fact that there exists a plethora of new and exciting digital concepts available, there has never been a time more appropriate for the industry to embrace, adopt and implement a real digital strategy. Within the construction industry we have moved to progressively embedding the use of Building Information Modelling (BIM), which is a digital information management approach that improves both productivity and quality in building and infrastructure projects. BIM is driven by a 3D object-oriented model that incorporates embedded data and is used digitally to plot every instance of the development stage from design, planning and the execution of construction through to completion and maintenance. This data can be distributed and shared at every stage and assists the project managers to be able to utilise BIM as a single reliable source of data for their decision making whilst ensuring that all stakeholders within the project retain responsibility for their own data.

Whilst not a new concept, the evolvement of the Building Information Model (BIM) for building development and digital designs was slated to be a market changer, the industry on a whole and specifically within the middle east has been slow to embrace the concept. Yet the emergence of digital technologies available to the industry coupled with recent technological breakthroughs provide the

opportunity for emergence of usages that are inconceivable at this stage.

The advancement of smart sensors, the usage of the Internet of things (IoT) are increasingly becoming a common sight on projects, with capabilities to drive cost reductions, monitoring and managing worker health and safety conditions, quality control and maintenance of building systems which even includes the forecasting of environmental conditions. The implementation of such digital capabilities is unmeasurable, we shall surely see the rapid adoption enabling connectivity with plant and machinery, wearable technology such as overalls monitoring heat and body functions, safety glasses, automated drone technology monitoring progress of the works, all strategically linked to generating project progress dashboards.

Moreover, the global digital transformation is evolving rapidly, it could be said that it is reinventing the construction industry and quite possibly will intensify the already competitive arena that is already constrained by low profit margins. The ability, agility and flexibility of the industry to embrace the digital world will be critical and of paramount importance over the short to long term periods in order for the players to maintain competitiveness in an already challenging and demanding environment.

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