UAE is largest GCC investor in Turkey

Total assets put at $4bn while Turkey invests $6bn in UAE

The UAE has emerged as the largest Gulf investor in Turkey, accounting for more than half the total assets controlled by regional oil producers in the Turkish market, Saudi Arabia’s largest bank said on Sunday.

Total investments by the six-nation Gulf Cooperation Council (GCC) in Turkey are estimated at nearly $10 billion, including around $6.5bn invested during 2004-2011, National Commercial Bank (NCB) said on a study on GCC-Turkey relations, sent to 'Emirates24|7'.

“The UAE has historically been Turkey’s most important GCC partner in terms of investments, having accounted for 56 per cent of all GCC FDI into Turkey in 2004- August 2011,” NCB said.

The report showed overall investment flows between Turkey and the UAE are estimated to have reached some $10bn at the end of 2010, with UAE companies investing some $4bn in Turkish tourism and energy. Turkish investments in the UAE, the second largest Arab economy, totalled $6bn, mainly in construction. NCB expected UAE investments in Turkey to grow by around $1bn to $5bn by the end of this year.

It said some 500 Turkish companies are operating in sectors such as trade, petroleum, construction, transport, security equity, and pharmaceuticals. It noted that Turkish Trade Minister Zafer Çaglayan stated in 2009 that 35 Turkish firms had undertaken 77 projects worth $6bn in the UAE so far.

Turning to Saudi Arabia, the largest Arab economy, the report showed173 firms from the kingdom invested a total of $1.3bn in Turkey between 2004 and 2009. It said the main areas of operation are textiles, food, banking trade, real estate, and tourism.

Also purely financial investments are growing in importance with the Kuwait Investment Authority identifying Turkey as one of its priority countries and increasing its investments there to $1.7bn,it said.

“Even personal investments are likely to increase, partly because of Turkish willingness to modify its long-standing principle of reciprocal regulation on foreign ownership of property. A growing number of developments targeting GCC investors are now underway in Turkey,” it said.

But it noted that despite significant progress in recent years, the number of GCC companies operating in Turkey has remained relatively small.
It said only 217 Saudi companies were active in the country as of the end of June 2011. The most important sectors were construction (40 companies), transportation (21), real estate (9), food production (9), and tourism (9).

In the opposite direction, the Turkish presence in Saudi Arabia has tended to be dominated by constructions companies with an estimated 150 Turkish firms now active in the kingdom, according to NCB.

“Construction and real estate remain dominant themes in the Turkish presence in the Gulf. Turkish companies established a major foothold in the GCC during the regional construction boom led by Dubai, but their presence far predates this,“ the study said.

“The operations of GCC companies in Turkey are fairly diverse. The initial focus on GCC investments was heavily on financial services and, as a result, GCC-owned banks are dominant within Turkey’s group of four Shariah-compliant participation banks.”

According to NCB, the awareness of business opportunities on either side has grown dramatically in recent years.

Although the growth of investments has been adversely affected by the tough international economic climate, there has been a steady increase in the number and sectoral footprint of acquisitions, it said.

“The growing number of serious expressions of interest on either side suggests that this trend will continue, and probably accelerate further, in the coming years.”

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