BIO: Ibrahim Kocagoz is the Technical Director at SODEXO Thailand, responsible for Innovation, Smart City & Systems, and Sustainability.
STORY: Ibrahim and his wife bought several apartments in Istanbul. The plan was to retire soon at a vineyard, making wine while receiving income from the apartments. However, the Turkish currency started devaluing, throwing off the value of the flats. Ibrahim could only charge half of what the apartments were worth when purchasing them.
LEARNING: Do thorough research before investing in property. Real estate is high-risk; avoid investing in it if you can. Understand the currency risk concept before investing abroad.
“Learn a lot about what you want to invest in and try to invest in more than one sector.”
Ibrahim Kocagoz
Guest profile
Ibrahim Kocagoz is the Technical Director at SODEXO Thailand, responsible for Innovation, Smart City & Systems, and Sustainability. Before joining SODEXO, Ibrahim worked as a Smart City Project Manager in Qatar for almost seven years. Ibrahim received a Bachelor’s Degree in Electronics Engineering from the University of Istanbul, Turkey, in 2004.
Ibrahim has more than 15 years of experience in urban development, oil & gas fields, and industrial projects. He has excelled at engineering, construction, commissioning, research, development, and management, especially for systems integration, instrumentation & control systems, and sustainability.
Worst investment ever
Ibrahim and his wife talked about investments, and they settled for real estate. They believed that it was stable and it would gain in the future. So they bought several one-bedroom apartments in Instanbul.
The plan was for the couple to, later on, move to the South of Turkey, buy a vineyard and produce wine while getting rent from the apartments.
The currency issue
Soon after they bought the apartments, the Turkish currency started devaluing, so the apartments’ value went down. Ibrahim, thus, had to lower his rent to get tenants. Selling the flats was not even an option because he could never sell them for a profit.
The currency recovered after a few years, but Ibrahim could not increase rent, and so he lost 50% of their expected value in rent collection.
Overlooking important investing factors
There are two things that Ibrahim and his wife overlooked when they decided to invest in real estate. One, they assumed that Instanbul, being the largest and most popular city in Turkey, would be more profitable in terms of rents. However, the city of Izmir has better incomes.
The second thing they overlooked was the performance of the currency. They did not do any research to see how the currency was changing and if it was stable or not.
Lessons learned
Do thorough research before you invest in real estate
Real estate is a high-risk investment because there is no guarantee that you will make a profit. It is, therefore, imperative that you do thorough research before you decide it is the right investment option for you.
Diversify your investment portfolio
Do not invest in just one sector; diversify your investments. At the very least, invest half of your money in different stocks and the other half in a sector that you understand fully. Doing this will help you reduce your risk.
Andrew’s takeaways
Investing from abroad means you’re making two investments
Most people live and invest in their home country. And therefore, the concept of currency risk is not a big thing. But when you live outside of your country and want to invest back into your home country, you will make two investments.
The first is you have to buy the currency of that country and then buy the underlying asset. Many people forget about this, but it’s important to think about currency risk because you could greatly gain on the underlying asset. Still, if the currency devalues, you lose that gain.
Real estate is a high-risk investment
On the surface of it, rental property seems like a good investment. But there are several problems with it. First, you can have a lot of supply but little demand making it hard to resell at a profit. Second, there could be a crisis, such as the Coronavirus pandemic, where many people are never going to get the gain that they thought they’d get on their properties.
Property is illiquid
You cannot just wake up one day and say you do not want to own your property anymore and then just get out. It takes time to sell.
Do not buy rentals during an inflationary period
We should expect to experience inflation around the world. Most people may think this is the time to own property, especially rentals. However, this is not a good idea because it is hard to increase the rent. After all, salaries are not going up. Land and physical assets offer some protection against inflation.
No. 1 goal for the next 12 months
Ibrahim’s number one goal for the next 12 months is to bring his smart city vision, sustainability, knowledge experiences to more countries, including Vietnam, Laos, and Myanmar.
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