Istanbul: where worlds collide

Istanbul sits at the crossroads of two continents. As everyone knows, environment plays a massive role in shaping the personality of a place, so it will come as no surprise that Istanbul’s own character is a stirring amalgamation of the two continents’ cultures, with an added splash of something that is entirely its own.

The Bosphorus strait, which divides the European and Asian halves of the city, connects the Black Sea with the Sea of Marmara. This completely unique geographical position has not only impacted Istanbul’s look and feel, but it has also helped the city to become a hub of economic activity for Turkey, and now the world. For this reason, more and more people are finding themselves travelling to the Old City on business, helping to make Istanbul one of the most popular travel destinations in the world.

The city holds prime real estate, with its position as the gateway between Europe and Asia making it a vital trade route for commerce. The Port of Istanbul plays a massive role in driving the national economy onwards and upwards, being responsible for generating more than half of Turkey’s total trade. Every day the port readies Turkish exports, with local producers selling everything from tobacco and olive oil to rubber and cotton.

While Istanbul’s large population has helped it to compete on the global stage, migration and urbanisation have put a strain on its infrastructure

Building a reputation
The city is also an extremely important site with regards to the country’s burgeoning tourism industry, which caters to both holidaymakers and professionals who are visiting on business. In fact, the city’s popularity as a tourist destination is growing so rapidly that Mete Güney, European Region General Manager of MasterCard, said in a 2014 press conference that the city is expected to surpass Paris as the second-most visited city in Europe by as early as this year.

Venturing away from the city’s coastline and towards the districts of Levant and Maslak, visitors can find Istanbul’s busy financial sector, which is home to the Borsa Istanbul and a growing number of international banks, including JP Morgan, Citibank and Deutsche Bank. The Borsa Istanbul is the sole exchange in Turkey, having replaced the Istanbul Stock Exchange (ISE), the Istanbul Gold Exchange and the Derivatives Exchange of Turkey.

Recently, the Chairman of the exchange, Talat Ulussever, boldly said that the issue of income inequality could be solved if the world adopted Islamic finance’s interest-free lending model: “Instead of a stock market model where only interest-free Islamic stocks and Sukuk are traded, we should develop a model in which all securities could be traded in an Islamic way”, Ulussever said in a speech at the International Islamic Finance Summit in September. His hope is that, through the adoption of Islamic principles in Turkey and beyond, that income will be more evenly distributed, as the core tenets of Islam promote the idea that wealth and prosperity should be shared equally.

Interestingly, his comments come at a time when Turkey, and Istanbul specifically, has a lot of wealth to divvy up. In fact, the Old City is doing so well for itself that it is now responsible for bringing in a little less than half of all tax revenues that the Turkish Treasury collects, according to data compiled by the Ministry of Finance. Comparing its contribution with that of the nation’s capital, Ankara, which contributed just over TRY 23.15bn ($8bn) against Istanbul’s TRY 89.63bn ($31bn), it is easy to see which city is the real jewel in Turkey’s crown.

Playing in the big leagues
Despite the country as a whole experiencing a downshift in economic performance, with GDP tapering off slightly in recent months, Istanbul’s local economy remains strong. Its economic success is a by-product of the way that the city has evolved over the last 100 years: for starters, its population has grown rapidly, with Istanbul expected to become the largest European metropolis by 2020, overtaking London in the process.

Rapid urbanisation has provided the city with a large labour force, which has been an essential ingredient for turning Istanbul into the industrial, financial and logistics hub that it is now known as. However, for all its successes, its journey to becoming one of the world’s most prosperous cities has been wrought with challenges: while Istanbul’s large population has helped it to compete on the global stage, migration and urbanisation have put a massive strain on its public infrastructure and housing, making investment in these two areas crucial if the city is going to continue to perform as well as it has grown accustomed to.

The composition of the local economy has altered a lot too – many would have once laughed at the idea that the city would one day grow to become a hotbed for technological innovation, but, as more and more start-ups choose to make Istanbul their home, this is exactly what is in the process of happening.

“E-commerce is a growing sector with great potential. However, this is a highly segmented market with a lot of small players. It is a hard game, as currently e-commerce consumers are very price-sensitive and generally not as much focusing on the quality of goods and customer service. There really is an incredible amount of potential here.”

Numan isn’t the only one struggling to contain his pride over the city’s potential to blossom into Turkey’s answer to Silicon Valley. In fact, the biggest hurdle for Turkish tech companies right now is obtaining the necessary amount of capital they need, with the tough economic climate significantly reducing banks’ willingness to lend. “It is difficult to get funds for innovative projects compared to other hubs”, Hakan Bas, an investor and local technology expert and one of the other entrepreneurs quizzed in Virgin’s report, said. “Even if you have an original idea like Twitter or Instagram, you wouldn’t be able to make it easily happen here. Nobody invests [in] a dream. It’s all about proven models, usually from abroad.”

Employing new technology
It seems ludicrous that investment is so hard to come by, especially when Turkey boasts a population of more than 76 million people, providing the potential for a massive domestic market for e-commerce. There is hope, however, that Turkish banks’ sentiments will change as the economic stability of the country further improves. In the meantime, the best option available for fledging tech companies seeking to secure investment is from venture capitalists, and the best way to get their attention is undeniably by creating innovative products and services. This is easier said than done, of course, but in recent years – and thanks to some breakthrough start-ups like BiTaksi, Istanbul’s answer to Uber – foreign investors have started to become a little more willing to open up their chequebooks.

Another route that has been highly successful for start-ups looking to secure investment is crowdfunding. This is slowly emerging as a viable alternative for tech companies in Istanbul: there are currently three equity crowdfunding platforms operating in Turkey – Biayda, Fongogo and Fonlabeni – but they are still relatively new to the game, and it only takes a quick perusal of their websites to see that there is a distinct lack of tech campaigns to invest in. Such slim-pickings, however, are the result of a relatively infant ecosystem for crowdfunding, rather than a lack of ambition. “The priority is to have a well-educated ecosystem,” according to Numan. “As this is a young hub, new entrepreneurs need smart money, and not just money on the table.”

It is clear that it will take time to nurture such an ecosystem, and it is better for start-ups in Istanbul if the foundations for success are laid slowly, rather than jumping the gun early and unravelling all the good work that the industry has done so far. All in all, the start-up community and the technology sector as a whole look very promising indeed, and the likelihood of the city growing to become a tech hub capable of rivalling the very best is high, as long as it continues to grow in a sustainable manner.

A break from business
Istanbul’s geographical position has not only allowed it to become an international bastion of economic activity and trade, but it has also helped it to become one of the most culturally enriched cities in the world; helping it to grow in popularity with business travellers and tourists alike. The city boasts a stunning cityscape full of historical landmarks and breathtaking views, and while its selection of monuments and sites of historical value is immense, without a doubt one of the most beautiful and impressive has to be Istanbul’s Topkapı Palace. This stunning structure was once home to the sultans of the Ottoman Empire – however, since the establishment’s demise, the palace has been transformed into a museum that holds some of the most important artefacts of the Muslim world, including the cloak and sword of the Prophet Muhammad.

Once travellers have adequately gorged on the history of the kingdom, it is time to indulge in the arts, with the city more than capable of catering for art lovers of all tastes: for those with thirst for contemporary art there is the Istanbul Modern, home to a permanent collection of exhibitions including the works of Juan Munoz, Anish Kapoor and William Kentridge. The gallery itself is a spectacle in its own right, however: a converted warehouse that manages to maintain its industrial heritage while mixing modern technology and design, creating a piece of architecture that is simply stunning. Meanwhile, those who prefer the classics can take a short trip to the Sakıp Sabancı Museum. Inside, visitors are able to feast their eyes on works ranging from those of Pablo Picasso to Salvador Dali.

After a long day trekking around the city, some R&R is often needed. For some, the best way to relax is with a little retail therapy – and luckily, Istanbul has some of the best bazaars and shopping districts in the world. One of the best is the aptly named Grand Bazaar, or Büyük Çarsı in Turkish: consisting of a vast network of interconnecting passageways that brim with bright colours, loud chatter and a wide array of merchants selling everything from authentic Turkish carpets to various trinkets to take home; there really is something for everyone.

At the heart of any culture is its cuisine, and Istanbul does not disappoint here: its cross-continental location has certainly helped it to become a hotbed for trade, but it has also resulted in the city becoming a melting pot of culinary delights, where old meets new and tradition intersects with modernity. The Old City truly has something to satisfy even the pickiest of palates, with a plethora of restaurants serving everything from classic Ottoman dishes to some of the finest fresh fish that the Bosphorus has to offer.

The city has gone through a lot of changes over the centuries, a fact exemplified by the many names it has had. All of its former titles, from Byzantium to Constantinople to the modern Istanbul, represent a different phase of its history, determined by the rising and falling of various empires that once claimed the city as their own.

Istanbul is now embarking on yet another chapter, with its hopes set on becoming a global city and hub of technological innovation in the near future. Over time, the city’s various rulers have left their mark, adding to the city’s story in the process – it is this rich history that will ensure that Istanbul remains a place that is coveted the world over for years to come.