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Turkey: Construction a great hope in 2016?

While official stats have yet to be released regarding 2015’s growth levels in the Turkish construction industry, the forecasts are looking good. Construction Global has reported that the industry is looking at an optimistic growth rate of 4.5%.

A positive outlook for the Turkish construction industry

Initial estimates placed construction growth at 4%. This would carry on the average rate of 3% that Turkey has experienced annually since 2012. As a caveat, this growth is based on purely domestic demand and does not include overseas projects or exports.

According to the British Chamber of Commerce Turkey (BCCT),  approximately 1.8 million employees work in the building sector and the entire industry constitutes 5.9% of Turkey’s GDP. Indeed, construction is one of the economy’s most important areas.

The industry sits behind food and beverages as the second largest section of Turkey’s national income. Food and beverage expenditures account for 20% of the total figure. Private construction investment and household consumption for houses constitutes 17% - demonstrating the huge value of the building industry to Turkey.

2015 did, however, show a slowdown in housing demand as developers sought to sell off existing stock rather than investing in new projects. Housing permits, for example, dropped from 820,000 units requested in 2014 to 620,000 units in 2015.

Despite this, a rise in house sales was noticeable in 2015. Data from the Turkish Statistical Institute (TÜIK) has revealed that 1.24 million homes were bought in Turkey in 2015 - an increase of 11% compared with the 1.165 million sold in 2014.

What is being built in Turkey in 2016?

It remains to be seen whether residential building developments will regain focus in 2016. However, a number of key infrastructure projects will either begin their initial planning stages over the next 12 months or see work on them accelerate.

Turkey is investing heavily in civic developments, and one such project is the Bilkent Integrated Healthcare Campus. Over $1.2 billion dollars of investment has been sunk into this project so far into creating what will be the biggest hospital in Europe. The groundbreaking ceremony was conducted in September 2013, and financial security for the 1,200,000 square metre development was secured in May 2015. Completion is slated for 2017.

Construction of Istanbul’s third airport is expected to accelerate in 2016 Binali Yildrim, Turkish Minister of Transport, Maritime Affairs and Communication, announced in February of the same year. Located close to Lake Terkos on the city’s European side, Istanbul’s new airport will be one of the world’s largest. Total costs are expected to reach in excess of $7 billion dollars once the airport is commissioned in 2018.

It was announced in December 2015 that the government will begin the tendering process for the Istanbul Canal in the first half of 2016. A canal linking the Black Sea and the Sea of Marmara through Thrace, routed through Istanbul, was first proposed by President, then Prime Minister, Erdogan in 2011 but work is only just beginning. Naval traffic congestion is expected to be alleviated by the $10 billion canal as between 150-160 vessels are expected to use it upon completion.

Another major infrastructure project that is of vital importance to Turkey, not just in terms of construction, but also in fostering improved trade links, will be the Turkish section of the Baku-Tbilisi-Kars railway. The BTK railway will link the country to Georgia and Azerbaijan, greatly improving trade in the area. 79 kilometres of track is required in the province of Kars in the north-east of the country

A bright future for Turkish construction?                                                                              

With major infrastructure plans in progress or kicking off, and an optimistic growth rate for 2015 forecast, it seems as though Turkey’s construction industry could enjoy a strong year in 2016. It might not be able to bear the brunt of the country’s economic needs solo but could well remain a strongly performing sector. 

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