Turkish construction industry continues to expand
Published on 15/10/2014
Turkey's construction industry is continuing to expand at a rapid rate, with the sector proving resilient to the after-effects of the eurozone crisis.
That is the key finding of a new report by Research Moz entitled Construction in Turkey - Key Trends and Opportunities to 2018, which examines the recent growth in the sector and how it is prepared for significant expansion over the next four years.
According to the data, the Turkish construction industry increased at a compound annual growth rate of 12.6 per cent from 2009 to 2013, with the nation outperforming its neighbouring countries thanks to support from both private and public investors.
Growth drivers
A key driver of the growth has been residential and institutional construction projects, with government investment and private sector participation through public-private partnerships (PPPs) combining to catalyse new developments.
Spurred on by this success, industry growth is expected to continue over the forecast period from 2014 to 2018, as a result of both the government’s focus on developing physical and social infrastructure in the country, and an expected recovery in the global economy.
Overall, the industry is anticipated to post a forecast-period compound annual growth rate of 8.07 per cent.
Widespread expansion
The industrial construction market is also expected to expand over the forecast period, driven by the country’s growing manufacturing industry, which is identified as a vital pillar of the domestic economy.
This is supported by figures from ISPAT, which show that Turkey’s manufacturing industry has grown at a compound annual growth rate of 12 per cent since 2003, and reached TRY185.0 billion (US$103.0 billion) in 2012, with this trend set to continue in the year ahead.
Furthermore, according to the Economic Policy Research Foundation of Turkey, the government plans to increase the manufacturing industry’s share in the country’s GDP from 15.6 per cent in 2012 to 16.5 per cent in 2018 under the 10th development plan (2014–2018), which will support the growth of industrial construction over the forecast period.
New models
Another key finding concerns the impact of the build, operate and transfer (BOT) model, which supports the active participation of the private sector in public construction, and under which Turkey has recorded solid investment growth in infrastructure projects.
This also led to the Turkish government's announcement in 2013 that it is to construct the world’s largest airport in Istanbul, with an expected investment of around TRY13.2 billion (US$7.0 billion).
Overall, the outlook for the country's construction industry is one of positivity, with investment boosts and new developments set to sustain the sector to 2018 and beyond.