Constructors warn of Roubini ‘perfect storm’

ANKARA- Anatolia News Agency

High buildings rise behind the newly constructed Mimar Sinan mosque opened to the public on July 20 on Istanbul’s Anatolian side. The close-by Ataköy neighborhood is becoming the new finance center of the city with banks companies planning to move there. AA photo

The construction sector, one of the engines of the Turkish economy along with automotives, has started signaling a significant slowdown in parallel with other industries, with a recent pessimistic report by the Turkish Contractors Association (TCA) pointing to a fall on a quarterly basis.

“The World and Turkey toward Roubini’s Perfect Storm” report released yesterday indicated the sector growth in the first quarter of 2012 stood at a mere 2.8 percent, which falls shorter than both the previous quarter and the same period in 2011.

This was in parallel with an overall slowdown in the first quarter of the year, the report said, noting that the country’s gross domestic product also grew 2.8 percent in the given period. Construction permits showed a slight increase in the first quarter of this year, although this was below the figures for the previous three quarters. Housing production was a little higher than overall construction output in the first three months of the year.

Less houses sold

When it comes to housing, the slowdown is even larger, despite a small drop in loan rates. Some 92,000 new or old houses were sold in the first quarter, which is 19.5 percent lower than the figure in the previous quarter. This is still 5.5 percent higher than the same period in 2011.

Both sale prices and rents of second hand houses went up by around 11 percent from last year, according to Gökhan Karahan, the marketing director at Remax Turkey, a leading consultant.
Because of the supply surplus, the prices and rental fees for houses on the outskirts of cities are dropping, while houses constructed by well-known companies are gaining, he told daily Hürriyet.
The shopping mall, office and hotel construction sectors were strong in the first quarter, according to the TCA report.

As business life increases in Istanbul, the largest city in the country, the need for qualified office buildings is also rising, said a recent Propin Property Investment Consultancy. The number of office districts in Istanbul is expected to increase from the current 12 to 15 with the participation of Kağıthane and Kartal along with Ataşehir, which is becoming the new finance center of the city on the Anatolian side.

According to Propin’s forecast, the total area of the A class offices in the city will soon increase to 4 million square meters from today’s 2.6 million. Some 350,000 square meters of office space will be added to the stocks this year, the report said.

Rents for A class offices in central business areas cost around $30 per square meter. However the figure goes up in more luxurious neighborhoods such as Taksim and Nişantaşı, reaching $42 in Levent.