Urbanization stimulating expansion in Turkish construction industry

ANKARA - Anadolu Agency

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Urbanization, combined with the demand for higher quality buildings, is driving growth in Turkey’s construction industry, analysts have told state-run Anadolu Agency, amid speculation that the sector is a bubble set to burst.

Turkey’s population growth, which is happening at a faster rate in cities than in rural areas, will outpace that of its regional neighbors, boosting investment in commercial and residential real estate, Richard Marshall, an infrastructure analyst with BMI Research in London, said.

“The most recent statistics to come out of Turkey are the production and turnover indices for the construction industry. These show steady growth over the last year, a clear positive for the sector,” stated an analysis conducted by the ITE Group. 

 In 2014, the Turkish construction sector’s turnover increased by 4.6 percent over the previous year. In the last quarter of 2014, this rise continued as the turnover index improved by 0.9 percent compared to the third quarter, still slightly lower than the high point in the first three months.

The first quarter of 2015 is expected to see an even greater rise, according to the ITE analysis. Meanwhile, overall production rose by 3 percent in 2014, compared with 2013, according to statistics from the Turkish Statistical Institute (TÜİK).

“Urban transformation is gathering momentum in major cities, particularly in Istanbul,” industry analyst Cameron Deggin told Anadolu Agency. 

“This is giving rise to major facelifts in old historic town centers gone to disrepair such as Istanbul’s Gaziosmanpaşa, where the volume of urban transformation transactions is the highest,” he added.

Other Istanbul areas with these trends included Bomonti, Şişli, Kağıthane, Talimhane and certain parts of Fatih, Deggin said, adding that similar high profile projects are ongoing in all major cities across the country. 

“By the year 2020, urban transformation targets are set to have redeveloped up to 350,000 housing units,” Deggin predicted.

With around 70 percent of Turkey’s population living in cities, the need for both housing and major infrastructure projects in those areas is critical, ITE reported.