Turkish constructing and real estate market is considered one of the most promising markets in the world. Turkey has a unique location between Europe, the Middle East, and Asia, which gives it a strategic importance among the international markets. However, the importance of the geographic location is not only Turkey’s strength; Turkey provides effective services with international standards, high credibility, and a wide range of experiences and knowledge.
For this reason, Turkey has been a global destination, offering great opportunities for real estate investors and construction companies all around the world.
The real estate and construction section has witnessed a veritable boom in Turkey, in which it accounts for approximately $4.6 billion in 2017, or in other words, 8-9% of the gross domestic products (GDP), employing 2 million people.
The leading international industry magazine has published in 2017 a list of “The World’s Top 250 International Contractors” includes 46 Turkish contracting companies, which makes it one of the largest countries in the world in terms of construction and real estate sector. Turkish contracting companies are located in 120 countries, competing with high-quality services, and challenging projects in all the fields of the construction industry.
A budget of $400 billion is set by the Urban Renewal and Development initiative, which is responsible for 7.5 million housing units, gives the private sector a great opportunity to contribute largely in the construction sector. In 2017, the number of sold houses increased to 1.4 million units, especially after the law of abolishment of the reciprocity in 2012, which leads to increase the real estate sales significantly in Turkey.
At the end of 2017, the number of office buildings in Istanbul alone is about 249 with 5.3 million square meters, while the gross leasable area is almost 1.2 million square meters, and it is expected to reach 7.1 million square meters in 2020. Furthermore, over 12.2 million square meters of the leasable area across 401 shopping centers, almost 114 of them in Istanbul, whereas the number of hotels is almost 3,641 hotels, 42.7% of them are 5-star hotels in 2016.
16 new city hospitals all around the country to defeat CONVID19
The ministry of health in Turkey recently announced the completion of nearly 16 new city hospitals all around the country. The new hospitals have big bed capacity marked among the largest hospitals in the world. Turkey has an ICU bed capacity of 43 beds per 100,000 people, while Germany and the USA have 29,2 and 34,7 beds per
100,000 people as shown in the below chart
Turkey`s main priority in year 2020 is fighting inflation
The Turkish treasury and finance minister Mr Albayrak said the Turkey`s priority in 2020 will be stabilizing the inflation rate to single digits.
The government will be mainly working on improving the production and quality of the Turkish goods and services.
Albayrak declared after the Turkish Statistical Institute announced that the country’s inflation rate last month was 11.84%.
With reference to the country’s export figures for 2019, Albayrak said that the government will continue to back producers and allocate resources for growth based on exports and value-added production.
Turkey’s exports rose 2.04% year-on-year to reach $180.46 billion in 2019, hitting a historic high, Trade Ministry data showed.
Turkey’s central bank decreased the interest rates
Turkey’s central bank came with a significant cut in the interest rates from 24% to 19.7% to boost economic activity in the country, this came after a meeting in the central bank chaired by the new president of the central bank Mr Murat Uysal, While experts primarily expected that this cut will increase the Turkish economy especially the real estate sector that is offering higher return on Investment from the banks.
New mega highway project between Istanbul and Izmir
The president of Turkey Recep Ordogan cut the ribbon on a new mega highway project between Istanbul and Izmir, a project that will decrease the travel time between the two cities by more than half, the trip used to take 8 hours now it will take around 4 hours, the road is 192 kilometres long and is considered an extension for Sultan Selim bridge that was established in 2016, the project will widely contribute in increasing the trade and facilitating the movement between the two cities.
Istanbul Airport, one of the largest airports in the world
Istanbul airport is one of the major current projects, which Turkey has inaugurated in 2018. According to Anadolu Agency, Istanbul airport is expected to launch 2000 flights daily to more than 350 destinations, hosting 90 million passengers by the end of 2018.
Furthermore, the completion of the airport is expected by the end of 2028, handling up to 200 million passengers.
The company, which has taken the responsibility of constructing the new airport, announced that in the beginning, Istanbul airport will be prepared with three runways, however, by 2018, it would be equipped with six runways. The location, where this project is launched, spreads over an area of 76.5 million square meters, with an estimated cost of $12 billion.
This investment initially is expected to achieve more than $30.65 billion at the end of 2018, not mention its importance of the strategic location with this huge capacity, which might be competitive over the other world’s top airports.
The Istanbul airport has won the first prize in the” Future projects and infrastructure” at The World Architectural Festival in Berlin for its outstanding design in 2016.
Also, it is worth mentioning that our projects in Başakşehir are so close to Istanbul airport in which you can be there in less than 20 minutes.
The recent Turkish lira crisis
Turkey has experienced a high depreciation in its currency, in which Turkish lira has lost more than 35% of its value this year, hitting the lowest record of 6.88 against the US dollar. This unprecedented lira’s depreciation began days after the announcement of US president Donald Trump about doubling the tariffs of steel and aluminum imports from Turkey.
In the recent 15 years, Turkey as a developing country has witnessed high levels of long and short run capital inflows including direct investments, which in turn push the economy toward high economic growth rates and promote the Turkish labor market throughout maintaining low unemployment rates.
However, this heavy loans dependence and the high deficit in the current account, which continues progressively since several years along with the latest political problems, put more pressure on the economy, causing higher inflation rate and weaker the Turkish lira.
Consequently, the Turkish government has taken several serious measures in which the finance minister of the Turkish government, Albayrak recently unveiled a new economic program aimed to stop the financial crisis, promising to tame the depreciation in Turkish lira.
Due to the coordination between both fiscal authority and the central bank, the decision of raising the interest rate regularly up to 24% has played the main role in recovering the economy, bringing the exchange rate back to stable levels.
Istanbul İkitelli City Hospital
Istanbul İkitelli City Hospital Project is the 3rd largest healthcare project in Turkey under Public Private Partnership agreement proposed by the Ministry of Health. This huge health project is located in Başakşehir, serving the European side of Istanbul with capacity of 2682 bed. It is expected to be completed in 2020 with area of 1.000.000 m2 which is very huge.
The City hospital project is surrounded with many public facilities such as Yavuz Sultan Selim Bridge, TEM access roads, and the planned subway route which provide the residents of Istanbul and its neighboring provinces with an easy access to the project.
Istanbul İkitelli City Hospital Project will provide health services for 60.000 visitors per day, employing almost 9500 workers; doctors, nurses and administrative employees.
The Istanbul İkitelli City Hospital involved Main Hospital with 2,682 beds, Physical Therapy and Rehabilitation Hospital with 200 beds, and Psychiatric Hospital with 128 beds.
The main hospital includes 6 buildings with a shared core building, the hospitals are:
-General Hospital with a bed capacity of 469
-Cardiovascular Diseases Hospital with a bed capacity of 327
-Neurology and Orthopedics Hospital with a bed capacity of 311
-Children’s Hospital with a bed capacity of 521
-Gynecology Hospital with a bed capacity of 359
-Oncology Hospital with a bed capacity of 367
Yavuz Sultan Selim Bridge
Yavuz Sultan Selim Bridge has become one of the most iconic infrastructure projects in Turkey, linking between the European and Asian sides of Istanbul which is one of the most important transit in Turkey.
Yavuz Sultan Selim Bridge is one of the tallest bridges in the world with length of 2,164 meters, and one of the world’s widest suspension bridges with width of 58,4 meters. The bridge is located near the Black Sea entrance between the European and Asian sides, which called the Third Bosphorus Bridge.
It is built for both rail and motor vehicle transit, carrying eight motorway lanes and two railway line in each direction, and it is expected to serve over 270,000 vehicles daily for both directions with crossing fees of 3 $ for cars and 15 $ for trucks.
It was opened officially in August 2016 in a huge ceremony, which was attained by the Turkish President Recep Tayyip Erdoğan and many Presidents and Prime Minsters of the neighboring countries.
The bridge is constructed by Turkish company İçtaş and the Italian company Astaldi, under budget of 4.5 billion TRY, which is about 2.5 billion USD. Yavuz Sultan Selim Bridge is designed by the Swiss engineer Jeaand and the French structural engineer Michel Virlogeux from T-ingénierie, involving two years of design studies and two years of works around the clock seven days a week to end it.
Moreover, the officials have declared that the bridge will reduce the traffic congestion in Istanbul, declining the fuel costs and saving people time. In terms of the project’s economic contribution, its construction accounts for 6 % of output, employing 2 million people.
Real Estate Report 2012-2019
The Turkish real estate sector has grown significantly in recent years thanks to many effective reasons. Implementing the law of Abolishment of Reciprocity in 2012, which allows foreigners to buy properties, has an important role in increasing the foreign demand on the Turkish real estates. Furthermore, the tax cuts, which is related to the housing sector also has encouraged investments in the housing market till 2018 the real estate market faced a recession which pushed the Turkish goverment to take 6 major actions to recover the real estate market in Turkey
-The central bank Dropped the bank interest rates from 24% to 14% and still decreasing.
-The U.S. dollar/Turkish lira exchange rate became constate at 5.6/5.7 rate after reaching 7 TL last year.
-The private and state banks provide housing loans with around 0.8 percent and 1 percent interest rates, which is very good to revive the construction sector.
-The demand for houses became much better compared to the rates 1-1.5 years ago.
-The country eased the citizenship conditions for foreigners last year by reducing real estate worth limit to $250,000, which increased the foreign demand by 19%
-Turkey’s contractors are pursuing significant projects in African countries, Qatar, Russia, and the Turkic republics.
In the recent ten years, the residential market has witnessed a high growth arises from the population growth and the effect of rural-urban migration. Istanbul, Ankara, Bursa, and Izmir are considered primary markets, which account for the highest demand in Turkey. The demand for the residential sector is determined by many factors such as price, location, and size.
In 2017, the number of housing units exceeded 32 million; Istanbul alone has the biggest share, which is 5.4 million housing units. Since the law of abolishment of reciprocity entered into force in 2012, residential demand has increased to 12.5%. With the recent depreciation in Turkish lira, the central bank of Turkey has followed tightening procedures, which reflect a significant rise in mortgage interest rate, which suppressed 36% after it, was within the range of 11% to 17% during the period of 2012-2017.
Due to the high population and the important location in Istanbul, its share of house sales accounts for 18% in 2017. Following, Ankara, Izmir, Antalya, and Bursa with shares 11%, 6%, 5%, and 4% respectively.
Turkey becomes one of the best developing countries, which provides a suitable environment for business. Companies in different fields such as, financial services, IT, construction and media have taken place all over the country, particularly Istanbul, which is considered the economic capital of Turkey. Turkey receives firms from over 90 countries around the world.
Location is one of the most important determinants of the demand of the office market. Having an office close to the metro station is considered a big advantage for companies and their staff. Furthermore, prestigious office buildings, which equipped with facilities such as, restaurants, sport clubs and cultural facilities, alongside the physical attributes and size also, can play a key role in attracting firms for their workplaces.
In 2017, the grade A office stock in Istanbul exceeded 249 office buildings spread over 5.3 million square meters with the growth of 12% since 2010. In terms of the prime rent of office, since 2009, it was within a stable range of $40-$45 per square meter for a month up to the beginning of 2016. However, the prime rent started to decline due to many reasons, a high construction growth, a decrease in global demand in Turkey since 2015, and the recent depreciation of Turkish lira against the dollar hitting the level of $30 per sq. m/month at the end of 2017.
The Turkish retail market has increased dramatically over the recent decade. There are many reasons could explain this significant expanding in the retail market such as population growth, improvement in living conditions, tourism and high growth rate. Istanbul was the sixth most attractive retail market in Europe, according to JLL Cross Border retailer attractiveness index in 2016.
The gross leasable area spreads over 12.2 million sq.m in 2017, Istanbul has occupied almost 34.5% of total GLA. Moreover, the retail prime rent witnessed a significant decline from EUR 90 in 2016 to EUR 70 in 2017.
Hotel and tourism market has been affected negatively in the recent few years, due to many political and economic problems. However, Turkey proved its ability to attract passengers from different countries around the world, in which the number of passengers increased to 193 million with a growth of 11% compared to the previous year. In terms of the hotel market supply, Turkey has more than 3640 hotels, 5-star hotels make up 42.7% of the total hotels, while 4-star and 3-star hotels account for 24.8% and 12.6% of the hotel market in 2017.
The Turkish economy is one of the developing economies, which has witnessed an impressive economic development performance since 2000. Turkey has achieved a high and stable economic growth rate during the period between 2002 and 2017 in which it reached 7.4% in 2017, according to official data showed on March 29/2018.
The national poverty line for Turkey fell continuously from 13.3% in 2006 to 1.6% in 2015, which is considered a big achievement that Turkish people have never experienced before. Moreover, the Turkish economy attracted about $10.83 billion of net international direct investment with more than 5720 new foreign companies were established in 2017.
During the last decade, Turkey has adopted several regulations and laws according to European Union standards, opening to foreign trade agreements and developing public services and infrastructure, as well as establishing an advanced financial system. All of these adjustments enable Turkey to be an appropriate investment environment for both local and foreign investors.
Turkey is a founding member of the OECD and the G-20 major economies in which its economy becomes one of the world’s largest economies in the world.
Recently, Turkey has experienced hard years full of challenges and difficulties such as Syrian conflict and refugees’ crisis, failed military coup, and Turkish lira crisis, however, Turkey has proved its economy’s ability to overcome all the relative economic problems at the lowest costs. Additionally, the latest political election, which was a big success for government (AK Party) played a key role in enhancing the economic conditions and promoting the economic growth again.
The policies and measures, which Turkey has taken to tame the recent inflation in the country is a poof of the capacity of the government to confront any economic problem efficiently. Furthermore, Turkey could take advantage of the Turkish lira depreciation, in which Turkish lira becomes a competitive against other currencies such as Euro, which encourages higher domestic production due to the higher exporting, and increases the foreign demand on properties and constructing sector in Turkey.