Real Estate & Construction

Rise to the Challenge


The construction sector posted year-on-year growth of 10.6% in 3Q2011, as the industry reached a volume of TL15 billion. On average, the sector grew by 11% over 2011, with the […]

The construction sector posted year-on-year growth of 10.6% in 3Q2011, as the industry reached a volume of TL15 billion. On average, the sector grew by 11% over 2011, with the total for projects abroad valued at $19.3 billion. The construction sector’s share in GDP has hovered above 3.5% since the late 1990s, and over the past two years, this figure has surged to some 5.8%.

Total public investments in 2011 rose by 9.7% compared to the previous year, with private investments registering 11.6% growth. In a report released by the Turkish Building Information Center, the number of houses sold in 3Q2011 slowed down by 5.2% compared to the second quarter. However, this still marked a 21.6% increase compared to 2010. The declining demand for housing can be attributed to the higher cost of financing in response to the crisis in Europe, which has affected mortgage rates and banking policies in Turkey.


Through a partnership with Emlak Konut REIT, Ege Yapı is building the Batışehir project in Istanbul. The project is expected to bring in $1 billion in revenues, with an initial investment of $800 million. As one of the largest projects in Europe, the complex will have residential areas, offices, restaurants, street shops, a hotel, and sports facilities, and is scheduled for completion by 2014. İnanç Kabadayı, President of Ege Yapı Group, attributed the prime location and reliability of the buildings as one of the main reasons for demand. “Projects like this are being promoted to alleviate inner-city congestion and urban infrastructure,” Kabadayı said in an interview with TBY. “These projects offer people life in a place with less traffic, more space for kids, safety, and no electricity and water cuts.”

In addition to enjoying areas with less traffic and higher safety standards, new projects must be earthquake proof, as stipulated by the government’s push to protect the city from natural disaster damage. Hundreds of thousands of houses and residential buildings must be renewed or knocked down to become earthquake safe in the next 20 years, with many transformations already happening at a faster pace. In July 2012, the government launched its plan to begin issuing the majority of urban transformation projects as part of a two-year plan, with citizens able to object within 15 days of a warning. The cities undergoing the most serious transformations are Istanbul, Bursa, and Izmir, which sit along the earthquake-prone fault lines of the country. As a result, “people want to be sure that they are living in solid, safe, and modern homes,” Ege Yapı’s Kabadayı concluded.

Demand for safer homes has also triggered the creation of the Istanbloom project, spearheaded by engineers, scientists, and the government. This project aims to regenerate and renew Istanbul, employing the use of green technology for construction to maximize the health and longevity of new buildings. The project is set for completion in late 2013, with construction companies such as Esin Yapı already selling more than 40% of its built units. “We want to sell the large majority of the buildings before completing the project,” Metin Esin, Chairman of Esin Yapı, told TBY.

However, as Ant Yapı Board Member Mehmet Okay noted to TBY, “the same project or plan may not work everywhere.” With its focus on urban development, the construction company has modified its unit layouts and development to meet the needs of certain neighborhoods in the city center. For example, luxury development Port Alaçatı includes a marina, canals, houses, gardens, boutique hotels, and restaurants.


The price of building materials rose by 5% in 2011, with companies in the cement, glass, steel and roofing sectors offering promising returns and diving into new projects in 2012. Although domestic cement consumption is expected to decline in 2012, cement production has shown continued growth.

Forecasts for 2013 also illustrate an increased volume in cement sales and production. Sales figures for cement have increased from 38 million tons in 2008 to an estimated 53 million tons in 2012, demonstrating the sector’s fast-paced growth and heavy demand. Cement exports are also expected to edge up in 2012, according to YF Securities, and recover sharply by 2013. The primary source of demand for the building material is the construction of infrastructure and housing, both domestically and abroad.

Four main companies are expected to offer lucrative yields in 2012, with Mardin Çimento potentially generating 10%. Çimsa (9.7%), Adana Çimento (9.4%), and Akçansa (5.3%) are also offering generous dividends for investments. Top export locations during the 2010-2011 period were the Middle East, North Africa, and Central and Southern Africa, which comprised a total of 62% of the total cement products leaving the country.

Seeing huge potential in the construction sector, flat glass manufacturers are eager to take advantage of domestic and international demand. Generally applied to commercial buildings and the automotive sector, flat glass “has become an important construction item that enhances the level of comfort with a number of functions,” Ahmet Kırman, Vice-Chairman of the Board of Directors & CEO of Åžişecam, told TBY.

Åžişecam currently employs 18,000 workers and allocates 1% of its turnover to R&D activities, actively contributing to the development of technologically advanced glass products that provide its customers with more sustainable and efficient alternatives.

Trakya Cam is another flat glass producer in the local industry, and was the first company to utilize float technology, among the countries of Eastern Europe, the Middle East, and North Africa. The company’s turnover reached $700 million in FY2010.

In terms of construction steel, Turkey is advancing dramatically in the production of rebar, or reinforcing bar. Turkey’s rebar and round bar exports rose by 33.4% year-on-year compared to July 2011, with the amount exceeding 42,000 tons in May 2012. Revenue generated over the same period totaled $483.6 million, and steel exports comprised 11% of the total goods leaving the country in 2011. In May 2012, the top export destinations for rebar steel were Iraq, Saudi Arabia, and Egypt. This industry is expected to support Turkey as it aims to lower its current account deficit and improve its trade balance.

In Turkey for more than 16 years, Onduline Ayrasya has found ways to adapt its offering to the Turkish market. With the help of French technology, the development of roofing for Turkish homes has been rewarding for the company. “People are quite open to innovation, and as a result we are now the number one company in Turkey, accounting for 18%-20% of the roofs in the country,” Burhan Karahan, Eurasia CEO & General Manager, Onduline Avrasya, told TBY. The company also attributes its success to its ability to modify French building materials to suit the local market.


Turkish constructors have seized every opportunity to expand abroad, in a sector of the country’s economy worth $206 billion. Country-by-country, Turkmenistan topped the list with a 17.7% share of activity, followed by Russia with 17.4%, and Iraq with 14.6%. Turkish contractors currently have 6,500 projects abroad in 94 countries, according to a report issued by the Turkish Contractors’ Association.

With 37 subsidiaries, Enka is Turkey’s leading constructor, focused on a diverse range of construction activities in the sectors of power generation, air transportation, petroleum, and road infrastructure. Since its foundation in Turkey in 1957, the company has completed more than 400 projects on four continents, posting annual revenues of TL7.82 billion in 2009. In January 2012, the company signed an agreement with Iraq to build a natural gas power plant with four gas units, each with a production capacity of 125 MW.

Rönesans is Turkey’s second-largest construction company, with a presence in 10 countries, 15,000 employees, and a turnover of ‚¬1 billion. The company targets energy-rich countries with cultural ties to Turkey. The company is also very active in Iraq, following Enka’s lead by signing a deal with a local partner to build an electric power plant capable of 1,000 MW in capacity. Since January 2012, Turkish contractors have taken on over $3 billion worth of projects in Turkmenistan, dominating the industry in that country and offering mutual benefits by building schools, roads, hospitals, infrastructure, drilling platforms, pipelines, textile factories, hotels, and entertainment facilities. Turkish firms Polimeks, Norsel, GAP Construction, and Soyak have recently won bids, contributing to the 500 Turkish-led projects already underway in the country, worth $32 billion.

Other firms involved in projects abroad include Cevahir, Ant Yapı, and MetagInşaat. Cevahir, famous for its landmark Istanbul Cevahir Shopping Center in Istanbul, won one of the first tenders in Libya. It is currently building a 400-unit luxury apartment complex with a total area of 245,000 sqm in Macedonia, and has been invited to work on projects in Iran. Metag İnşaat has grown from its humble beginnings in Turkey to completing work in more than seven countries worth $1.5 billion. The company has also created 4,000 jobs in these countries. As long as European demand for construction wanes, Turkish companies will continue to seek opportunities in new regions, while building materials’ companies will also expand into new sectors and regions. With the support of hefty investments from both private and public sector actors, the construction industry will continue meeting demand and taking on new challenges.

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