With the growth in commercial housing projects all over the country and the boom in public tenders for major infrastructure projects, 2013 was a very bright year for the construction sector as…
With the growth in commercial housing projects all over the country and the boom in public tenders for major infrastructure projects, 2013 was a very bright year for the construction sector as “under construction” signs became increasingly visible on the streets throughout the year.
In addition to major projects, one of the most important developments in the sector was a change in zoning regulations that prevents the sale of properties without valid construction permits that became effective in June. The new construction law and its related legislation stated that a construction project that is not initiated within two years or not completed within five years from the date of the permit will be classified as an “unpermitted” project and expired permits will need to be renewed in order to either sell the property or finish the construction. According to Turkish lawyer Berk Çektir, “Construction projects that were started prior to a modification to zoning plans also fall within the scope of the new regulation, provided that the provisions applicable at the time of obtaining the permit for the first time have been taken into consideration.”
The tender for İstanbul’s third airport was among the most discussed topics of 2013 as it was among the world’s largest. The contract to build the city’s third airport was given to the Cengiz-Kolin-Limak-Mapa-Kalyon Consortium, a joint venture of Turkish companies, on May 4. The consortium will pay the government 22.1 billion euros. The construction of the bridge over the Bosporus Strait was inaugurated in late May of 2013 and is expected to be completed in two years. The project is the country’s second-largest build-operate-transfer (BOT) scheme to date. The bridge is estimated to cost $3 billion and the total cost could go as high as $6 billion when the construction of highways and other supporting infrastructure is included.
During 2013, projects to construct hospitals in major cities, high-speed train lines, highways and a hydroelectric power plant (HES) also gained momentum, not to mention commercial real estate projects.
However, the increase in poorly planned construction projects has also triggered a public reaction, as people have been increasing their voices regarding such projects throughout the year. Although it turned into a broad anti-government protest later on, the Taksim Gezi Park protests that began in İstanbul in May were sparked when a group of environmentalists gathered in the park to protest the government’s plans to build a replica of Topçu Barracks over the park as part of an urban redevelopment plan.
Public sector spending in the construction sector increased by 30 percent over the previous year and contributed significantly to the growth in the sector. Private sector construction spending, which had been narrowing for the previous six quarters, grew in the third quarter of 2013 at the rate of 7.5 percent and continued to grow in the last quarter as well, according to the Association of Turkish Building Material Producers (İMSAD). İMSAD predicts that the sector will close the year with 6 percent growth.
The Turkish builders that have major operations in 120 countries abroad have also contributed to the sector. Ministry of Economy data released in November showed that construction sector exports are expected to total $22 billion for 2013 and the sector’s exports experienced an approximate 25 percent increase in 2013 at over $10 billion.
A high ranking officer from Garanti Mortgage stated in recent remarks that 2013 was one of the best years for the housing sector, as housing sales would exceed one million by the end of the year and the increase in sales would be 5-6 percent for the year. According to Real Estate Investing Partners Association (GYODER) research done for November, housing prices increased by 14.75 percent in the country compared to same month in the previous year. Of all the houses purchased in November, 14.2 percent of them were completed construction, while 85.8 percent of them were in unfinished housing projects. Also in November, 7.8 percent of housing sales were made to foreigners.
A separate survey prepared by property research firm Knight Frank indicated that a number of key emerging markets recorded price growth of more than 10 percent — including Turkey at 12.5 percent — in the 12-month period ending Sept. 30, 2013 over the preceding year. Comments made by renowned economist Nouriel Roubini stating that housing markets have become overheated in emerging markets, including Turkey, stirred the market about a housing bubble. The experts that recently spoke with Today’s Zaman said that a housing bubble remains a distant possibility thanks to strong demand and low leverage risks to buyers while adding the restoration of risky buildings and the transformation of urban areas will continue to attract local and international real estate investors in the long term.
Construction worker deaths on the job have continued to be a serious problem for the sector. One in three worker deaths and work-related accidents in Turkey occurred in the construction sector due largely to unsafe working conditions. A total of 1,017 workers died in work-related accidents between January and October this year, government reports show. This figure was 867 for the entirety of 2012, suggesting that the situation may have become worse. Unlicensed builders and the large number of sub-contractors used in the sector are also contributing factors.
Labor and Social Security Ministry data reveals that the construction sector employs about 1.9 million people and accounts for 6 percent of national employment and serves 200 related sub-sectors. A survey done by an online employment site in Turkey, Yenibiris.com, indicated that the construction sector received the most job applications during the year. The number of job postings in the sector in 2013 increased by 15.8 percent year on year, taking up 9.18 percent of the total of all sectors and applications to those postings went up by 23.7 percent compared to previous year.
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