Construction in Turkey – Key Trends and Opportunities to 2025 (Q2 2021)

The Turkish construction industry was in a weakened state prior to the COVID-19-induced slowdown, having contracted sharply in 2019, owing to the steep depreciation in the lira and high interest rates. With construction costs and the cost of borrowing rising sharply, the viability of projects was eroded, and contractors had to bring projects to a halt. Following eight consecutive quarterly contractions, industry output increased in Q3 2020, with value-add rising by 4.7% year on year (YoY). This turned out to be a false dawn, however, as the construction industry contracted by 12.5% YoY in Q4, and only edged up by 2.8% in Q1 2021. Rising interest rates, coupled with the imposition of lockdown measures in response to the outbreak of COVID-19, have contributed to the industry’s weakness. The key interest rate has been increased to 19% (as of June 2021), which is up from 8.25% in May 2020. The industry has also been affected by delays in project implementation and the reallocation of part of the government’s budget toward its fight against the pandemic. Nevertheless, with an aim to support economic growth, the government announced a new economic reform package in March 2021, which includes plans to establish a stronger fiscal framework, which will allow it to respond more effectively in future crises. The government also announced plans to cut business rates to support firms suffering from the economic impact of the virus outbreak.

The industry is expected to recover and grow over the forecast period, driven by investment in renewable energy, education, and transport infrastructure. However, reflecting the recent period of weakness, construction output is not expected to return to 2017 levels until 2024, when significant capital inflows supported a boom in investment. The government plans to build 2,000km of high-speed rail lines from Kars in northeast Turkey to Edirne in the westernmost part of the country, this project is being partially financed by the Chinese Government. The Turkish government also aims to increase the share of renewable energy in electricity generation to 38.8% by 2023, compared to 32.5% in 2018. Spurred on by these investments, construction output is forecast by GlobalData to grow by 3.8% in 2021, and retain growth momentum over the forecast period, with average annual growth of 5.5% between 2022-2025. There are downside risks, however – construction costs have soared in recent months, with the latest index on construction costs showing a year-on-year (Y-o-Y) increase of 35.5% in April, with materials costs rising by 43.1% and labor costs rising by 20.6%. This reflects the increase in domestic demand, and for materials, the surge in costs is also reflective of wider global supply imbalances and ongoing disruptions caused by COVID-19. There are also risks associated with macroeconomic instability, given high inflation and a potential currency crisis.

This report provides detailed market analysis, information, and insights into the Turkish construction industry, including –

– The Turkish construction industry's growth prospects by market, project type and construction activity

– Critical insight into the impact of industry trends and issues, as well as an analysis of key risks and opportunities in the Turkish construction industry

– Analysis of the mega-project pipeline, focusing on development stages and participants, in addition to listings of major projects in the pipeline.

Scope

This report provides a comprehensive analysis of the construction industry in Turkey. It provides –

– Historical (2016-2020) and forecast (2021-2025) valuations of the construction industry in Turkey, featuring details of key growth drivers.

– Segmentation by sector (commercial, industrial, infrastructure, energy and utilities, institutional and residential) and by sub-sector

– Analysis of the mega-project pipeline, including breakdowns by development stage across all sectors, and projected spending on projects in the existing pipeline.

– Listings of major projects, in addition to details of leading contractors and consultants

Reasons to buy

– Identify and evaluate market opportunities using GlobalData's standardized valuation and forecasting methodologies.

– Assess market growth potential at a micro-level with over 600 time-series data forecasts.

– Understand the latest industry and market trends.

– Formulate and validate strategy using GlobalData's critical and actionable insight.

– Assess business risks, including cost, regulatory and competitive pressures.

– Evaluate competitive risk and success factors.

Table of Contents

Table of Contents

1 Executive Summary

2 Construction Industry: At-a-Glance

3 Context

3.1 Economic Performance

3.2 Political Environment and Policy

3.3 Demographics

3.4 COVID-19 Status

3.5 Risk Profile

4 Construction Outlook

4.1 All Construction

– Outlook

– Latest news and developments

– Construction Projects Momentum Index

4.2 Commercial Construction

– Outlook

– Project analytics

– Latest news and developments

4.3 Industrial Construction

– Outlook

– Project analytics

– Latest news and developments

4.4 Infrastructure Construction

– Outlook

– Project analytics

– Latest news and developments

4.5 Energy and Utilities Construction

– Outlook

– Project analytics

– Latest news and developments

4.6 Institutional Construction

– Outlook

– Project analytics

– Latest news and developments

4.7 Residential Construction

– Outlook

– Project analytics

– Latest news and developments

5 Key Industry Participants

5.1 Contractors

5.2 Consultants

6 Construction Market Data

7 Appendix

7.1 What is this Report About?

7.2 Definitions

7.3 CRI Methodology

7.4 GlobalData Construction

Contact Us

List of Tables

List of Tables

Table 1: Construction Industry Key Data

Table 2: Turkey, Key Economic Indicators

Table 3: Turkey, Commercial Construction Output by Project Type (Real % Change), 2016-2025

Table 4: Turkey, Top Commercial Construction Projects by Value

Table 5: Turkey, Industrial Construction Output by Project Type (Real % Change), 2016-2025

Table 6: Turkey, Top Industrial Construction Projects by Value

Table 7: Turkey, Infrastructure Construction Output by Project Type (Real % Change), 2016-2025

Table 8: Turkey, Top Infrastructure Construction Projects by Value

Table 9: Turkey, Energy and Utilities Construction Output by Project Type (Real % Change), 2016-2025

Table 10: Turkey, Top Energy and Utilities Construction Projects by Value

Table 11: Turkey, Institutional Construction Output by Project Type (Real % Change), 2016-2025

Table 12: Turkey, Top Institutional Construction Projects by Value

Table 13: Turkey, Residential Construction Output by Project Type (Real % Change), 2016-2025

Table 14: Turkey, Top Residential Construction Projects by Value

Table 15: Turkey, Key Contractors

Table 16: Turkey, Key Consultants

Table 17: Turkey, Construction Output Value (Real, US$ Million)

Table 18: Turkey, Construction Output Value (Nominal, TRY Billion)

Table 19: GlobalData Construction Market Definitions

Table 20: Risk Dimensions

Table 21: Ratings, Scores and Definitions

List of Figures

List of Figures

Figure 1: Eastern Europe, Construction Output (Real % Change), 2020 and 2021

Figure 2: Turkey, Construction Projects Pipeline by Sector (US$ Billion)

Figure 3: Turkey, COVID-19 Confirmed Cases

Figure 4: Turkey, Risk Summary

Figure 5: Turkey, Risk Regional Comparison

Figure 6: Turkey, Construction Output Value (Real, US$ Billion, 2017 Prices and Exchange Rate), 2016-2025

Figure 7: Turkey, Construction Output Value, by Sector (Real, US$ Million), 2016-2025

Figure 8: Turkey, Construction Value-Add (TRY Million, 2009 Chain Linked Volume Measures), % Change YoY

Figure 9: Turkey, Construction Turnover Index, Seasonal and Calendar Adjusted (2015=100), % Change YoY

Figure 10: Turkey, Building Activity Index and Construction Confidence Index, Seasonally Adjusted, % Change YoY

Figure 11: Turkey, Gross Fixed Capital Formation (TRY Million, 2009 Chain Linked Volume Measures), % Change YoY

Figure 12: Turkey, Number of People Employed in The Construction Industry, In Thousands, % Change YoY

Figure 13: Turkey, Construction Projects Momentum Index

Figure 14: Eastern Europe, Construction Projects Momentum Index

Figure 15: Turkey, Commercial Construction Output by Project Type (Real, US$ Million), 2016-2025

Figure 16: Turkey, Commercial Construction Projects Pipeline, Value by Stage (US$ Million)

Figure 17: Turkey, Value of Permits Approved for The Construction of Commercial Buildings, In TRY Million

Figure 18: Turkey, Total Foreign Visitors Arrivals, In Thousands

Figure 19: Turkey, Services Value-Add (TRY Million, 2009 Chain Linked Volume Measures), % Change YoY

Figure 20: Turkey, Retail Sales Volume Index (2015=100), % Change YoY

Figure 21: Turkey, Industrial Construction Output by Project Type (Real, US$ Million), 2016-2025

Figure 22: Turkey, Industrial Construction Projects Pipeline, Value by Stage (US$ Million)

Figure 23: Turkey, Manufacturing Value-Add (TRY Million, 2009 Chain Linked Volume Measures), % Change YoY

Figure 24: Turkey, Capacity Utilization Rate in The Manufacturing Industry, in %

Figure 25: Turkey, Industrial and Manufacturing Production Indices, Seasonally and Calendar Adjusted (2015=100)

Figure 26: Turkey, Total Export (US$ Million), % Change YoY

Figure 27: Turkey, Infrastructure Construction Output by Project Type (Real, US$ Million), 2016-2025

Figure 28: Turkey, Infrastructure Construction Projects Pipeline, Value by Stage (US$ Million)

Figure 29: Turkey, Energy and Utilities Construction Output by Project Type (Real, US$ Million), 2016-2025

Figure 30: Turkey, Energy and Utilities Construction Projects Pipeline, Value by Stage (US$ Million)

Figure 31: Turkey, Value-Add of Information and Communication Activities, In TRY Million, 2009 Chain Linked Volume Measures, % Change YoY

Figure 32: Turkey, Energy Production Index (2015=100), % Change YoY

Figure 33: Turkey, Institutional Construction Output by Project Type (Real, US$ Million), 2016-2025

Figure 34: Turkey, Institutional Construction Projects Pipeline, Value by Stage (US$ Million)

Figure 35: Turkey, Construction Permits Approved for Public Entertainment, Education, Hospital or Institutional Care Buildings, in TRY Million, % Change YoY

Figure 36: Turkey, Value-Add of Public Administration, Education, Human Health and Social Work Activities, In TRY Million, 2009 Chain Linked Volume Measures, % Change YoY

Figure 37: Turkey, Residential Construction Output by Project Type (Real, US$ Million), 2016-2025

Figure 38: Turkey, Residential Construction Projects Pipeline, Value by Stage (US$ Million)

Figure 39: Turkey, Real Estate Activities Value-Add, In TRY Million, 2009 Chain Linked Volume Measures, % Change YoY

Figure 40: Turkey, Value of Permits Issued for Residential Buildings, In TRY Million, % Change YoY

Figure 41: Turkey, House Sales, % Change YoY

Figure 42: Turkey, Residential Property Price Index (RPPI) (2017=100), % Change YoY

Figure 43: Turkey, Headquarters of Key Contractors (% of Total Project Pipeline)

Figure 44: Turkey, Headquarters of Key Consultants (% of Total Project Pipeline)

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