The report highlighted the growing demand for urban transformation, particularly in high earthquake-risk areas such as Istanbul, creating significant potential for the construction sector. It emphasized the urgent need for disaster-oriented urban transformation in provinces prone to earthquakes, as well as the ongoing demand for housing production driven by demographic factors across the country. However, the report acknowledged that there are challenges that need to be addressed. Additionally, the report noted that no growth was observed in non-residential activities within the construction sector.
The industry experienced the most rapid growth in the past 20 quarters
According to the report, the construction sector witnessed its fastest growth in the first quarter of the year, marking the highest increase in the past 20 quarters. This growth was primarily driven by the acceleration in reconstruction efforts following the earthquake. Furthermore, the construction sector accounted for 5.4 percent of the national income. However, despite the positive outlook, the sector still has a long way to catch up to the performance levels seen in previous years. The study highlighted the potential for the construction sector in the upcoming period, specifically in relation to the rising demand for urban transformation in high earthquake-risk cities like Istanbul. However, the overall expectations for the sector are limited due to challenges such as increasing cost burdens and difficulties in accessing finance.
Risks exist, expectation of additional price difference continues
The study highlighted concerns regarding the unexpectedly rising input costs burden in the construction sector, both globally and nationally, in recent years. Specifically, it mentioned that the rapid increase in the exchange rate and the tightening measures in monetary policy would lead to additional costs for housing producers and public contractors. These factors were evaluated as potential challenges that could further impact the cost structure and profitability of the construction industry. The study emphasized the expectation for the removal of bans by implementing a one-time registration amnesty for contracting companies involved in public projects. This would apply to those companies whose letters of guarantee were converted into cash due to the unresolved cost increase issue in the previous period. Additionally, the introduction of an additional price difference arrangement to cover the cost increases was also highlighted as a potential solution. These measures were seen as necessary steps to address the challenges faced by contracting companies and mitigate the impact of cost escalation in the construction sector.
The reconstruction activity is of massive scale
The study highlighted the emergence of new and challenging problems in the housing sector, particularly in relation to the devastating earthquakes experienced. It revealed that Turkey has an annual housing requirement of approximately 800-850 thousand units. The study emphasized the significance of the government's plan to construct around 600 thousand houses in the earthquake-prone areas as part of the initial phase. Furthermore, it underscored the importance of prioritizing the reconstruction of less-damaged structures. The study emphasized the need for the reconstruction of nearly 2 million houses in the region, including residential properties. Furthermore, sector representatives expressed difficulties in finding an adequate labor force to meet the demands of these reconstruction activities. The report also highlighted the urgency of disaster-oriented urban transformation in provinces with high earthquake risk. It emphasized the need for this crucial process to be initiated and completed promptly, without relying solely on citizen initiatives. The report emphasized the importance of state support in swiftly evacuating unsafe structures and conducting the transformation process. In addition to the pressing need for shelter across the country, the report underscored the significance of conducting reconstruction works in earthquake-prone areas in a systematic and controlled manner.
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