Gulf Construction Online - Roaring success for Eurasia’s rising tiger

Turkey Review

A panoramic view of Istanbul city with the Zorlu Center seen in the centre.

Roaring success for Eurasia’s rising tiger

Straddling across Europe and Asia, Turkey has impressed with its unhindered growth rate, recorded at 11 per cent, surpassing China. The vital signs of its construction market point at a promising future.

01 August 2011

DUBBED Eurasia’s rising tiger, Turkey is well on the path to sustained growth, given its current focus on infrastructure and real estate development, particularly with private sector investment.

The country registered an 11 per cent growth year-on-year in the first quarter of this year, outpacing China, the benchmark for the world’s boom economies. In fact, since Recep Tayyip Erdogan took over as Prime Minister in 2003 (newly re-elected), Turkey’s economy has not only recovered from the 2001 crash but has reached a position where the country now boasts the sixth strongest economy in Europe and the 17th largest in the world.

Business Monitor International (BMI) says it sees significant upside potential for Turkey, as the country’s infrastructure and construction market has strong domestic players and is buttressed by positive population and macro fundamentals.
Istanbul, for instance, is buzzing with construction activity with diverse world-class infrastructure and real estate development projects both under way and on the cards. Among the ambitious projects in the pipeline are what Erdogan calls “Canal Istanbul”, and a proposed third bridge linking Asia to Europe over the Bosphorus.

“Canal Istanbul” will be an unparalleled feat of engineering, according to Erdogan. “We are building the canal of the century, a project of such immense size that it can’t be compared to the Panama or Suez canals,” he said.

The canal connecting two seas near Istanbul in an effort to relieve the congested Bosphorus Strait will be built on the European side of the city. Measuring 50 km in length, with a width of 150 m and a depth of 25 m, it is designed to be large enough for supertankers to pass through. Connecting the Black Sea and the Marmara Sea, the canal is earmarked for completion by 2023, the year Turkey celebrates its centenary of the founding of the Turkish republic.

The proposed third bridge linking Asia to Europe over the Bosphorus – part of the $6.5-billion Northern Marmara Highway – has taken a crucial step closer with the Turkish government having invited bids to be submitted this month for the project. It will be located at the northern end of the Bosphorus, and is expected to ease congestion by diverting heavy commercial traffic to the far north artery and its connecting roads, skirting densely-populated areas now served by the First Bosphorus Bridge and the Fatih Sultan Mehmet Bridge in Istanbul.

Istanbul Sapphire ... recently completed.

As part of the 414-km thoroughfare with links to the existing Black Sea Coastal Highway, the third bridge will be built between Garipce in the European side of the city, and Poyraz in the Asian side. To be developed on a build-operate-transfer basis, the 1,275-m suspension bridge is slated for completion in 2015.

Another key infrastructure project is the Marmaray suburban rail upgrade project in Istanbul, which includes an immersed-tube tunnel, bored tunnels, cut-and-cover tunnels, at-grade structures and construction of three new underground stations, as well as renovation and upgrade of 37 surface stations – many of them historic. An upgrade of existing tracks will include a new third track on ground, new electrical and mechanical systems and procurement of modern railway vehicles. A joint venture of two Spanish contractors Obrascon Huarte Lain (OHL) and Dimetronic has emerged as the low bidder for the project with a $1.5-billion bid.

The project to upgrade the city’s 140-year-old suburban train lines will create an uninterrupted high-capacity commuter rail system of 76.3 km between the suburbs of Gebze on the Asian side and Halkalı on the European side. It will include a line running through the immersed tube tunnel currently being built under the Bosphorus Strait by a Turkish-Japanese consortium.

Among other developments, Turkey is planning to construct 100 new high-speed railway stations across the country. Construction will take place following the installation of a further seven high-speed rail lines connecting Turkish cities in addition to a first line connecting Ankara and Konya. The first three stations will be built in Ankara.

Another major infrastructure involves building what will be the world’s fourth-longest suspension bridge, which entails the construction of a 2,800-m-long steel suspension bridge over the Gulf of Izmit, located southeast of Istanbul. IHI and Itochu have clinched the $1.1-billion order for the project. Construction on the Izmit bridge is likely to start at the beginning of next year, with completion slated for 2015.

Real estate
A total of 2.9 million new housing units will be needed by 2015 to meet the projected demand created by the increase in the number of households, renovation requirements and urban transformation projects, according to a study by the Real Estate Investing Partners Association (GYODER). Noting that the Housing Development Administration of Turkey (Toki) will be building 500,000 new residences to meet the needs of low-income households in the near future, the study pointed out the demand for the remaining 2.4 million units will have to be met by the private sector – an enormous business potential both for domestic and foreign construction companies.

The country has been inviting foreign investment in the country’s real estate and tourism sector and has recently been received encouraging response. Among the latest GCC investors in the country is Saudi Arabia’s Binladin Group, which will invest initially $500 million in the Turkish real estate sector. The Saudi Binladin Group will launch a housing development project in Armutlu in the northwestern province of Yalova.

Local developers such as Zorlu Gayrimenkul (Zorlu Property Development and Investment) are also investing in a number of real estate projects. Zorlu Property is developing its flagship Zorlu Centre, a five-in-one project that is currently one of the biggest construction sites in Turkey and possibly in Europe (see separate article). The project is designed by a joint venture of Tabanlioglu Architecture and Emre Arolat Mimarlık.

Tabanlioglu also holds credit for designing Istanbul Sapphire, which is now Turkey’s tallest tower and the world’s 15th tallest. Inaugurated by the Turkish Prime Minister in March this year, the 261-m hi-technology tower boasts innovative architectural features such as the first-of-their-kind vertical gardens, indoor golf course and luxury homes.

Another major Tabanlioglu project completed recently is the Marmara Forum, a mega complex featuring two blocks, one incorporating a shopping mall and the other an office building. Covering a 104,417 sq m site in Istanbul, the shopping mall integrated with a hypermarket connects to the adjacent four-storey office block, through a huge open-air landscaped car-parking lot.

Conclusion
According to BMI’s revised forecasts, in 2012, Turkey’s infrastructure sector will overtake residential and non-residential construction in making the largest contribution to Turkey’s total construction industry value, accounting for 50.3 per cent of the total.

These infrastructure initiatives will be supported by an accelerating economy. The country, however, faces inflationary risks. Economists advise controlling a ballooning current-account deficit that is above eight per cent of gross domestic product and rising quickly – an imbalance seen as a sign of overheating.