Construction in Turkey - Key Trends and Opportunities to 2025 (Q3 2021)
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GlobalData is forecasting the Turkish construction industry to grow by 5.6% in real terms this year, up from the earlier estimate of 3.8%. This revision has been brought about due to the progress in the civil engineering construction sector in Q2 2021. According to the Turkish Statistical Institute (TurkStat), the country's construction turnover index in civil engineering construction grew by 12.7% on a quarter-on-quarter (Q-o-Q) basis in the second quarter of 2021; this was preceded by a decline of 5.5% quarter on quarter (QoQ) in Q1 2021. Moreover, on a year-on-year (Y-o-Y) basis, it increased by 19.3% in Q2 2021, while construction of utility projects increased by 55.5%, followed by the construction of buildings, which increased by 46.3% during the same period. However, the construction confidence index fell by 12.1% on a Q-o-Q basis in Q2 2021 - down from the growth rate of 2.5% in Q1, as a result of the third wave of infections. Moreover, the possible threat of a fourth wave could affect growth momentum in the construction industry, particularly if the government is forced to impose another lockdown.
The industry is expected to continue to recover and grow over the forecast period, driven by investment in renewable energy, education and transport infrastructure. 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 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 retain growth momentum over the forecast period, with average annual growth of 6% between 2022-2025. There are downside risks, however, as construction costs have soared in recent months, with the latest index on construction costs showing a Y-o-Y increase of 44.8% in July 2021, with materials costs rising by 56.4% and labor costs rising by 20.6%. This reflects the increase in domestic demand, while the surge in costs is also reflective of wider global supply imbalances and ongoing disruptions caused by Coronavirus (COVID-19). There are also risks associated with macroeconomic instability, given high inflation and a potential currency crisis.
GlobalData's Construction in Turkey - Key Trends and Opportunities to 2025 (Q3 2021) report provides detailed market analysis, information and insights into the Turkish construction industry, including -
This report provides a comprehensive analysis of the construction industry in Turkey. It provides -