Table of Contents
This report discusses the market conditions in the construction sector in Turkey, with an analysis of trends through Q3 2013 and projections through 2014. The report also includes corporate news for firms including, among others, Emlak REIT, a consortium of Turkish firm Enka and U.S. engineering company Bechtel, Japan's Mitsubishi Heavy Industries, and Akkuyu NGS.
The Turkish construction sector's growth rate accelerated slightly to 8.7% y/y in Q3 2013 after the sector grew 7.6% y/y in the second quarter of last year. This brought the 9M expansion rate to 7.4% y/y. The construction sector expanded by a dismal 0.6% in 2012 after growing 11.5% the previous year. Turkey's GDP growth rate registered at 4.4% in Q3, from 4.3% in Q2. The government had predicted an annual growth rate of 5% but the economy is likely to have grown around 4% in 2013. For 2014, the government forecasts growth of 4%, but this seems too optimistic given the uncertainties regarding the local and global economy. International institutions' (European Commission, IMF, and World Bank) estimates range between 2.5% and 3.5%.
The real estate investment trusts' association (GYODER) estimates that Turkey's construction sector has expanded 6%-6.5% in 2013 and it may grow around 6% in 2014. The main challenge facing the construction industry in 2014 is slower growth, political turmoil, weak consumer confidence, and the resulting weak domestic demand. The government is likely to increase spending ahead of the local elections in March 2014 and presidential election in August. Some construction companies will benefit from extra government spending in infrastructure but overall the construction industry is likely to have a difficult year in 2014.
oIn corporate news, Emlak Real Estate Investment Trust sold a total of 543 units in January in several real estate projects, generating a revenue of TRY 217mn (EUR 73mn), excluding VAT.
oA consortium composed of Turkish firm Enka and U.S. engineering company Bechtel has won a tender to build a 65-kilometre motorway link Pristina with Skopje.
oAkkuyu NGS, a JV which will build Turkey's first nuclear power plant in Akkuyu town of Mersin province, is in talks with more than 30 contractors for the construction of the 4,800MW plant, including local companies Enka, Tekfen, Gama, Nurol, Ronesans, Limak, Kolin, Cengiz, Aksa, and Tepe Insaat.
oJapan's Mitsubishi Heavy Industries (MHI) is to establish a new business unit, the Turkey Nuclear IPP Development Department, to step up its involvement in the Sinop nuclear power plant.
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