Reports   Research

1/30/2018

TMB’s Construction Sector Analysis January 2018 (I)

"Indicators that the revitalization of demand which increased to some extent at certain months of year, lead to heightened concerns on the sustainability of this trend. It is of importance to continue supporting the sector because of the real estate stock, general cost increases in all fields as the result of foreign currency fluctuations and increase trend of house credit interest rates which are already above monthly 1%."

Union of Turkey Contractors (TMB) released January 2018 issue of Construction sector Analysis Report. In the report, it is noted that as of third quarter of 2017, general economy grew by 7.4%, construction sector 10.2%. ıt is also reported that as from second quarter of year, public expenditures replaced by investments in the growth, construction investments increased 13.3% in the first quarter of 2017, 22.5% in the second quarter of year, 12.0% in the third quarter of year. 

"Large scale infrastructure projects played important role in growth of the sector in the past period"

Reportedly, large scale infrastructure projects beside private sector investments played important role in growth of the sector in recent period. Major transportation projects like Osmangazi Bridge, commissioned in 2016 Yavuz Sultan Selim Bridge and Access Roads, Eurasian Tunnel, and 3.Airport and Çanakkale Bridge planned to be commissioned in the forthcoming period and integrated health campuses and hospital projects were all realized on Public-Private Partnership model by TMB member companies.

Reportedly, in the forthcoming period, public investments and urban development process expected to continue to support the growth of construction sector. On the other hand, the market conditions are underlined to be of importance in terms of infrastructure projects which require high financing. Shrinking envisaged to be experienced in the global liquidity conditions in the forthcoming period, increasing trend of geopolitical risks, high foreign currency Exchange rates and developments in terms of interest rates, all increase the risks involved in construction investments. 

"Concerns increasing on sustainability of revitalization of demands in real estate sales"

In TMB Report shows that under the impact of precautions taken in the past period, total house sales increased 10.1% on annual basis in the first nine months of year, Particularly in September, 29% increase experienced on annual basis. The most important reason of this increase is reduction of deed charges. Actually, as soon as the subject implementation ended, in the last quarter of 2017, real estate sales decreased 6.7%. The increase in house sales through the year is reported to be 5.1%, which is a limited increase.

Reportedly, indicators that the revitalization of demand which increased to some extent at certain months of year, lead to heightened concerns on the sustainability of this trend. Reportedly, increase of domestic inflation, interest rates and Exchange rates, expected decrease in spendable income may limit the demand in the forthcoming period. It is of importance to continue supporting the sector because of the real estate stock, general cost increases in all fields as the result of foreign currency fluctuations and increase trend of house credit interest rates which are already above monthly 1%.