Welcoming July housing sales figures which have overcome the gloomy impact of the coronavirus pandemic, the Turkish construction sector is hopeful for 2020 despite expecting a slowdown in the upward trend.
The July figures are “striking,” according to Mithat Yenigün, the head of the Turkish Contractors' Association (TMB).
Residential property sales in July hit an all-time monthly high with 229,357 units, a 124.3% year-on-year increase, the Turkish Statistical Institute (TurkStat) said.
Spurred by low-interest mortgages state lenders provided in June and July, the surge in figures is a relief for the companies in the sector, Yenigün underlined.
“The low rates also encourage people to mobilize their savings to buy houses while reviving the economy,” he told Anadolu Agency (AA).
However, as mortgage rates increased by end-July, the rise in sales will be lower in the coming months, he added. “I want this upward trend to continue, even if it will at a slower pace,” Yenigün said.
He opined that an annual rise of 45.5% in construction permits might be due to document renewals, not for proceeding with new construction.
"This is still a good sign for the economy with it meaning some builders lay the groundwork for future businesses," he said.
Echoing Yenigün's view, Ahmet Erkurtoğlu, the deputy head of the Contractors’ Association of Istanbul’s Anatolian Side (AYIDER), underlined that the promising figures, despite the pandemic, were driven by mortgage rates below 1%, which he called a "psychological limit."
Erkurtoğlu stressed the importance of the rise in July, as the summer season is generally stable for the construction sector.
He also underlined that interest in summer houses was another reason behind the uptick in figures.
“We may hit another record high number of housing sales by the end of this year,” Erkurtoğlu said.
Drawing on the drop in housing sales to foreign buyers, he said the coronavirus pandemic was the No. 1 culprit that has created drastic uncertainty worldwide.
Housing sales to foreigners fell 34.6% on an annual basis to 2,741 in July, according to the TurkStat data.
Erkurtoğlu said, however, Chinese buyers showed great interest in Turkish residential properties.
“The number of housing units Chinese citizens bought rose threefold in January-July,” he said, adding: “If the pandemic ends with the vaccine, housing sales to foreigners will reaccelerate.”
Nearly 1.35 million housing units were sold in the country in 2019, while up to 45,500 houses were bought by foreigners, seeing a 14.7% increase compared with the previous year.
2020 target axed by coronavirus
On the coronavirus’ impact on the Turkish construction sector, Yenigün said the sector will not achieve its target of $20 billion in 2020.
“We may make $10 billion to $12 billion this year when the data from the first six months is considered,” he stated, citing that the normalization from the coronavirus has not fueled the sector considerably as flights operate partially and logistics are still disrupted worldwide.
On the memorandum of understanding signed between Turkey and Libya last week to boost trade and economic ties, Yenigün said the move was welcomed by the Turkish construction companies.
“This is very important for us as there are projects which should be completed urgently especially in the field of education and health,” he said.
The memorandum aimed to lay the groundwork for clearing up pending issues between Turkish firms and Libyan employers and making new investments.
Yenigün said the deal will pave the way for Turkish builders to undertake new projects that will be announced by the Libyan government.
Al-Hadi al-Taher al-Juhaimi, Libya’s planning minister, said last week the country plans to begin 184 development projects worth $16 billion and invited Turkish firms to take part in these.
Yenigün said the sector also expects ongoing issues with Gulf countries to be resolved. “We took $3 billion less work from the Gulf countries due to political strain with Turkey,” he said.
He highlighted that Turkish builders may focus on Indonesia during the post-pandemic period, as the country plans to relocate its capital from Jakarta to the province of East Kalimantan.
“The Indonesian minister of public works invited us to take part in this great investment, but the presence of Japan, Korea and China is very strong,” Yenigün said.