ISTANBUL'S SOARING CONSTRUCTION SECTOR
Prolonged expansion in the construction sector reaches a 10th consecutive quarter.
Turkey's construction industry is shining bright with a 10-quarter growth streak, thanks to a 7.3% yearly expansion in Q1 2025. Despite a slight slowdown from the previous quarter, this powerhouse surpassed the meager 2% GDP growth, according to the Association of Turkish Construction Material Producers (IMSAD).
While the brakes on the economy have barely been applied, reconstruction projects in earthquake-stricken areas, urban transformation, and various development projects are boosting the sector, IMSAD reported in its monthly update.
Construction spending has skyrocketed, too, jumping 41.8% to a whopping 1.85 trillion Turkish Liras in the opening quarter. Earthquake-related projects played a major role in this expansion, propelling the sector ahead.
The construction sector accounted for 6.2% of the country's GDP in Q1, up from 5.5% in the final quarter of 2024.
Meanwhile, real estate activities climbed 2.4% year-on-year in Q1, outpacing last quarter's 1.3% growth. This growth primarily reflects the latest GDP data, unveiled on May 30.
Some key indicators in IMSAD's report paint an optimistic future for the construction industry.
The existing construction activities index soared 3.2 points in May, while business confidence among construction companies shot up 3.6 points in the same month, IMSAD noted. Moreover, the index of new construction orders saw a 1.9-point increase during May.
Housing market sales went through the roof, up 56.6% year-on-year to over 118,000 units in April. April's figures followed a 5.1% annual increase in March, while sales soared 39.7% and 20.1% year-on-year in January and February, respectively.
From January to April, a remarkable 454,000 homes have been sold in Turkey, marking a robust 27.9% increase compared to the same period in 2024.
It's worth noting that Turkey's construction industry remains robust despite larger economic challenges, with high interest rates and inflation posing potential threats. Additionally, volatile geopolitical conditions could impact future investment decisions. Nevertheless, government spending, infrastructure projects, and reconstruction efforts continue to fuel this growth engine.
In the soaring construction sector of Istanbul, the industry's growth is not only attributed to domestic activities but also driven by significant finance influx, particularly in earthquake-related projects. The finance sector has played a pivotal role in the sector's 41.8% increase in construction spending, which reached 1.85 trillion Turkish Liras in Q1 2025.
