Turkish real estate companies expect the building and property sector to grow by more than 10 percent this year, while up to four property firms will list on the stock market, the business association head said.
Turkey's economy, which suffered a financial crisis in 2001, is now enjoying strong growth and is attracting foreign investors. Haluk Sur, who heads the Association of Real Estate Investment Companies (GYODER), reckons the real estate and construction sector will outpace overall economic growth this year to become a more important chunk of the economy.
Sur, who is also chief executive of İhlas, one of 10 listed real estate investment trusts (REIT), said three or four more REITs will list on the stock market this year as part of a wider boom in new share sales.
"[Growth] may not be 20 percent but not less than 10," Sur told Reuters in an interview.
In recent years the real estate and construction sectors have made up about 10 percent of Gross National Product, which has been seen growing to YTL 539.9 billion ($381 billion according to government calculations).
That would be slower than the construction sector's exceptional 19.7 percent growth in the first nine months last year, outpacing 5.5 percent for the whole economy, as interest rates fell and the market suddenly picked up after years in the doldrums due to the financial crisis. In some parts of Istanbul, Turkey's largest city with a population of 12 million and 3 million homes, real estate prices rose as much as 150 to 200 percent last year, Sur said.
"[From now on] the price increase in the real estate market will be more meaningful, and may be 9 to 10 or 12 percent."
One of the reasons behind the boom is an increase in home ownership rates in Turkey as economic growth translates into higher spending power.
"In my opinion it may go up to 70 to 75 percent in the coming 10 years," said Sur, who also sees opportunities in possible public-private partnerships to redevelop Turkey's shanty towns and areas where housing is not resilient to earthquakes.
Economists expect lower borrowing rates -- currently at 13.5 percent -- and lower inflation after years of double-digit levels.
Turkey's candidacy to joint the European Union also is likely to help fuel foreign interest in construction and property, following the example of the EU's new Eastern European members, they say.
"Turkey has underdeveloped construction as a percentage of Gross Domestic Product. If you look at offices [per capita], it's tiny compared to EU countries," said Mark Robinson, head of research at CA IB International Markets.
"It's sustainable, because we've seen this downturn for the last four or five years. There's a lot of catch-up in Turkey," he added.
A new law allowing mortgages is awaiting final approval in Parliament and is likely to further drive the real estate sector.
But Ihlas's Sur did not expect radical changes soon, because the country first needs to firmly establish a secondary market to make mortgages secure, which could take a couple of years.
