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Turkey, the world’s second largest contractor

Article - October 10, 2011
Local developers, infrastructure and construction firms, as well as producers of construction materials, are powering forward
Turkey has become increasingly popular as a second home location for British people. One major reason for this is the fact that its real estate has remained inexpensive despite the fact prices have dramatically risen in other parts of Europe.

In 2010, the number of second homebuyers rose in Turkey from 20,000 to 30,000, boosted by the large international real estate companies that have recently entered the market and which have created a mortgage system that has also contributed to expanding Turkey’s economy. Owing to this increase, the construction and real estate sectors are additionally rising in importance.

Turkey’s economy is dynamic and continually growing thanks to these sectors and it is home to a number of globally competitive companies, all of which currently do and will continue to serve as the foundation of Turkey in years to come. 

Alper Insaat, a construction company that has carried out projects in South America, the Middle East, Turkey and its neighbouring countries, is one of these companies. Alper Insaat has pursued other industries, but keeps its focus mainly in construction.

“Construction is such an important sector because, like in any country, it impacts every other sector in Turkey’s economy. Currently the annual demand for housing is about 150,000 and the number of houses being built in Istanbul is less than 30,000,” says Alper Ünsal, chairman of the board.

Mr Ünsal was a key contributor in the Kartal Project, the plan for a new, futuristic type of urban city environment that will be built in Istanbul. It is intended to be the world’s first fully green city. This project was named among the top projects ever to be created by the Istanbul Metropolitan Planning Centre. Although Mr Ünsal would like to expand into other sectors, construction is so fruitful at this time in Turkey – and is his company’s field of expertise – his intention for the moment is to continue growing in construction.  

“Our long-term plans are to expand into the energy sector, yet we would like to become as big as we can in the construction sector first. The feasibility studies on Istanbul’s demand for housing and business centres reveal that the sector is still promising to grow further,” Mr Ünsal explains. 

Nevertheless, while the construction industry is in high demand these days in Turkey, serving more than 400 different industries and accelerating other sectors, Mr Ünsal claims working in the industry is fulfilling in other ways, as well.

“Construction opens up many doors and helps companies give back and commit to the social responsibility they have,” he explains. “Another distinctive feature for us is that in every project we develop, we build part of a social area, such as cultural centres, small hospitals, parks, theatre halls, mosques, etc. All of this, of course, is a part of our social responsibility.”

Another company that benefits from the construction industry and helps the Turkish economy is Kardemir, a multi-faceted iron and steel firm. It was established in 1937 and is currently the only company that locally produces iron ore as a raw material.  

“Our competitors produce other products, but they work with scrap. The quality of the steel made from scrap is not as good as the steel made from iron ore, so the quality of our steel is unparalleled,” comments Fadil Demirel, general manager of Kardemir.

Kardemir also produces various articles of mining equipment and is the only producer of steel for rail production. Furthermore, there is no other rail producer in the Middle East or North Africa, giving more business and opportunities to Kardemir.

The company was privatised in 1995 and at this time, £126 million was invested to modernise and develop plants and to increase its force within the market. Kardemir consists of blast furnaces, steel plants, rolling mills, power plants, machinery factories, foundry plants, steel construction plants and a lime and oxygen plant. The company employs 5,000 workers and provides products for both the domestic and international markets. 

Rail production capacity is 450,000 tonnes per year and a new plant is being built with a 2.5-million-tonne capacity.

In addition to iron and steel, Kardemir is involved in a hydraulic energy project with 22.5 megawatts (MW) in capacity, which will be finished at the end of the year. They also have a 50MW energy project to produce energy from its own waste gas coming from its integrated plant. “We are going to collect waste gases and turn them into energy,” Mr Demirel explains. “We will get a return on our investment in just two and a half years.”

The main project Kardemir is involved in, however, is the building of its own harbour. 

“Our biggest project is our harbour project, which we are developing on our own. We have conducted a feasible study for the underground area and the bottom of the sea, working closely with the government. This project is very important for Turkey [and will be] completed in three years maximum.”
The Nata Group is another Turkish company that has immersed itself in numerous sectors. While operating in construction, infrastructure, real estate, investments, geothermal energy, mining and aviation, Namik Tanik, chairman of the board, has come a long way since launching his own company as a contractor at the age of 20.

“Currently we build roads, highways and bridges at home and abroad. We also started the mall construction business in 2000. We are presently building our third shopping mall and also designing our fourth and fifth projects. In 2008 we started our international projects with a 1,800-kilometre (1,118-mile) highway project in Turkmenistan. We managed to complete 90 double-lane suspension bridges. This made a total of 180 in 500 days,” Mr Tanik says.

The success of Nata Group very much depends on its fast pace, and the company considers the Nata Vegas, the most recent shopping mall under construction, to be its most prestigious project. The 200 square metre Nata Vegas will have been completed in just 15 months and will boast a zoo and a car park with space for 8,000 vehicles. 

The Nata Group believes that the construction sector is crucial to the development of Turkey, especially since it escaped relatively unscathed from the global financial crisis. In addition to opening up a huge number of jobs – Nata employs 4,000 people – over 500 different types of materials are needed for the sector, easily making this industry the locomotive of Turkey’s economy.

“Almost 95 per cent of the materials allocated to the domestic construction market are produced in Turkey,” explains Mr Tanik.

While construction may be the engine of growth now, Mr Tanik saw the importance of diversifying his company early on and immersed the company into other sectors of the Turkish economy. “We try to operate in areas where domestic and global needs are met. Our company has been growing in parallel with the Turkish economy. In addition to the activities mentioned, the production of cement and concrete pipes are the current major sectors that we are a part of,” Mr Tanik says. 

Aydiner Construction Co also believes in expanding its business into other sectors and demonstrates this through the abundance of services it offers which, in addition to construction, include energy, pump industry services, steel construction, tourism, agriculture, potable water, computer technologies, international mining and trade.   

“We have some buildings under construction, including hotels and three commercial buildings, which we have sold already,” explains Ömer A Aydiner, member of the board. “But Aydiner is mainly involved in water-related infrastructure. We do water transmission lines and distribution lines, hydroelectric power plants, reservoirs and dams, irrigation systems, sewage water and waste water treatment plants and pipelines, etc. We also used to build bridges and roads.” 

Aydiner Construction was one of the first companies to take a step toward investing in renewable energies when it was still unknown in what direction this sector was headed. “The first projects here were not easy – it was an adventure actually,” Mr Aydiner says. “Nobody, not even the government, knew what was going to happen.” 

The demand for energy in Turkey today is huge and the more the sector is developed, the easier it will become to develop new industries. Aydiner Construction is also working in wind energy, having already completed one plant that is in operation. Another two are being licenced and prepared for construction.

“The first one is about 30 megawatts, the second will be 30 megawatts and then the third will be 25 megawatts. We also have some other plants outside of Turkey, like the gas plant running in partnership with the Ankara Organised Industrial Trade Zone,” explains Mr Aydiner.

Mr Aydiner’s vision for the company is to always look ahead to see which industries are being expanded and to make sure his company is a part of that. “We have three major international lines: energy, tourism and industry. Construction is always going to be there, whether we are involved in energy, tourism and industry, or not. For that reason, we are looking for opportunities for operational partnerships in tourism and we are also looking into several energy projects all over the world. We are focusing on renewables mainly, but we are taking other sectors into account, as well,” Mr Aydiner says.

Another area where Aydiner Construction focuses its attention is in corporate social responsibility. It is currently undertaking a project through Ayen Enerji, engaging in a forestation plan in Kurthogazi to return a forest back to its natural state. The company also offers scholarships and builds schools and cultural centres.