Building and construction to Turkey

(Last updated: 26 Jul 2007)

Trends and opportunities

The market

Following the textile and agriculture sectors, construction is the third leading sector in Turkey and offers real business and investment opportunities for Australian companies. To date, the total value of investment (mainly in infrastructure projects) has almost reached US$50 billion. Investments in Turkey’s construction sector consist of:

• residential constructions – 60 per cent
• non-residential constructions – 15 per cent
• civil engineering investments – 25 per cent

Building materials constitute approximately 10 per cent of the total construction industry.

The sector employs more than 1.5 million people (6.9 per cent of total employment) and accounts for eight per cent of Turkey’s gross national product (GNP).

A current issue in the Turkish construction sector is the total annual burden of unfinished projects, the value estimated at US$15 billion. These projects include hydroelectric power plants, motorways, cultural centres, industrial investments, airports, and tunnels.
The current unfinished projects are expected to be completed by 2012 at the earliest.

A feature of the Turkish building and construction sector is that the mortgage market for retail housing is underdeveloped. This has traditionally hampered demand for building products.

Eighty per cent of building material is locally produced including cement, building steel, timber, bricks, PVC, polyethylene, glass, ceramic tiles, and sanitary ware.

There is good potential for Australian building products, in particular:

• Those of more sophisticated technology
• ‘Finished’ products of high quality
• Interior ‘finishing’ materials
• Building systems
• Specialist building products imported in component form and assembled in country

Turkey is estimated is estimated to have 120,000 units of construction machinery, owned by state institutions and private contractors. The equipment is used both in Turkey and abroad. Most of this equipment is estimated to be over 15 years old. The market for construction equipment is valued around A$2 billion, with imports accounting for 85 per cent of the market.

Opportunities

Although Turkey’s construction industry is mostly self-sufficient, opportunities in specialty markets such as accessories, flooring, prefabricated wall panels, paint raw materials, insulations and plumbing fixtures do exist for Australian suppliers.

The breakdown of potential building products and services is as follows:

• Specialised and quality flooring materials
• Technologically innovative wall and fascia panels
• Building systems – low cost housing
• Building systems – earthquake resistant
• Aluminium profiles
• Heat insulation systems
• Water insulation systems
• Building chemicals and adhesives
• Roofing and siding materials
• DIY products

Construction services required by Turkish contractors include know-how and/or technology transfer, technical support, management consulting and manufacturing under license.

Competitive environment

Building and construction sector imports have grown 20 per cent over the past few years and the main suppliers include Germany, Italy, France, Bulgaria, Russia and the USA. Some products imported into Turkey are re-exported into Central Asian countries, Russia, the Commonwealth of Independent State (CIS) countries, the Middle East and the Balkans.

The major international construction machinery companies have all targeted Turkey as a key market, with forecast growth of 15 per cent per year.

Tariffs, regulations and customs

Turkey, in forming a customs union with the European Union (EU), has adopted (most of) the EU import regime, which involves the application of external customs tariff for third country imports and zero duty rates for non-agricultural products of the EU. As part of the same agreement Turkey has adopted the 12-digit Harmonised System of classification. In general, a value added tax (VAT) of 18 per cent is applied on most products whether locally produced or imported.

Import regulations are implemented by the Undersecretariat of Prime Ministry and Foreign Trade.

Duty rates applicable to building products include:

Product	HTN Customs No	Duties (%)
Marble	2515	Free
Granite	2516	Free
Cement	2523	1.7
Pigments	3206	6.5
Paints (in non-aqueous)	3208	6.5
Paints (in aqueous)	3909	6.5
Vinyl flooring and wall coatings	3918	8.9
Bathtubs, washbasins	3922	6.5
Doors, windows, plastic frames	3925	6.5
Wood siding and flooring	4409	Free
Windows and frames of wood	4418.20	3.0
Doors and frames of wood	4418.10	3.0
Textile floor coverings	5403	10.4
Floor and wall coverings applied for textile backing	5904	10.4
Ceramic building bricks flooring	6904	2.0
Roofing tiles of ceramic	6905	Free
Unglazed ceramic flag, wall tiles	6907	5.0
Glazed ceramic flag paving	6908	7.0
Ceramic sinks, wash basins	6910	7.0
Glass	7003	4.4
Paving blocks, slabs, bricks	7016	8.0
Insulation materials	7019	7.0
Iron and steel in long and flat form	7208	22.5
Structures and parts of structural iron and steel	7308	1.6
Aluminium structures and parts	7610	7.0
Prefabricated buildings	9406	2.7

Industry standards

After the 1999 major earthquakes the Turkish Government introduced the Building Control Decree with an implementing regulation that established specially licensed private inspection companies.

In accordance with this decree, all buildings – except for the ones constructed under the State Tender Law – are subject to the control of building inspection companies. These companies operate with permission from the High Committee for Building Inspection and are exclusively engaged in the building inspection business.

The Turkish Government has discretionary authority to grant a percentage preference to domestic companies on public construction projects. However, some large infrastructure projects (US$15 million plus) including, dams, power plants, highways and railways are tendered for international companies, usually with local partners. All projects with foreign credit guarantees allocated by the Turkish Government are open to foreign construction companies.

Turkish Treasury guarantees for new projects have been significantly reduced in order to meet strict fiscal goals under Turkey’s disinflation program and the Standby Agreement with the International Monetary Fund.

Marketing your products and services

Australian exporters are encouraged to enter the building and construction market via appointments of competent local agents. Attending and showing at major trade exhibitions and construction fairs is another recommended method for entering the market. 

Internationally, Turkish construction companies are very active in Russia and the Commonwealth of Independent States (CIS) countries (11 former Soviet Republics), Central Asia, Europe and the Middle East. Thirty per cent of Turkish companies have a business presence in the CIS and serve as excellent partners for Australian exporters wanting to pursue opportunities in Turkey and regional markets.

In general, Turkish construction companies are suitable for partnership because they deliver:

• Projects to deadline  
• Quality service
• Competitively priced labour and materials

Distribution channels

Services in the Turkish construction industry are sourced internationally for large-scale projects – domestic or abroad. Services for smaller-scale projects are sourced locally or are available in-house.

The main channel for distributing building products in Turkey is through a professional network of wholesalers and industrial suppliers which supply industry professionals. In order to succeed via this channel, Australian suppliers will need a presence to sell products using one or more of the following methods:

• Appointing a distribution partner to handle importing and customer liaison
• Finding a fulfilment company to warehouse and ship to customers, while managing from Australia
• Setting up an office in Turkey
• Sending staff to Turkey to represent the company
• Sharing distribution with another Australian company
• Undertaking a joint venture with a Turkish company
• Manufacturing products in Turkey

The concept of hardware stores specialising in building materials is relatively new in Turkey. At present, Bauhaus (Germany) has a well-established presence, tending to distribute products that are sold directly to DIY end-users.

Most products that are of interest to contractors are primarily sold through agents or distributors or via regional dealers located in Turkey’s major cities.

Transport

Turkey has a fairly well established railway system, both internally and linking to neighbouring countries. The Turkish cities of Ankara, Istanbul, Izmir, and Bursa all have underground railway systems.

Turkey has several international airports servicing major cities including:

• Esenboga International Airport: Ankara (35km north of the city)
• Ataturk International Airport: Istanbul (24km west of the city)
• Sabiha Gökçen International Airport: Istanbul (40km east of the city)
• Adnan Menderes International Airport: Izmir (18km south of the city)

There are also international airports servicing the cities of Adana, Antalys, Dalaman, and Trabzon.

Turkish Airlines is the national carrier.

Turkey’s major ports include Antalya, Istanbul, Izmir, Marmaris and Mersin. There are a number of ferry services with routes between Turkish coastal cities, and countries bordering the Mediterranean, Black and Aegean Seas.

Links and industry contacts

Building and construction related resources

Directory Turkey (construction) – www.buildturkey.com

The major Turkish construction companies include: 

Akfen Group – www.akfen.com.tr
Alarko Group of Companies ­– www.alarko.com.tr
Baytur Construction and Contracting Co – www.baytur.com
Enka Construction and Industry Co Inc – www.enka.com
Oyak Construction Co Inc – www.oyak.com.tr
STFA Construction Co Inc – www.stfa.com.tr
Tekfen Construction and Installation Co Inc – www.tekfen.com.tr
Tepe Construction Industry Co Inc – www.tepe.com.tr
Yuksel Construction Co Inc – www.yukselinsaat.com.tr

Government, business and trade resources for Turkey

Banking regulation and supervision agency – www.bddk.org.tr
Banks Association of Turkey – www.tbb.org.tr
Business Guide Turkey – www.turkindex.com
Istanbul Stock Exchange – www.ise.org
Telerehber – www.telerehber.com/construc.htm
Turkey Business Center – http://business.wec-net.com.tr

The Istanbul Chamber of Commerce – www.tr-ito.com
Resadiye Caddesi
No. 3 Eminonu Istanbul
Tel: (90 212) 528 5828 or 511 4150
Fax: (90 212) 513 1565 or 520 1656
Email: bilgi@tr-ito.com

Turkey State Institute of Statistics (SIS) – www.die.gov.tr
Necati Bey Caddesi No 114
06580
Yucetepe – Ankara
Tel: (90 312) 417 6440
Fax: (90 312) 425 3387 or 418 1182

Service providers

Financial

PricewaterhouseCoopers
Suleyman Seba Cad.
Besiktas Plaza
B Blok, No:92
Akaretler Besiktas
Tel: (90 212) 326 6060
Fax: (90 212) 326 6050

Deloitte and Touche Turkey
Istanbul General Management:
Buyukdere Cad.
Yapi Kredi Plaza B Blok, Kat 5
80620 Levent
Istanbul
Tel: (90 212) 283 1585
Fax: (90 212) 283 1593

Ankara office:
Iran Cad. 33/4
06700 Gaziosmanpasa
Ankara
Tel: (90 312) 427 6235
Fax: (90 312) 427 6202

Legal

Bircanoglu and Bircanoglu – www.bircanoglu.com
Inonu Caddesi No 69
Isik Ap. Kat:2 D:4
Gumussuyu Istanbul 80090
Tel: (90 212) 292 0952
Fax: (90 212) 292 1180
Email: counsel@bircanoglu.com

SariIbrahimoglu Law Office ­– www.sariibrahimoglu.com
Kizkulesi Sokak 14/1
06700 GOP
Ankara
Tel: (90 312) 447 4013 or 447 5307-98
(90 212) 217 2726 or 217 3573
Fax: (90 312) 447 4564
(90 212) 217 4281
Email: infor@sslawoff.com
Also has an office in Istanbul

Kilic Law Office
Hasircibasi Cad.
Kismet Ap.
No:30/1 Kadikoy
Istanbul
Tel: (90 216) 336 6549
Fax: (90 216) 336 6550
Email: kiliclawoffice@ttnet.net.tr

Logistics

Turkish Airlines – www.turkishairlines.com

International Transporters Association (Uluslararasi Nakliye Dernegi) (UND) – www.und.org.tr
Nispetiye Caddesi Seheryildizi Sokak No 10
80630 Etiler Istanbul
Tel: (90 212) 359 2600/pbx
Fax: (90 212) 359 2626
Email: info@und.org.tr

Media

Istanbul Stock Exchange – www.ise.org
Dunya Online – www.dunyagazetesi.com.tr

Australian resources

Turkish Embassy
60 Mugga Way
Red Hill ACT 2603
Tel: (02) 6295 0227
Fax: (02) 6239 6592

Turkish Consulate-General – Sydney
66 Ocean Street
Woollahra NSW 2025
Tel: (02) 9328 1155
Fax: (02) 9362 4533

Turkish Consulate-General ­– Melbourne
Level 8, 24 Albert Road
South Melbourne VIC 3205
PO Box 323 South Melbourne VIC 3205
Tel: (03) 9696 6046
Fax: (03) 9696 6104