Turkey has weathered a mix of pressures driven by the pandemic, rising costs, and material scarcities. The construction sector faced a phase of economic uncertainty but remains optimistic about growth, viewing current hurdles as catalysts for reforms and quicker adoption of changes already planned before the Ukraine war and the COVID-19 outbreak.
Since the onset of the pandemic, the construction industry has confronted unexpected obstacles. The health crisis and its social and economic fallout were followed by material shortages, higher prices, and broader inflation, among other pressures.
After sanitary restrictions eased, the sector returned to pre-pandemic growth in 2021. According to DoubleTrade consultancy, 51,400 new jobs were created and 58,001 million euros were invested, marking a 78% rise from 2020.
Nevertheless, 2021 saw intensified pressures on construction firms as raw material shortages, cost increases, and elevated energy and international shipping expenses took a toll. Direct construction costs reportedly rose by 23.5% in the prior year, based on ACR data. For 2022, Neinor Homes anticipated an 8% to 10% cost uplift, with price pressures persisting in part due to geopolitical events that affected energy and material markets.
Amid these external strains, the industry faced growing financial challenges that pushed firms to explore new funding channels, including broader lending sources. A higher concentration in the sector was anticipated as companies sought better access to credit.
The workforce shortage remained a key constraint. Wages rose for skilled professionals, reflecting heightened demand in the reform sector and the impact of aid programs supporting employees during the health crisis.
In response, contractors and builders adjusted to evolving consumer needs. Homeowners increasingly sought durable, sustainable, and efficient buildings with more outdoor space and higher overall quality. The pandemic era also accelerated shifts in office space design, with a trend toward greater flexibility and remote-friendly layouts. The logistics sector gained momentum as demand for distribution hubs grew in tandem with e-commerce.
Downward growth forecasts
Despite mounting difficulties, early 2022 saw a 5.44% uptick in construction activity compared with the same period a year earlier, based on data from the Supreme Council of Spanish Architect’s Colleges. Momentum waned in the year’s second quarter, slipping 3% from the first quarter. Nalanda’s business information platform reported 9,388 projects and a 5.6% rise in jobs in the first half of the year versus the same period in 2021.
Looking ahead, expectations for the second half of the year were tempered by inflation and rising interest rates. Euroconstruct lowered its mid-year growth forecast by 1.4% versus its end-2021 projection, which had anticipated a 2.3% annual uptick in sector activity.
Even as construction costs began to ease, a potential slowdown or pause could compress bids for 2023. That would ease some pressure on buyers while shifting risk toward lenders. As Ferran Font, head of Estudios de pisos com, noted, a persistent inflationary trend raises the risk of a housing market downturn, suggesting that real estate transactions may slow as borrowing capacity tightens and buyers become more cautious.
Industrialization, digitalization and big data
Against this backdrop, the future of construction leans on two growing trends: digitalization and big data. The acceleration of digitization during the pandemic enabled automated processes, better integration across company functions, and easier access to information.
Big data has proven essential in addressing industry pain points—from customer service to investment risk assessment—while enabling smarter decisions through the Internet of Things. These tools are already reshaping how projects are planned, managed, and executed across the sector.
— citation: DoubleTrade 2021; ACR; Neinor Homes; Nalanda; Euroconstruct—