Renewed Istanbul

042. Renewed Istanbul infrastructure boom (3): Urban Development and Real Estate Projects

Without much ado in greater Istanbul a series of multi-billion dollar infrastructural projects is being implemented putting Istanbul on the first spot when it comes to new infrastructure in Europe. Some projects are controversial (third airport, the canal), others too long delayed (the expansion of the metro network), but one thing is for sure: their impact on the future face and functioning of Istanbul will be huge.

My first blog on this subject was about the construction of Istanbul’s third airport (scheduled to become the world’s largest) and the to be renewed Salıpazarı-Karaköy Cruise Port with an expansion from ½ mln to 3 mln cruise tourists annually.

My second blog  on construction was about the third bridge over the Bosporus (consisting of eight lanes and two railway lines) and the Eurasia Tunnel, which makes Asia and Europe join under the seabed.

This third blog in my series about Istanbul’s infrastructure boom is about Turkey’s rapid urban development. Which major real estate projects are taking place in – and around – Istanbul? And what is the influence of Turkey’s unpreceded hunger for construction on its economy and social development?

Some impressive numbers and examples:

Construction is booming in Turkey.

Since 2008, 39 new skyscrapers have been completed in Turkey while almost 50 are currently still under construction. In the year 2000, Turkey had only 46 malls while nowadays it has over 300. And the following three years more than 50 new four and five star hotels will be constructed and completed, adding almost 40,000 new beds to the hotel market.

Besides that, large residential areas are being developed. ‘Vadistanbul’, for example, plans to build 3,000 residential units, a 55,000 square meter shopping center, 48,000 square meters of hotels, a private connection to Istanbul’s metro system and a waterway from the Bosporus making its way through the area, while ‘Tema Istanbul’ will construct almost 4,000 homes, offices and hotels on 330,000 square meter of land.

Construction: good for development (?)…

Recently, Martin Raiser (World Bank Country Director for Turkey) wrote an interesting blog on the subject of Turkey’s rapid urbanization over the past three decades.

Despite all the discussion and protests going on, Raiser states that Turkey’s growing cities are good for development. ‘Turkey has been able to combine rapid urbanization with sustained increases in living standards in ways that are far from self-evident.’

With Istanbul, Bursa, Izmir and Ankara among the 10 most dynamic cities worldwide (according to a recent Brookings report), according to Raiser, Turkey’s urbanization ‘has been a remarkable success’.

There are two policy choices that contributed greatly to the successful urbanization story of Turkey, Raiser writes. Firstly the 1984 metropolitan municipality law, which consolidated city planning and the provision of public services. Secondly the investments which the central government made in transport infrastructure, starting in the 1930’s.

or driver of ‘bubble economy’?

Economic analyst and columnist Jesse Colombo couldn’t disagree more with Martin Raiser. In his blog on Forbes.com he warns for Turkey’s ‘Bubble Economy’.

Turkish housing prices have soared by more than 50% since 2009, the number of ultra-wealthy individuals in Turkey has increased and the country depends significantly on foreign capital inflows, Colombo writes.

‘Turkey’s frothy, low interest rate environment of the past half-decade had led to the inflation of property bubbles in major urban centers. (…) Turkey’s ballooning mortgage bubble helped to finance a 78.8 % increase in property sales in 2013, which has led to a bubble in residential construction activity in turn.’

According to Colombo, construction plays a key role in Turkey’s bubble. In the New York Times experts too, express their worries over Istanbul’s building boom.  Others counter these claims and point to less than 10% of GDP being in mortgage loans, while in the Netherlands that figure is approximately 100%.

The future

As always it is hard to predict what will happen, especially  in the future. It doesn’t look like however that  the implementation of multi-billion dollar infrastructure and real estate projects is going to end anytime soon. We see a city that will continue to grow to well above 20 million people and with a strong need for more construction.

As in other cities there are conflicting interests, with nature and social fabric coming under pressure. Yes,  there will be the occasional bust, but as said, we will see a lot more construction in the coming years in Istanbul. And what about historic Istanbul? Hopefully this world heritage site will be strong enough to survive any construction!

Leave a Reply

Your email address will not be published. Required fields are marked *