ISTANBUL — Turkey’s construction sector has been the backbone of the country’s growth for the past two decades, but the sharp decline of the national currency has hit the sector hard amid soaring costs, industry professionals said.
The sector, which accounts for about six percent of the overall gross domestic product (GDP) and employs nearly 2 million people, was recovering from a currency crisis in 2018 before the fallout of the COVID-19 pandemic dragged it back into the troubled waters in late summer when the Turkish lira accentuated its decline against the U.S. dollar.
The lira has fallen as much as 45 percent in value against the greenback since the start of the year, with the losses concentrated in the last three months as the central bank gave consecutive interest rate cuts.
“We are in dire straits. The prices of building properties and imported raw materials have skyrocketed in the past few months because of the devaluation of the lira,” Engin Atay, a contractor based in the capital Ankara, told Xinhua.
“The depreciation is so significant that projects in big cities such as Istanbul or Ankara have come to a standstill. In the current situation, it is impossible to engage in new construction,” he said.
Over the last two decades, the construction sector has transformed the skyline of Istanbul, Turkey’s largest city of over 16 million, and other major cities.
However, the work has halted since September at numerous construction sites across Turkey as contractors staged a two-week protest against soaring cement prices.
“Material prices have gone through the roof. The price of cement, ready-mixed concrete, sand, and steel has increased on a weekly even daily basis. Our business is reeling from this currency turmoil,” Koray Sert, co-owner of a building materials company, told Xinhua.
“We import goods in euro and dollars. As the lira has declined strongly and transactions have nearly stopped, we do not know what to expect next,” he lamented.
Moreover, with the rising inflation of over 20 percent and living costs, Turks are now much less inclined to buy houses.
President Recep Tayyip Erdogan is betting on low-interest rates and cheap credits to boost the economy and growth amid currency volatility.
On Tuesday, Erdogan said during a televised interview that he expects a growth of about 10 percent for 2021 on the back of exports and tourism revenues.
Yet, the overall growth is not translating into better living standards for many households, and buying a house is now less affordable.
“We had a deal regarding an apartment we wanted to buy, and we got a bank loan. However, the owner of the flat broke the engagement and asked more money because, he said, of the lira crash,” Gamze Unal, a teacher from Ankara, told Xinhua.
Unal and her family finally abandoned their plan for a new house. “People may think the weakening of the lira affects only business, but in reality it impacts everyone,” she noted.