Understanding the Surge in Construction Costs in Turkey

Recent times have seen a notable increase in construction costs in Turkey, a trend that has impacted the real estate market significantly. This article delves into the various factors contributing to this rise, providing insights into the economic, material, and geopolitical elements at play.

Global Economic Influences

The global economy plays a crucial role in determining construction costs. Turkey, like many other countries, has been affected by global economic trends, including inflation rates and fluctuating exchange rates. The Turkish Lira has experienced notable depreciation against major currencies, which directly impacts the cost of imported construction materials and equipment. Additionally, global economic instability, partly due to ongoing geopolitical tensions and the aftermath of the COVID-19 pandemic, has led to increased prices in raw materials worldwide.

Rising Material Costs

A significant factor in the increased construction costs is the rising price of building materials. Steel, cement, and energy, essential components of construction, have seen a sharp increase in prices. The demand for these materials often outstrips supply, further driving up costs. Additionally, Turkey’s reliance on imports for certain key construction materials means that any global increase in these commodities’ prices directly affects the domestic market.

Labor Market Changes

The cost of labor in Turkey’s construction sector has also contributed to the overall increase in construction costs. With the industry facing a shortage of skilled labor, wages have risen. Moreover, there’s been an increase in the cost of living, prompting a demand for higher wages by the workforce. These factors combined have led to a higher cost of labor in construction projects.

Regulatory and Environmental Factors

Government regulations and environmental policies can also influence construction costs. Stricter regulations, aimed at ensuring safety and sustainability, often result in additional costs for construction companies. These may include investments in safer, more sustainable materials, adherence to environmental standards, and compliance with new building codes.