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Due to the sharp rise of the US dollar after the Federal Reserve raised interest rates and the effects of the UK’s decision to exit the EU on global markets, coupled with regional conflicts and internal tensions such as the treacherous coup attempt on July 15 and terrorist attacks, Turkey’s economy tilted into a recession, despite its strong start in early 2016.
Nevertheless, the Turkish economy rebounded in the last quarter of the year, thanks to the measures taken by the monetary authority and Turkish Government.
Turkey is one of the 20 largest economies in the world. Mega projects such as Istanbul’s third airport, Istanbul Canal and Eurasia Tunnel are indicative of not only economic development, but also social and environmental development.
The real estate industry, which is significantly affected by fluctuations in the economy, also faltered due to the economic slowdown. However, the sector bounced back, thanks to recent stimulative measures and campaigns.
The construction industry is a key driver of Turkey’s economy. Our industry creates demand for more than 200 subsectors and construction output accounts for 30% of the country’s GNP.
Following the coup attempt on July 15, GYODER (Association of Real Estate and Real Estate Investment Companies) initiated a campaign under the slogan “Real Estate Sector Coalition for a Stronger Turkey” to boost economic activity. Subsequently, 49 real estate development companies, which are also GYODER members, were provided with the opportunity to offer their projects under a 10-year repayment plan with an interest rate of 0.7%. As a result, some 3 thousand homes and 400 office units were sold, generating revenue of TL 2.6 billion.
Buyers also enjoyed reductions in VAT and loan interest rates. As a result, residential sales picked up in August with total sales hitting a record high during the year, increasing from 1,289,000 units sold in 2015 to 1,341,453 units sold in 2016. Despite all these developments, home sales rose 4% over the previous year.
Boasting a strong corporate structure and a long history of success, Kuzu Group figures among the strongest players operating in the industry. Therefore, our Group was not affected by the fluctuations in the market. We continued our investment program and maintained steady growth in 2016.
Kuzu Group will continue to leverage the competitive strengths of Turkey’s construction sector in international markets and pursue its goal of “creating a leading Turkish contractor brand in the global construction industry.”
Kuzu Group currently ranks 141st among the world’s top international contractors and makes solid progress toward becoming one of the top 20 contracting companies worldwide.
In 2016, Kuzu Group focused its efforts on the construction and sale of the SeaPearl Ataköy Project, the only premium development project located directly on the coastline of Istanbul. As delivery dates neared, sales continued at a strong pace. As of year-end 2016, 45% of the residential units were sold, with 15% of these sales made to foreign buyers.
Kuzu Group signed an agreement with Jumeirah Group, a global hotel operator, for the operation of the 5-star hotel within the SeaPearl Ataköy Project, at a launch event held at Esma Sultan Mansion in April. The opening of the 202-room hotel and 62 residential units, located directly on the coastal strip, is scheduled for 2019. The hotel’s interior design will bear the signature of the renowned architect Khuan Chew/KCA International. The hotel facility will add value not only to Ataköy, but also to Istanbul with its unique architecture.
Meanwhile, the construction of Kumru Ankara and Kuzu Effect – the most prestigious residential projects in Ankara – continues on schedule. The Kuzu Effect Project, which is nominated for LEED certification, represents Kuzu Group’s environmental approach and symbolizes the Group’s sustainable growth objective.
As the first Turkish construction company operating in Iran, Kuzu Group has undertaken large-scale projects in this country since 2010 with the support of our government. Surpassing its competitors, Kuzu Group single-handedly won the contract to build the Maskan Mehr Project in Iran’s capital Tehran. Our Group continues construction on this large-scale housing project without complications. Meanwhile, the Parand Project in Iran is completed with 20,000 housing units delivered to their owners. Construction of the Pardis Project, which consists of 37,000 housing units, is currently underway. This project is the world’s largest social housing project awarded under a single contract.
Kuzu Group continues to create added value for the Turkish economy and the people, striving to bring prosperity to all segments of society. Fully aware of its responsibilities to society, our Group stands strong against economic fluctuations and political turmoil, as it works steadfastly to move Turkey forward. As a platinum member of the consortium formed by GYODER (Association of Real Estate and Real Estate Investment Companies) for the repair and renovation of the Grand National Assembly, which was bombarded during the coup attempt on July 15, Kuzu Group began repair work on damaged parts of the building. Under the slogan “The Nation Builds the Nation’s Parliament,” 32 companies joined the consortium and collected TL 50 million for repairs.
Kuzu Group aims to become one of the world’s top 20 contractors. To this end, the Group participates in international trade shows to further bolster its brand profile and recognition. In 2016, Kuzu Group showcased the SeaPearl Ataköy Project at the Cityscape Exhibition, held in Turkey for the first time on March 24 – 26, and at the Cityscape Dubai Exhibition in September. The Cityscape Dubai Exhibition was especially important for Kuzu Group to show that Turkey is an investable country and that our economy is stronger than ever.
The stimulative measures that will be taken in the coming period will likely revive the Turkish economy and the real estate sector while creating more value for Turkey.
Foreigners invests an average of USD 5 billion in real estate in Turkey yearly. We aim to increase this amount to USD 50 billion in five years. Considering sales to foreign buyers a source of export item income will help revitalize the real estate sector. Granting foreign investors resident status and citizenship will also help boost the market and significantly reduce Turkey’s current account deficit. Participation in trade shows, conducting PR activities, and implementing the needed regulatory changes will attract investors from the Gulf region, who are eager to invest in Turkey. We are sure that such efforts will help the real estate industry set new records in 2017.
As we confidently move forward on the path to sustainable growth, we derive our strength from our employees, customers and business partners. I would like to thank all our stakeholders for supporting us in our efforts to move Turkey forward.
Board Member and CEO