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Investing in projects implemented by Turkish public or private construction companies: which is better?

19/01/2023 Investment in Turkey 83 Investing in projects implemented by Turkish public or private construction companies: which is better?

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Similar to many other countries in the world, Turkey has two primary divisions for its construction industry: the first is for government-related companies, and the second is for private-sector companies. Nonetheless, the projects in Turkey are very different from those in other countries. What exactly is the difference?

Government-run construction firms and private-sector firms differ significantly in a number of key ways. Some people could find these points to be advantageous, while others might find them to be disadvantageous. As a result, the Damasturk Real Estate Consulting team opted to elaborate on this topic for you so that your vision would be as clear and accurate as you would want to see it, dear investor.

We selected headlines in our article today that were specific to each area where government and private sector efforts converged. We will start the article by outlining the characteristics of construction companies in both the public and private sectors. The pros and cons of these companies' projects will next be explored. Finally, we will offer you our judgment on which sector company's projects are the best, and the final choice will be up to you.

Construction companies in Turkey: the government sector vs. the private sector

First: construction companies in the government sector

  • First and foremost, the number of construction enterprises in the government sector is relatively small, but their influence is significant, extending across Turkey and beyond. Keep in mind that we are discussing building businesses that are involved in presenting residential projects; the building businesses that cover areas other than residential projects are numerous and can have a global effect.
  • Companies in the government sector adopt the principle of submitting projects based on three forms, as follows:
    1. Providing land to certain building companies and managing the entire construction process from A to Z.
    2. Establishing projects for a certain group of people that are wholly run by these companies, especially for those with limited incomes and long-term delayed installments.
    3. Constructing luxury projects in key venues for all segments with extended installments.
  • The first and second forms are exclusive to these government companies, while the third is undoubtedly shared with the private sector, where luxury, medium, and ordinary projects can be constructed. The names that stood out among other companies belonged to two companies whose projects almost covered the whole breadth of Turkey! These businesses will be mentioned in the following paragraphs. 

Second: construction companies in the private sector

  • There are many private construction companies in Turkey, and they have recently competed on many points with companies in the government sector. These companies present their projects based on lands and tenders obtained in central locations in cities, and they are the ones who build from the ground up and deliver and follow up on all units in their projects. 
  • Private sector companies use the strategy of submitting projects based on the two forms listed below:
    1. Establishing luxury or ordinary projects in specific locations for all segments with medium installments.
    2. Establishing luxury or ordinary projects in specific locations for all segments but requiring direct cash payment.
  • Private company projects seldom have long-term installments; thus, the majority of these companies followed the principle of installment payments up until the start of project delivery, which means the maximum time is around three years. More details, however, will be covered in the following paragraphs.

Construction projects in Turkey: the government sector vs. the private sector

First: construction projects by the government sector

Anyone who has looked for real estate in Turkey has come across phrases like “apartments for sale in Istanbul with a government guarantee.” This phrase “government guarantee,” used by all real estate marketing firms to denote the fact that these projects were constructed by a public sector company, is seen as a benefit that real estate marketing companies may utilize to draw clients to them.

This is, in fact, a crucial component that is calculated for the public sector, so the concept of government guarantee is a participative idea to construct housing units made available to individuals desiring to purchase real estate in Istanbul, and all logistical and administrative work, as well as the decision-maker, are handled by the Turkish government. Additionally, the issue of monitoring the different phases of the construction processes is also handled by the Turkish government, which is the most distinctive about the projects constructed by the Turkish government, as we will discuss in detail as well.

Second: construction projects by the private sector

Construction projects in the private sector also may be associated with the phrase “government guarantee” in the event that these companies build projects on lands that belong to the government; otherwise, they are not associated with the government sector and are just private projects established by real estate development companies.

However, this does not imply that these private-sector construction projects are not worthwhile. Rather, some of them may outshine what public-sector construction projects have to offer, especially since some of these private construction companies are building projects outside of Turkey. Anyway, this will also be discussed under the pros and cons of each sector.

Advantages of construction projects in Turkey: the government sector vs. the private sector

First: advantages of construction projects in Turkey in the government sector

  • The legal guarantee for the projects established

After handing over the land to construction businesses, government-guaranteed companies entrust a complete team of legal consultants to deal with official and legal concerns. This team's purpose is to audit and thoroughly follow up on the licensing procedure and other regular issues from municipalities, the Tapu Department, and others. This means that all projects in which the government has a hand are completely legal, with no fraud or the like.

  • The follow-up of the construction process and the materials used

After the completion of all paperwork and other legal procedures, a team of engineers with all specializations will follow up on construction matters in all of their cases to guarantee that projects are completed in accordance with all pre-imposed and agreed-upon standards and requirements.

It is their responsibility to give complete supervision and direction for the use of conditional materials and tools as well. All of this is defined in contracts signed with the construction company in charge of the project.

  • The regular monitoring of the construction processes

Construction projects in the government sector are distinguished by the procedures that take place when the apartments are delivered and after the deliveries as well. The apartments are delivered with high professionalism, and we guarantee that all matters meet the previously outlined conditions and duties to any customer.

Moreover, the process does not end here but rather with the supervision of projects after completion and regular visits to ensure that all matters and others continue to be in the correct position.

  • The documenting of official contracts and ensuring their validity

This feature is no less important than what we mentioned previously since it is the guarantee of documenting sales contracts at the notary public and in the presence of representatives of government guarantee companies.

There are contracts with installments extend to 20 years, and the only guarantor in this case is these companies based on contracts submitted in the presence of the notary public, so they are the guarantors for the substitution of the sales contracts, which, after the end of the payment of installments or after the end of the construction projects, are submitted to the official Tapu document in front of government institutions.

  • The long installments and reasonable prices

Everyone seeks to buy apartments for sale in Turkey with a government guarantee, certainly because the government guarantee companies offer flexible and easy installment plans to their customers, some of which reach 20 years and with reasonable installments; in addition, the prices in these projects are reasonable and are offered based on the market prices in each region, and this is what enhances the purchase of these companies, which really seek to be a model for managing the affairs of citizens and others wishing to buy real estate in Turkey.

  • The vital places and areas with an investment future

Government-guaranteed companies have a correct and proven vision based on previous experiences, allowing them to select the best locations for future investment. Of course, all of this is based on plans in partnership with the Turkish government to direct housing to certain new areas or to rehabilitate a specific area. We saw areas where government-guaranteed companies were able to convert it from flat land to high-rise towers, such as Bahçeşehir and Başakşehir, so the future investment is definitely here in these projects.

Second: advantages of construction projects in Turkey in the private sector

  • Selecting central places in the heart of Turkish cities

This feature is ascribed to projects established by private companies since they constantly want to make a difference, distinguishing themselves from government projects as they acquire lands in the centers of cities such as Istanbul and build luxury projects on them, so that certain private companies have controlled a big proportion of areas in their totality through the construction of their own projects next to each other and have made a significant impact in some areas of Istanbul.

  • The luxurious finishes and high quality of the projects

This is yet another feature that distinguishes private construction projects. In general, these companies attempt to include the highest-quality finishes and the most cutting-edge technologies in their projects in order to differentiate their projects from what is available in the real estate market for government projects, because government projects typically offer average quality and standard finishes in light of the target segment in general in Turkey.

  • The prestigious services associated with private construction projects

Projects built by private companies usually aim to deliver high-luxury services in comparison to what government companies offer, and if you take a real estate tour, you will be able to see the true difference between the two since government projects offer mediocre services while private projects have the most up-to-date amenities like gyms, swimming pools, and other facilities of premium services.

  • The unified content in the projects of private construction companies

Private companies always support specialized forms for their projects, whether they are residential, commercial, or commercial centers. Government companies construct and provide all these forms.

Specialization is always advantageous, they say. For example, however, we find private companies that only construct office apartments and rely on this form for all of their projects. As a result, it constantly concentrates on investment sites, and it succeeds since it only provides this form.

Disadvantages of construction projects in Turkey: the government sector vs. the private sector

Disadvantages of construction projects in Turkey in the government sector

Through what we mentioned about the positives, the negatives were automatically clarified for each type of private or governmental company. The most important points that might be negative for some and not for others with regard to construction projects in the government sector are as follows:

  • Apartment finishes and cladding are often mediocre in government projects.
  • The services associated with projects are average and sometimes limited.
  • Not specializing in a specific project's content makes it somewhat less professional.
  • Transactions and papers related to them are somewhat lengthy due to the pressure of demand on government projects.

Disadvantages of construction projects in Turkey in the private sector

The private sector also has some drawbacks that some may perceive as advantages, as follows:

  • Payment plans and installments are not as flexible as those found in government projects and are only available for a maximum of four years. 
  • There is a significant weakness in punctuality and project delivery for private companies.
  • Real estate prices in private projects are somewhat higher than those in government projects.

The most important construction companies in Turkey in the government sector and the private sector

The best two construction project companies in Turkey in the government sector are:

  • EMLAK KONUT

Emlak Konut Company was created in 1953 to address the demands of housing and, with the assistance of the contemporary Turkish government, is a public joint stock company and is regarded as one of the major real estate investment funds in Turkey, owning a 50.6 percent share structure in the city of Istanbul. It is a significant and favorable number for Turkish nationals and anyone looking to purchase real estate in Turkey.

The company's skills should never be underestimated, as it has contributed to the formation of over 130,000 independent properties to this day, a huge number that multinational construction companies have not been able to accomplish. This company has constructed contemporary regions in the city of Istanbul, particularly Başakşehir in Kayaşehir, as well as Ispartakule in Bahçeşehir, the "City of Gardens."

  • TOKİ

It is an abbreviation for “Toplu Konut İdaresi,” which means the General Administration of Housing in English. On the orders of President Halil Turgut Özal, it was established in 1984. This company's budget is entirely distinct from the state treasury, yet it is legally owned by the Turkish government.

The principle of this company is the implementation of projects and residential buildings for low-income individuals, but it has grown significantly and now provides huge projects in Istanbul as well. This company's most valuable characteristic is its long-term installments, which often last more than ten years.

Among the best construction project companies in Turkey in the private sector, we mention:

  • İHLAS YAPI

It is one of the largest companies that provides family content to clients; the majority of the apartments built in this company's projects are of a complete family concept with professional services and very large spaces; some of İHLAS YAPI’s projects exceed what other construction companies offer. Its projects have greatly expanded in Bahçeşehir and Beylikdüzü.

  • BABACAN HOLDİNG

BABACAN, which was founded in 2002, is considered one of the best construction companies in Turkey. It relies on the construction of residential and commercial projects. It also has interests in energy and logistics. Its name shone in the recent period when establishing a series of various Babacan projects throughout the city of Istanbul, and it relies more on hotel apartments and business offices beside the main roads in city centers.

  • ARTAŞ

It is a famous company with over thirty years of experience in the Turkish construction sector and several projects in Istanbul on both the European and Asian sides. Its content is filled with broad grassy expanses and has a strong family orientation. The apartments in its projects are huge and have large spaces, and they often include flats with three or four rooms and a salon.

Before concluding and following a detailed description of construction projects in Turkey, whether built through public or private construction companies, which, in your opinion, is the best investment?

For us, each has benefits and positives, and each has disadvantages, but based on your request and your objective, we can accomplish the best investment for you between the two due to our extensive knowledge of the Turkish real estate market. So the answer to this question depends on your conditions and preferences.

In the conclusion, it is fair to say that this article was a full and comprehensive explanation of the construction projects in the private and government sectors in Turkey, through which we were able to discuss all of their pros and cons, as we defined each of them in terms of their common content in Turkey, and we mentioned to you at the end the most important and prestigious construction companies from both parties. To help you choose the best projects, do not hesitate to contact us now.

Damasturk Real Estate Company is the best choice for the finest opportunities, real estate deals, and excellent services if you are interested in real estate investing in Turkey, buying real estate in Turkey, or obtaining Turkish citizenship through its numerous ways.

Contact us right away; our team is available to help you around the clock.

 

Edited by Damasturk Real Estate©

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