NEWSROOM

The construction sector is on the verge of a deep cliff due to the corona virus outbreak, the high depreciation of the TL against the exchange rate and The Associated increased cost inputs. Another fundamental problem is the negativity experienced by subcontractors. Sub-contractors that do business with construction firms have sunk because of projects that the main firms have stopped. Burning collateral letters, sinking loans, checks written are at abnormal levels. 

"The sector is going through very troubled days due to epidemics, economic difficulties, increased exchange rate, cost increases, subcontractor guarantees and Czech law. A big chaos awaits housing producers in the financial picture that is being formed. Contractors and construction subcontractors are on the verge of bankruptcy. Parliament needs to pass emergency measures, " he said.   

Construction costs up 145 % 

The construction sector is one of the locomotive sectors in the country's economy. Because the construction sector is a sector that has a connection with about 250 sub-sectors, where money movements provide a fast return, which leads to the result as soon as possible. In this environment, where global crises, political conflicts and mutual protests occur, the negative impact of the pandemic on the production of raw materials and products is seen as the impact of the difficulties in the supply of products on the cost. The sector, which is sitting at such an effective point in the economy, is unfortunately experiencing troubled days due to the high increase in construction costs. 

Exchange rate rise puts sector in trouble

The raw material of this 250 sub-sector consists mainly of imported products from European countries. The cost of imported products is directly related to foreign currency. As such, the increase in foreign currency unfortunately affects the construction sector in the first place in our country. It puts the construction industry in a serious crisis. The rapid rise in exchange rates and the depreciation of the TL is the most important problem in the housing sector, affecting both cost and sales. Add to this the communication and relationship crises that we experience in the international arena, and the sector is getting into trouble. 

Big crisis in the industry is at the door

Our sector, which is the engine of the country's economy, has almost come to a standstill due to the extraordinary price increases in all construction materials, especially iron, concrete and cement prices, inflation and interest values, and exchange rate increases in foreign currency. Of course, the economy is not the only problem. Because of the Pandemic, there are serious supply problems in many construction materials. The industry is almost black market. 

Let's not fool ourselves, precautions are necessary

That's why I want to warn you. If the legal, economic and sociological factors in the construction sector, in which more than 250 product items are used, are not properly addressed, greater problems in the sector are inevitable. As a result of the melting of the Turkish Lira against foreign currency, European and other countries in the region buy construction materials from our country and export them abroad. Unfortunately, this is what the president calls the export boom. Because of this, production cannot respond to the domestic market, and costs are rising. 

House prices double

We are all closely following the data announced by TUIK. The construction cost index increased by 4.41% in May 2021 compared to the previous month and by 39.56% compared to the same month of the previous year. In addition, compared to the same month of the previous year, the material index increased by 49.45% and the labor index increased by 19.97%. The increase in some items we use in the construction sector was 145 per cent. These cost increases are naturally reflected in house sale prices. 

Rising cost inputs, raw material supply problem, foreign exchange, inflation and high interest costs, such as the shrinking sector naturally leads to excessive house prices.Juliette is also the main source of income. An apartment sold for 600-700 thousand TL was sold for at least 1.5 million TL at a price of almost more than twice that. 

The sector cannot survive with foreign buyers

Our country has gone back almost fifty years today. A citizen has to work for 25 to 30 years to get housing. It's not just the interest on the loan. A citizen no longer has a down payment for housing. This serious decline in the number of domestic buyers is making the sector more troubled. It's impossible to stay afloat with a foreign buyer.

Subcontractors are most affected by the process

The receivables of sub-contractors already working with low profit rates from the parent company and the guarantees they give to the parent company should be seriously considered. Solution areas should be developed for sub-contractors who are in trouble due to reasons arising from the parent company. Subcontractors often don't get their entitlements either on time or at all. Letters of guarantee are being burned. Their property, given to banks in exchange for letters of guarantee, is sold at the expense of destruction. 

Urgent legal arrangements must be made

From here, I call on Mr. President Erdogan and all members of the Parliament. Parliament's emergency law should prevent its subcontractors from easily burning letters of guarantee. Laws must be passed to prevent this. In addition, measures should be taken to ensure that the assets of firms whose letters of guarantee are burned cannot be sold by banks at a price that is destroyed. If that happens, not only will so many construction firms sink, but record checks will be written and thousands of enforcement cases will not wait on the shelves in courthouses. The sector breathes a sigh of relief. When production costs and risks are eliminated, a relief is formed that will affect the purchasing power of Turkish citizens.