Turkey’s megaprojects threaten ‘mega’ financial havoc (Al Monitor, June 1, 2020)
Turkey’s “megaprojects” — a slew of multibillion-dollar infrastructure investments that Ankara has showcased as a hallmark…
MUSTAFA SÖNMEZ – Hürriyet Daily News/April 14 2014
Major construction companies that have managed their capital accumulation through construction look happy that the Justice and Development Party (AKP) was the winner of the March 30 local elections. The reason for this is they have currently ongoing and still to-be-launched giant projects, especially in Istanbul.
Construction firms have earned incomes of giant dimensions with major construction investments during the AKP era. They, at the same time, are accused of several urban crimes. Some of them operate in the market as Real Estate Investment Trusts.
At the top of these groups, which are building major shopping malls, skyscrapers, bridge and airport projects over the northern forests of the city, are people are close to the prime minister, such as the Torunlar, Kanyon-Limak-Cengiz, Tivnikli, Ülker, Sinpaş and Ağaoğlu groups.
There are major development lawlessness claims against the İçtaş-Astaldi group, which has undertaken the construction of the third bridge, as well as the Kanyon-Limak-Cengiz consortium building the third airport. If the AKP had lost the metropolitan municipality, then these projects, which are subject to a series of court cases concerning inflicting major damage to the environment, would have exposed these firms to major legal struggles. Separately, high interest rates and the high foreign exchange rate climate have also created major difficulties in financing the projects.
Investments made of cement
Those that have dominated the sector in Istanbul for the past 12 years with their residence, office, mall, urban infrastructure and reinforcement projects, operate as construction firms and real estate investment trusts (GYO). These groups opt for owning active companies in both tracks or opt for only one. For example, Torunlar Group has two separate firms in construction and as a GYO; however, giant real estate groups such as Ağaoğlu and Zorlu operate without a GYO company. The GYOs, the number of which was 30 at the end of 2013, are financing the construction projects with the money they have collected from large and small, national and international investors in the stock exchange. According to data from the Capital Markets Board (SPK), the size of the assets of the 30 GYOs as of end of 2013 reached 37.5 billion Turkish Liras (nearly $20 billion), and their market value reached 19 billion liras (nearly $10 billion).
The top five GYOs hold two thirds of the total size of assets. Among them, Emlak Konut GYO owns 36 percent of the size of assets and 46 percent of the market value, while Torunlar GYO and Yeni GİMAT GYO have a 21 percent share. İşBankası GYO and Sinpaş are the other two major GYOs.
Emlak Konut A.Ş., which is a subsidiary of the controversial Mass Housing Administration (TOKİ), allocates valuable public plots to major construction firms and takes half of the revenue of the projects and thus accumulates capital. Since 2003, 26 major prestigious housing projects have been built this way. Cooperating firms are mostly groups such as Ağaoğlu, Varyap and Kuzu. Emlak Konut GYO, on the other hand, operates in the stock market by transferring the assets of the group to securities.
In the size of assets of GYOs, second place goes to Torunlar and the third place to Sinpaş. Besides Torunlar, Saf GYO, which is claimed to have committed an urban crime by ruining Istanbul’s silhouette with its Zeytinburnu towers, is another outstanding construction group. Saf has partners such as Ülker and Tivnikli, as well as the Dinçkök family. The Kiler Group that belongs to the family of AKP deputy Vahit Kuler is another major construction group.
Even though they do not operate as GYOs, major construction firms such as Ağaoğlu, GAP and industrialist-investor groups such as Zorlu, Tahincioğlu, Çiftçiler, Oyak, Eczacıbaşı and Hattat are known to have made major investments in the Istanbul income and own new projects.
The Zorlu Group, which is mostly known as the producer of appliances and electronics, started a giant construction project in 2007 to take its share of the Istanbul income. It launched the Zorlu Center near the leg of the first Bosphorus Bridge. Zorlu bought the plot that belonged to the General Directorate of Highways from the Privatization Administration for 800 million Turkish Liras.
It has been reported that the group made huge profits out of this project, which corresponds to an asset of nearly $7 billion when calculated from an average value of $11,000 per square meters of a construction stock of 618,000 square meters. It is also known that the project contains certain development irregularities and they have conflicts with both the Metropolitan Municipality and the Ministry of Environment and Urban Planning. The Zorlu Center project is reported to have cost $2.5 billion. It has a Performance Arts Center, a mall, a hotel, offices and residences.
The second place among GYOs according to the size of assets belongs to Torunlar GYO. The founder of the company Aziz Torun is a classmate of the prime minister from the Vocational Religious [İmam Hatip] High School and conducts gigantic investments. They own the biggest mall in Ankara, Ankamall. They are now building the Mall of Istanbul.
They have bought the land from the Housing Development Administration and are about to complete the giant investment of $350 million containing a huge mall, office, residence and hotel.
The group also owns the giant complex built in the place of the former Ali Sami Yen stadium in Mecidiyeköy.