Cost of anticipated countrywide urban renewal project estimated at $255 bln

by editor | 29th October 2011 8:05 am

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A construction worker hoses down the debris of a building demolished by a buldozer during an urban renewal study in the western province of ?zmir.
An anticipated countrywide urban renewal project in the wake of earthquake danger could create a construction market with a total investment size of $255 billion (TL 448.8 billion), analysts say. Following a magnitude 7.2 earthquake that rocked the southeastern province of Van on Sunday, Prime Minister Recep Tayyip Erdo?an announced the government would embark on a comprehensive state-sponsored construction plan to build safe and sustainable cities in the face of the earthquake reality.
Turkey sits on a land crisscrossed by three major fault lines and a majority of the buildings across the country are desperately in need of reinforcement so that their vulnerability to an earthquake can be minimized. Sunday’s earthquake, the second worst since 1999 when a magnitude 7.6 quake in the western city of ?zmit killed 17,000 people, has killed 570 and left thousands homeless in Van.
Analysts calculate the estimated size of investment to be put into Turkey’s largest-ever construction campaign at $255 billion if the project is realized. Unplanned urbanization and illegal construction is a longstanding problem in the quake-prone country. There are 19 million houses in Turkey, and earlier studies show half of these buildings are susceptible to earthquake damage. The anticipated urban renewal project expects to either reinforce or reconstruct around 8.5 million of these houses. A question remains over how and where the government plans to move millions of residents from their houses during the project.

Real Estate Development and Investors Association (KONUTDER) Chairman Ömer Faruk Çelik said Erdo?an’s announcement was an opportunity to initiate a countrywide construction project and that the national government and local governments should jointly coordinate this process. “The state could offer flat owners a certain time period before they reconstruct or reinforce their buildings. … If the building is not repaired in the given time, then the state should evacuate it before an earthquake disaster hits its residents,” he opined.

Real Estate Investing Partners Association (GYODER) President I??k Gökkaya underlined that urban renewal was a must in Turkey and that the government should not lose time and must take swift action in this regard.

Take ?stanbul for example; a major earthquake in this metropolis will cost thousands of lives while dealing a significant blow to the Turkish economy,” he explained.

The leader in the Turkish urban transformation market, the state-run Housing Development Administration of Turkey (TOK?) has built quake-resistant houses for 43,752 families so far.

‘?stanbul has the resources to sponsor this project’

?nanlar ?n?aat CEO Serdar ?nan told Today’s Zaman in a phone interview on Friday that projects in ?stanbul could become the driving force to create the necessary funding for a countrywide urban renewal project, which he estimates to cost around $450 billion.

“A new city with a total population of 3 million will cost some $500 billion in ?stanbul, and this project could bring as much as $1 trillion in sales. … Here the major goal will be attracting foreign investors to the country,” he argued. ?nan has faith the ?stanbul project has enough capacity to bring $500 billion in revenue that could later be used to finance other urban transformation projects in the rest of Anatolia. “Look. There is currently strong interest in the Turkish real estate market from foreign investors. We need to make use of this growing appetite with sound, sustainable projects.”

Gökkaya joins ?nan and says foreign entrepreneurs could be attracted to putting money in a project to build a new city in ?stanbul. “Around 50 percent of 3.5 million houses in ?stanbul are illegally constructed. … We may need to rebuild some 2 million houses in the megacity. We need to look for alternative financing for this,” he explained. A?ao?lu Group CEO Ali A?ao?lu said projects in ?stanbul could be the engine for a countrywide urban renewal campaign and that all relevant parties should “act swiftly.” “The project will create the necessary funding itself once started,” he opined.

?nan says the most striking detail of the Van earthquake was that most of the collapsed buildings were built after the 1999 ?zmit earthquake, showing that contractors ignored safety regulations and local administrations neglected such defects. “When you look at buildings that were built following the 1999 earthquake in ?stanbul, most of them are strong enough to survive a major earthquake.” According to ?nan, only 10 percent of houses in ?stanbul need to be reconstructed, while the majority of the city’s buildings can survive with reinforcement. “The 1999 earthquake increased awareness among customers, contractors and construction workers. … People think twice when building a house, and they have to. But this is a case we only see in big cities. The situation is not that bright in Anatolia,” said ?nan. He noted that contractors could escape their responsibilities due to a lack of effective monitoring in minor cities, while customers are also still not well-informed about the importance of quake-resistant buildings. The company CEO says the construction of a new city in ?stanbul would take some 10 years to finalize, while the state could complete the projects for other provinces in the meantime. “The government has already introduced plans to construct new cities in the major cities of ?stanbul, ?zmir, Ankara and Diyarbak?r. Others can be added to this list.” Asked whether a countrywide urban renewal project could be sustainable, ?nan said the government has the strong will to lead the initiative, and the private sector should shoulder the responsibility in this regard. “We are not going to lose time by discussing who will take the largest share from a project that will take years. TOK? has its own experiences and so has private industry. … The question is, can we join forces to create a safe and sustainable project plan to follow? The state and the public should own this project — not this government or the other,” he explained.

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