Turkey is one of the most promising real estate markets in Europe, and the mantra “location, location, location” rings especially true for this country. Strategically situated at the crossroads of Europe, the Middle East, and Central Asia, and home to almost 78 million people, Turkey offers great opportunities for real estate developers and investors by combining a large construction sector with growing commercial and industrial output.
Some key facts and figures in the Turkish real estate sector include:
- The real estate sector accounted for approximately 5 percent of GDP in the last decade. On the investment side, FDI inflow rose to USD 16.5 billion, with real estate and construction garnering USD 4.1 billion (24.8 percent) of total FDI in 2015.
- Urban renewal and mega projects dominate the agenda for the foreseeable future, particularly in Istanbul. Some projects in the city include the Marmaray, Canal Istanbul, the third Bosphorus Bridge, and Istanbul’s third airport.
- It is estimated that around 6.7 million residential units nationwide will be demolished and rebuilt over the next 20 years, meaning an average of 334,000 units per year. Around USD 15 billion of financing will be required each year for urban renewal projects. In total, a budget of USD 400 billion has been allocated for this initiative, with the private sector taking the lead role.
- According to the Knight Frank Global House Price Index, Turkey ranked first in the 55-location index in Q4 of 2015 in terms of annual price growth index. Turkey saw a year-on-year increase of 18.4 percent and thus emerged as the top-performing housing market in the world, ahead of New Zealand, Sweden, and Australia.
- The total number of houses sold in the Turkish property market reached 1,289,320 units in 2015; likewise sales of real estate to foreigners began to increase following the abolishment of the reciprocity law in 2012. In 2015, 22,830 houses were sold to foreigners in Turkey, marking a year-on-year increase of 20.4 percent. With regard to house sales to foreigners, Istanbul was the top-performing province with 7,493 sales in 2015, followed by Antalya with 6,072 sales, Bursa with 1,501 sales, and Yalova with 1,425 sales.
- Office construction licenses obtained throughout Turkey increased by 27 percent, and together totaled 7 million square meters of additional planned office space in 2013. Class-A office space supply is expected to reach 6.5 million square meters by the end of 2017 with the completion of projects such as the Istanbul Finance Center, which, according to projections, will provide employment for 30,000 people.
- 368 shopping centers are operational in Turkey with a total gross leasable area of 10.89 million square meters. 108 shopping centers in Istanbul with a total gross leasable area of 4 million square meters represent 37 percent of the total leasable shopping center area in Turkey.
- According to JLL’s Cross Border Retailer Attractiveness Index 2015, Istanbul is the 7thmost attractive market in Europe after London, Paris, Moscow, Milan, Madrid and Rome.
- In spite of the growth in recent years, Turkey is still below the average of total leasable area per person compared to the European average. This indicates potential for further retail growth in Turkey.
- By the end of 2015, there were 13,615 registered accommodation facilities. 9,188 of these facilities were licensed by their respective municipalities, while the remaining 4,427 held tourism operation licenses. The combined total bed capacity of these facilities exceeds 1,250,000, although there is still a gap between supply and demand, particularly in Istanbul.
There are currently 281 projects in the pipeline that would add 74,130 much-needed beds to Turkey’s short supply.
Turkey has become one of the fastest growing energy markets in the world, paralleling its economic growth over the last 15 years. The success of a privatization program that has been ongoing since 2002 has resulted in power distribution now completely in private sector hands, while the privatization of power generation assets is set to be completed within the next few years. This privatization program has given the country’s energy sector a highly competitive structure and new horizons for growth.
Economic expansion, rising per capita income, positive demographic trends, and the rapid pace of urbanization have been the main drivers of energy demand, which is estimated to increase by around 6 percent per annum through 2023. In order to satisfy the increasing demand in the country, the current 80-GW installed electricity capacity is expected to reach 120 GW by 2023 through further investments to be commissioned by the private sector. As part of its efforts to provide sustainable and reliable energy to consumers, Turkey offers investors favorable incentives, such as feed-in-tariffs, purchase guarantees, connection priorities, license exemptions, etc., depending on the type and capacity of the energy generation facility.
In the last 15 years, the Turkish government has made significant reforms in the provision of energy. Turkey has moved forward the participation of private entities, and thus created a more competitive energy market. The privatization of energy generation assets, coupled with a strategy to clear the way for more private investments, has resulted in an increased share of private entities in the electricity generation sector, from 32 percent in 2002 to 75 percent in 2017. Another step taken by the Turkish government towards a more competitive energy sector is the establishment of an energy stock company, EXIST, which is responsible for managing and operating energy markets, including power and gas commodities.
In addition to having a huge domestic market, Turkey occupies a strategic location between a number of major energy consumers and suppliers, and thus serves as a regional energy hub. The existing and planned oil/gas pipelines, the critical Turkish straits, and promising finds of hydrocarbon reserves within the country itself give Turkey increased leverage over energy prices and reinforce its gateway status.
Opportunities for renewable forms of energy production – hydro, wind, solar, and geothermal – are abundant in Turkey, and encouraging policies backed by favorable feed-in tariffs are expected to increase their share in the national grid in the coming years. The Turkish government has made it a priority to increase the share of renewable sources in the country’s total installed power to a remarkable 30 percent by 2023. This will run in parallel to the government’s commitment to energy efficiency, whereby it is enacting laws that set principles for saving energy, at both individual and corporate levels, as well as providing incentives to energy efficiency investments. For example, the Turkish government introduced the new Renewable Energy Resource Zone (YEKA) model in 2016 in order to commission large-scale renewable energy projects through utilization of locally-manufactured components in the renewable power plants. Under the model, the largest-ever solar power auction in Turkey’s history took place on March 20, 2017, while a similar tender for 1-GW wind power plants took place in August 2017 with local manufacturing and R&D requirements.
As important as the renewables are for Turkey’s energy strategy in the coming years, technologies in such fields as waste processing and greenhouse gas reduction are also often cited together with this new form of power generation as critically important supplementary practices. Sustaining the environment by resorting to renewable resources is accompanied by a number of measures and regulations that are either currently in effect, or will soon be in effect. Some of these regulations deal with lowering carbon emissions, increasing generation/transmission efficiency, and promoting the use of waste management technologies.
The sum of these factors has had a profound effect on Turkey’s energy sector, turning it into one of the most attractive investment destinations in the world. In line with the implementation of investor-friendly regulations and the high increase in demand, the Turkish energy sector is becoming more vibrant and competitive, attracting the attention of more investors for each component of the value chain in various energy sub-sectors.
The total investments required to meet Turkey’s expected energy demand in 2023 is estimated to be around USD 110 billion, more than double the total amount invested over the last decade.
Turkey’s vision for 2023, the centennial foundation of the Republic, envisages targets for the energy sector in Turkey that include:
- Raising the total installed power capacity to 120 GW
- Increasing the share of renewables to 30 percent
- Maximizing the use of hydropower
- Increasing the installed capacity based on wind power to 20,000 MW
- Installing power plants that will provide 1,000 MW of geothermal and 5,000 MW of solar energy
- Extending the length of transmission lines to 60,717 km
- Reaching a power distribution unit capacity of 158,460 MVA
- Extending the use of smart grids
- Raising the natural gas storage capacity to more than 11 billion m3
- Commissioning nuclear power plants (two operational nuclear power plants, with a third under construction)
- Increasing the coal-fired installed capacity from the current level of 17.3 GW to 30 GW
The Turkish financial sector proved resilient during the global financial turmoil in 2009 as well as the ensuing economic crisis thanks to the regulatory reforms and structural overhaul that the government implemented in the wake of the country’s own financial meltdown in the early 2000’s. In fact, the reforms in the sector boosted investor confidence so much that financial services has become the preferred sector for FDI, attracting over USD 48 billion during the past 14 years.
- Banking dominates the Turkish financial sector, accounting for around 60 percent of overall financial services, while insurance services and other financial activities also show significant growth potential.
- There are 53 banks in Turkey (34 deposit banks, 13 development and investment banks, 6 participation banks). Out of 53 banks, 21 hold significant foreign capital (30% of total assets are held by foreign investors). Expanding loan base and favorable liquidity conditions contribute to the healthy growth of Turkey’s financial services.
- The sector enjoys a leading position in the world with an ever-growing asset size and strong equity structure protecting it against shocks that may arise from loans or turbulent market conditions.
The sector overall exhibited a robust 18 percent compound annual growth rate (CAGR) between the years 2008 and 2015, reaching a total asset size of TRY 3.6 trillion (USD 1.2 trillion). The banking sector in particular almost doubled its assets during this period, with TRY 2.4 trillion (USD 807 billion) on the books by the end of 2015
Turkey’s strategic location at the crossroads of Europe, the CIS, the Middle East, and North Africa, along with the country’s existing potential, increase in per capita income, and large, young and growing population have positively impacted the development of the business services sector in Turkey. Turkey has significant experience in a wide range of business service lines, such as engineering and architectural consulting, technical testing, and call centers. The country also boasts expertise in knowledge-based services, such as auditing and accounting, legal advisory, and consulting.
Engineering and Architectural Consulting
- Engineering and architectural consulting companies in Turkey provide services related to engineering, architecture, design, technical drawing, urban planning, scientific and environmental services.
- A skilled workforce, cost-effective service compared to international standards, expertise in diverse markets, and project types help move the sector forward in Turkey.
- During the 2015-2016 academic year in Turkey, a total of 33,785 students graduated from the fields of engineering and engineering trades in universities, while 14,585 students received their degree in the fields of architecture and construction.
- The technical testing market offers a wide variety of business lines, such as composition and purity testing, technical inspection, and road transport.
- The total annual turnover in these services has been showing an upward trend in the last decade, and as industries such as manufacturing, automotive, chemicals, and ICT continue to grow in Turkey the need for technical testing will increase accordingly.
- The call center sector in Turkey has gained momentum since the inception of the country’s first call centers in the 1990s.
- According to the Turkish Call Centers Association, the industry had a value of TRY 4.5 billion and employed 85,000 people in 1,229 call centers throughout the country in 2016, up from the 2013 figures of TRY 2.9 billion, 70,200 employees, and 1,124 call centers.
- The call center sector has set an ambitious target of having a work force of 300,000 people by 2023.
- Knowledge-based services such as auditing and accounting, legal advisory, and consulting also play a crucial role in Turkey’s economy.
- Turkey’s vibrant economy and improved business environment have paved the way for a dramatic increase in the number of foreign companies in Turkey.
- The number of companies in Turkey with foreign capital quadrupled in the last decade to reach 52,700 in 2016. This increase, together with the improved business environment, has resulted in the growth of knowledge-based services in Turkey.
As new regulations come into force and Turkey aspires to have compatible standards with the EU, the sector is set to for significant growth
The Information and communication technologies (ICT) sector has become an essential part of the economy, in particular social life, since it is directly or indirectly affecting the ever-changing business world. Turkey is well aware of the fact that this sector will have a much more influential role in the future than it currently has. Searches for solutions brought about by this development and growth, which are appropriate for the requirements of today, and the efforts to enable today’s economic and social life to acquire these most up-to-date and fast solutions instantly, together form the basis of information and communications technology, since these solution searches basically require the utmost efficient utilization of both time and physical resources. In this regard, Turkey has increased its interest in the ICT sector further, and started the necessary studies so as to have a voice in the sector in the future. The greatest indicators of these efforts are the new initiatives and R&D Law issued for the investors.
- As the young population increases and online market expands, the total number of mobile phone subscribers is expected to reach 75 million by 2017, up from 73.2 million in 2015.
- IT spending on hardware, software, IT services and telecommunication services in Turkey is expected to increase to USD 30 billion by 2017.
- ICT spending in Turkey is expected to grow faster than the world average. With regard to its large domestic market with sizeable potential in the ICT sector, sector growth is expected to grow with a CAGR of 7.4 percent during the 2012-2017 period.
- 5 percent of all households in Turkey have internet access.
- The percentage of internet users in Turkey is around 56 percent and this is forecast to rise to above 60 percent in 2017.
Turkey’s ambitious vision of 2023, the centennial foundation of the republic envisages grandiose targets for the ICT sector in Turkey. These targets include:
- Reaching 30 million broadband subscribers
- Providing internet connection for 14 million houses at a speed of 1,000 Mbps
- Increasing the sector’s share in GDP from 2.9 percent to 8 percent
- Becoming one of the top 10 countries in e-transformation
- Having 80 percent of the population computer literate
- Increasing the number of companies to 5,500; employees to 65,000; and exports to USD 10 billion in TDZs
- Increasing the ICT sector’s size to USD 160 billion, with a market growth of around 15 percent each year
- Increasing the R&D expenditure to GDP ratio to 3 percent from 1 percent
Turkey’s mining and metals sector has grown in parallel with the country’s robust economy. Harboring a large expanse of the western portion of the Tethyan-Eurasian Metallogenic Belt, which is an ophiolite extending from the Alps to southeastern Europe through Turkey, the Lesser Caucasus, Iran, and the Himalayas on to China, Turkey offers proven potential for mining investors. As the least exploited portion of the belt, Turkey stands out as a very promising region for companies engaged in mineral extraction. Mining in Turkey has mainly been limited to surface excavations, meaning huge potential with deep drilling is awaiting international investors.
Here are some essential facts and figures about the Turkish mining and metals sector:
- The sector’s total production value soared to TRY 24.5 billion in 2015.
- Turkey’s young, dynamic, and well-educated labor force offers a high-quality labor pool.
- There are 53 mining engineering departments in 38 cities in Turkey. The number of mining engineers in Turkey has increased by more than 50 percent since 2005, now reaching almost 35,000. In 2016, around 1,200 new mining engineers were added to the talent pool.
- Turkey’s advantages for companies in the mining sector are not limited to a high-quality labor pool, but also include relatively low logistics and drilling costs, proximity to major markets, lucrative government incentives, and highly competitive taxes.
- As a result of its remarkable economic growth, years of political stability, structural reforms, and the backing of governmental bodies, Turkey attracted USD 149 million of FDI to its mining industry in 2015. Meanwhile, mining exports in the sector totaled USD 3.5 billion in 2016.
- These figures prove investors’ increased interest in Turkey. As of today Turkey hosts 790 international mining companies, up from only 138 in 2004.
Turkey’s regional investment incentive system is based on a descending pattern where regions vary in a range of 1 to 6 based on their level of development, with a rating of 6 being given to the least developed regions. With this system, the most advantageous incentives are offered to the lesser-developed regions. Mining is one exception to this scheme, as most investments in the mining sector are supported with incentives extended to Region 5, regardless of the investment’s location
Global sales of chemicals more than doubled over the past decade, driven in large part by emerging economies that accounted for around 80 percent of new chemical production capacity.
Over the past decade, chemical sales in Turkey have closely followed the global trend. Turkey is an attractive investment location for chemical companies with its robust market growth fueled by end-user markets and its competitive production costs. Turkey is also a regional production, management, and export hub for leading brands in the chemicals industry. Chemical giants such as BASF, Henkel, Bayer, Evonik, Linde, P&G, PPG, and Dow have been producing in Turkey for decades and have continued to grow over the years.
The sustained growth in customer industries in Turkey is also a source of strength. Turkey is the largest commercial vehicle producer in Europe, the 17th largest automotive manufacturer in the world, the 7thlargest agricultural producer in the world, and the largest textile producer in Europe, accounting for 3 percent of global exports.
As part of the urban transformation project in Turkey, it is estimated that around 6.5 million residential units nationwide will be demolished and rebuilt over the next 20 years. Thus, Turkey’s construction industry, which is valued at USD 60 billion, is one of the fastest growing end-user markets for the chemicals industry in Turkey.
Another promising area in Turkey’s chemicals industry is the plastics sector, which accounts for almost 3 percent of global plastics production. This makes Turkey the 2nd largest producer of plastics in Europe and 7th largest producer globally. The paint industry also offers opportunities for investors as Turkey ranks as the 5th largest paint producer in Europe.
Turkey is the 2nd largest net importer of petrochemicals in the world after China. The significant gap between the capacity and the consumption of petrochemical products offers ample opportunities for local and foreign investors. There are also lucrative opportunities in Turkey’s surroundings that investors can tap into by utilizing the country’s strategic location and top-notch infrastructure. Petrochemical consumption in surrounding markets, such as Europe and MENA, accounts for one-fourth of the global total.
The combination of a growing economy, a large domestic market, advanced infrastructure, a skilled and competitive workforce, and investor-friendly legislation ensures that manufacturers in Turkey’s chemicals sector stand to reap long-term returns from investing in one of the most promising emerging nations in the world.
Machinery manufacturing continues to be one of the key growth drivers of the Turkish economy. This sector plays a crucial role in the development of Turkey’s greater manufacturing industry due in no small part to its capability to produce intermediate goods and provide inputs to other key sectors such as construction, energy, textiles, agriculture, and mining. The machinery manufacturing sector in Turkey is known for being R&D intensive — Turkey graduates over 450,000 engineers every year — and for creating high value. Local sourcing accounts for approximately 85 percent of all inputs at the production level.
- Total export value of the machinery industry reached USD 13.4 billion in 2015, up from USD 5.2 billion in 2005.
- Annual growth rate of machinery exports between 2005 and 2015 was 16 percent, double Turkey’s overall export growth rate during the same period.
- As the 2ndlargest export industry of Turkey, accounting for a 9.3 percent share in Turkey’s total exports, machinery products are exported to more than 200 countries.
- 60 percent of the total machinery product exports are shipped to the EU countries and the USA.
- Total imports of the machinery sector surpassed USD 26 billion in 2015 while posting an average annual growth of 10.3 percent over the past decade, evidencing the strong demand from the domestic market.
- FDI inflow in machinery manufacturing represents a significant source for Turkey’s overall FDI amount, making up around 20 percent of total manufacturing FDI between 2005 and 2015.
- R&D expenditures on machinery manufacturing reached USD 600 million in 2014, accounting for almost 10 percent of the total R&D expenditure of Turkey.
Turkey’s competitiveness in the machinery sector is driven by favorable input costs and strong enablers. Input costs include competitive labor cost, an affordable and reliable energy supply, and logistical advantages based on the geostrategic location of Turkey, while enablers include a skilled workforce, generous investment incentives, an innovation-oriented infrastructure, and a strong supply base and domestic clusters
The foundation of Turkey’s automotive industry dates back to the early 1960s. During a period of rapid industrialization and progress, this key sector transformed itself from assembly-based partnerships to a full-fledged industry with design capability and massive production capacity. Between 2000 and 2016, original equipment manufacturers (OEM) invested more than USD 14 billion in their operations in Turkey. These investments significantly expanded their manufacturing capabilities, which in turn led Turkey to become an important part of the global value chain of international OEMs. Meeting and exceeding international quality and safety standards, today’s Turkish automotive industry is highly efficient and competitive thanks to value-added production.
- Leveraging a competitive and highly-skilled workforce combined with a dynamic local market and favorable geographical location, the vehicle production of 13 global OEMs in Turkey increased from 374,000 in 2002 to over 1.5 million units in 2016. This represents a compound annual growth rate (CAGR) of around 10 percent during that period.
- Significant growth posted by Turkey’s automotive sector led to Turkey becoming the 14thlargest automotive manufacturer in the world and 5th largest in Europe by the end of 2016.
- Turkey has already become a center of excellence, particularly with respect to the production of commercial vehicles. By the end of 2016, Turkey was the number one producer of light commercial vehicles (LCV) in Europe.
- Proven as a production hub of excellence, the Turkish automotive industry is now aiming at improving its R&D, design, and branding capabilities. As of the end of 2016, 84 R&D centers belonging to automotive manufacturers/suppliers were operational in Turkey.
- Notable examples of global brands with product development, design, and engineering activities in Turkey include Ford, Fiat, Daimler, AVL, and Segula. Ford Otosan’s R&D center is one of Ford’s three largest global R&D centers, while Fiat’s R&D center in Bursa is the Italian company’s only center serving the European market outside its home country. Meanwhile, Daimler’s R&D center in Istanbul complements the German company’s truck and bus manufacturing operations in Turkey. AVL Turkey, which opened up its 2ndR&D center in Turkey, started to develop autonomous and hybrid vehicle technologies.
- Turkey offers a supportive environment on the supply chain side. There are around 1,100 component suppliers supporting the production of OEMs. With the parts going directly to the production lines of vehicle manufacturers, the localization rate of OEMs varies between 50 and 70 percent.
- Turkey is home to many global suppliers. There are more than 250 global suppliers that use Turkey as a production base, with 28 of them ranking among the 50 largest global suppliers.
- Auto manufacturers increasingly choose Turkey as a production base for their export sales. This is evidenced by the fact that around 77 percent of production in Turkey was destined for foreign markets in 2016. More than 1,100,000 vehicles were exported from Turkey to foreign markets in the same year. In addition, Turkey was the number one vehicle exporter to European markets with 645,000 units in 2016.
- While Germany, France, Italy, the UK, and Spain are currently the major export customers of the Turkish automotive industry, there is a trend of diversification in export destinations with companies looking to break into nearby emerging countries where there is considerably more demand potential for new auto sales.
- The rise of per capita income from USD 3,000 in the first few years of the 2000s to around USD 11,000 in 2016 led to higher sales in the motor vehicles market. While the average annual sale figures in the market were around 360,000 in the early 2000s, the average sales increased to 1,000,000 by 2016.
Despite the strong increase in the sales, the automobile penetration in Turkey — 165 cars per 1,000 people — is well behind the European average of 500. This indicates ample opportunities for carmakers in the domestic market. Increased purchasing power combined with a low automobile ownership rate should help drive automobile sales in the coming years.
Turkey, one of the most vibrant economies among emerging countries, sits at the heart of a major crossroads in global trade, bridging East and West, Europe and Asia.
Turkey’s strategic location provides access within a four-hour flight radius to multiple markets with a combined population of 1.6 billion people, a combined GDP of USD 27 trillion, and more than USD 8 trillion of foreign trade, which corresponds to around half of the total global trade. Trade in Turkey has been rising significantly, and the region as a whole has more of a presence in global trade. In 2015, Turkey was responsible for 1.05 percent of the global trade volume, and the country’s share in global trade is expected to exceed 1.5 percent by 2023.
The Turkish economy, which has been growing at an average annual growth rate of almost 4.7 percent over the last 13 years, provides many opportunities for the logistics sector. In addition to its robust economic growth, Turkey has one of the largest and youngest labor pools in Europe. More than 65 percent of Turkey’s population is aged between 24 and 54, and the strength of this labor force is reflected in the logistics industry. Investors can easily hire a talented workforce at a competitive cost to address the complex demands of the industry.
Public and private infrastructure investments in the last ten years have significantly improved the logistics services provided in Turkey. Many new airports have been built, and highways have spread across the country. In addition, the burgeoning high-speed train network has begun connecting major cities and the capacity of Turkish ports has been increased. Turkey is also building 20 logistics centers/villages, of which 7 have been completed, that will serve to lower the costs of transportation by offering various modes of transportation within these centers/villages.
The Turkish government has set challenging targets to be achieved by 2023 in an effort to further improve the logistics infrastructure. These targets include, but are not limited to:
- Having a total road network of 70,000 km, with 36,500 km of it being dual carriage way and 8,000 km of it being highway
- Having a total railway network of 25,000 km, of which 12,000 km will be high-speed railway
- Increasing annual passenger transportation to 1 billion persons and freight transportation to 125 million tons
- Increasing the total number of passenger airplanes from 487 to 750
- Constructing new airports in a move to increase total annual capacity to 400 million passengers
- Increasing container handling capacity from 8.4 million TEU to 32 million TEU
- Increasing vessel fleet carrying capacity from 29.2 million DWT to 50 million DWT
- Building one port in each of the three seas surrounding Turkey
Turkey’s advantageous geographical location, which provides easy access to Eastern Europe, Central Asia, the Middle East, and North Africa, allows the country to function as a hub for the freight carried in the region. The current size of Turkey’s logistics industry is such that it accounts for 12-13 percent of the country’s GDP. Immense growth is expected according to 2023 GDP targets, with the industry estimated to reach a volume of USD 200-240 billion by 2023.
Home to the headwaters of the Tigris and Euphrates Rivers, Turkey’s agricultural sector today is echoing the prosperity of ancient Mesopotamia. With its favorable geographical conditions and climate, large arable lands, and abundant water supplies, Turkey is considered to be one of the leading countries in the world in the field of agriculture and food.
Turkey has a robust agriculture and food industry that employs almost 20 percent of the country’s working population and accounts for 6.1 percent of the country’s GDP in 2016. The sector’s financial contribution to the overall GDP increased 40 percent from 2002 to 2016, reaching USD 52.3 billion in 2016.
The strengths of the industry include the size of the market in relation to the country’s young population, a dynamic private sector economy, substantial tourism income and a favorable climate.
Turkey is the world’s 7th largest agricultural producer overall, and is the world leader in the production of dried figs, hazelnuts, sultanas/raisins, and dried apricots. The country is also one of the leading honey producers in the world. Turkey boasted production of 18.5 million tons of milk in 2016, making it the leading milk and dairy producer in its region. The country also saw production totals of 35.3 million tons of cereal crops, 30.3 million tons of vegetables, 18.9 million tons of fruit, 1.9 million tons of poultry, and 1.2 million tons of red meat. In addition, Turkey has an estimated total of 11,000 plant species, whereas the total number of species in Europe is 11,500.
This bountiful production allows Turkey to maintain a significantly positive trade balance thanks to its position as one of the largest exporters of agricultural products in the Eastern Europe, Middle East, and North Africa (EMENA) region. Globally, Turkey exported 1,781 kinds of agricultural products to more than 190 countries in 2016, accounting for an export volume of USD 16.9 billion.
Turkey is looking to position itself as the preferred option for being the regional headquarters and supply center of top global players in the agricultural sector. To encourage investment in the sector, Turkey offers a set of incentives for potential agribusiness investors.
According to McKinsey and Co., Turkey offers significant investment opportunities in agribusiness subsectors such as fruit and vegetable processing, animal feed, livestock, poultry, dairy, functional food, fisheries, and enablers (in particular cold chain distribution, greenhouses, irrigation, and fertilizer).
As part of its targets set for the agriculture sector by 2023 Turkey aims to be among the top five overall producers globally. Turkey’s vision for its centenary in 2023 includes other ambitious goals, such as:
- USD 150 billion gross agricultural domestic product
- USD 40 billion agricultural exports
- 5 million hectare irrigable area (from 5.4 million)
- Ranking number one in fisheries as compared with the EU
The life sciences and healthcare sectors are considered industries of strategic importance in Turkey, especially when taking into consideration their social and economic impacts. Turkey showed its commitment to healthcare reforms with the implementation of the “Healthcare Transformation Program” introduced in 2004 by the Ministry of Health. These reforms marked a significant improvement in Turkey’s healthcare system, which is backed by investments in R&D and innovation in the healthcare sector.
Some key facts and figures in the Turkish life sciences sector include:
- The Turkish market for pharmaceuticals reached a size of TRY 16.8 billion in 2015, growing by 15.5 percent over 2014. Unit sales rose by 6.7 percent over the same period, reaching 1.95 million units.
- According to IMS Health Report, Turkey is one of the top 20 “pharmerging” countries, having been ranked 19thin 2014, and expected to be ranked 17th in 2019.
- The Turkish market is expected to grow by 11-14 percent between 2015-2019 (IMS Consulting Group)
- There are approximately 300 pharmaceutical entities operating in the sector. Among the 67 manufacturing facilities that meet international standards, 12 are owned by multinational companies.
- There are 12 raw material producing facilities in Turkey, 3 of which are owned by multinational companies.
- Approximately 30,000 people are employed in the sector and more than 11,500 products are produced.
- During 2009-2015, pharma sales grew by 27.8 percent and 43 multinational pharmaceutical companies entered the Turkish market, bringing the number of foreign entities in the market to 116.
- Pharma exports, which stood at USD 612 million in 2010, have grown by 53.4 percent over the past five years to reach USD 939 million in 2015.
- Turkish pharmaceutical manufacturers are exporting to more than 170 countries, with the bulk of that trade occurring with the EU, MENA, and CIS countries.
The Ministry of Health and the Ministry of Development are currently working on a joint long-term strategic plan for the pharmaceutical industry, which is experiencing growth in parallel with the world markets. This plan aims to create a market where domestic production of pharmaceuticals and medical devices will account for 60 percent and 20 percent respectively of total domestic demand in terms of volume.
A rapidly growing young population is one of the key factors driving demand for healthcare in Turkey. According to the Economist Intelligence Unit forecasts, the healthcare sector in Turkey is set to boom as healthcare spending per capita will increase at a CAGR of 5.6 percent during 2013-2017, while most developed countries will be experiencing relatively lower growth rates.
Favorable long-term macroeconomic conditions and increased access to medicine will continue to drive demand for medicine and attract foreign pharmaceutical companies, which in turn, will make Turkey an increasingly important location for pharmaceutical manufacturing in Central and Eastern Europe.
With regard to healthcare facilities, the Ministry of Health is planning to open organized health zones, which will include hospitals, rehabilitation centers, thermal tourism facilities, nursing houses, health techno-cities, and R&D centers.
The Turkish government has also taken on an ambitious healthcare public-private partnership (PPP) program. According to PPP professionals, Turkey is the 2nd most attractive market globally for PPP projects in the medium to long-term. Investments in the healthcare sector are expected to continue as the government strives to increase the number of hospital beds per 10,000 people to 32 in 2023 from the current level of 26.5.
With the considerable potential for growth, the Turkish healthcare sector provides a vast number of investment opportunities. The Ministry of Health will be spending an estimated TRY 100 billion in lease payments for its Healthcare PPP Program, whereas free healthcare zones, health tourism, and e-health provide similarly attractive investment.
Moreover, the government aims to boost manufacturing infrastructure through the establishment of special pharmaceutical zones, with the goal to make the country a global pharmaceutical R&D and production hub. The Turkish government also aims to make the country one of the world’s top ten economies in healthcare services by 2023 by increasing R&D expenditures to 3 percent of GDP and by increasing exports to USD 500 billion. As expectations for readily-accessible and higher-quality healthcare services increase in line with the advancement of economic welfare, healthcare spending per capita in Turkey is expected to almost triple by 2023, hitting USD 2,000.
As the 6th most popular tourist destination in the world and well on its way to attracting more than 40 million tourists annually within the next couple of years, Turkey continues to present vast investment opportunities in both the established and newly-developing subsectors of the industry.
With its favorable location, existing potential, megaprojects, and ambitious targets set for 2023, the tourism sector continues to grow at a rate that outstrips its bed capacity. Even though there has been a surge of investments in the last several years, there is still ample room for new ventures. Eastern and Southeastern Anatolia both have untapped potential for cultural tourism as well as the increasingly popular boutique hotel concept, which blends well with the characteristic nature, history, and culture of the regions.
Here are some essential facts and figures about the Turkish tourism sector:
- Turkey is currently the 6thmost popular tourist destination in the world, attracting more than 30 million tourists annually and continuing to show positive growth year-on-year.
- The tourism sector has set annual targets of 50 million tourist arrivals and revenues of USD 50 billion by 2023.
- According to the Ministry of Culture and Tourism, the number of foreign travelers arriving in Turkey in 2015 was 39.4 million, while total turnover of the tourism industry that same year was USD 31.4 billion.
- Growth in the Turkish tourism industry has been above the global average in recent years, and the direct contribution of the industry to the current account deficit in 2015 was 80 percent, while its contribution to GDP reached 4.37 percent the same year.
- By the end of 2015, there were 13,615 registered accommodation facilities. 9,188 of these facilities were licensed by their respective municipalities, while the remaining 4,427 held tourism operation licenses. The combined total bed capacity of these facilities exceeds 1,250,000.
- There are currently 281 projects in the pipeline that would add 74,130 much-needed beds to Turkey’s short supply.
- Antalya is the most preferred city in Turkey based on the number of incoming foreign visitors. Visited by 34 percent of the foreign tourists in 2014, Antalya has over 500 4-star and 5-star hotels in its center and surrounding towns such as Kemer, Belek, and Kas.
- In 2015, there were more than 165 hotel chains in Turkey, with 15 percent of these hotels being owned by international investors.
- Turkey has 7,200 km of coastline and ranks 2ndamong 38 countries with its 436 blue-flag beaches; only Spain has more blue-flag beaches than Turkey with 578. There are also 22 blue-flag marinas in Turkey.
- In terms of geothermal tourism potential, Turkey is among the top seven countries in the world and ranks 1stin Europe with its 1,500 thermal springs. Bed capacity in the various thermal spa resorts has reached a combined 55,140.
- Turkey is also an emerging destination for golf tourism with 15 tourism operation-licensed golf resorts. Most golf courses in Turkey use Bermuda grass, which is perfect for a Mediterranean climate and can be used for more than a decade.
- Based on 2015 tourism figures, Euromonitor International has ranked the world’s top 100 most-visited cities, with Antalya coming in 10thplace with 11.1 million foreign visitors.
- Owing to its increasing global connectivity, due in no small part to its favorable geographical position, Istanbul is very much the center of attention with its recent rise to the 5thmost visited city according to MasterCard Global Destinations Cities Index 2015 with over 11.8 million foreign and domestic visitors annually.
- The International Congress and Convention Association’s (ICCA) Country and City Rankings Report for 2014 saw Istanbul maintain its top 10 positions as a global congress destination. Ranking 8thin the world in 2014 with 130 congresses, Istanbul has now held a top 10 position since 2010.
The Turkish government offers incentives and pursues policies that offer reduced utility prices and reduced tax rates while decisively eliminating any bureaucratic barriers that may hinder growth in the tourism sector.