Türkiye’s Construction Business in 2026: Between Reconstruction and Rebalancing

Türkiye’s construction sector enters 2026 in a mixed but ultimately growth-oriented position. After several years of high inflation, tight monetary policy and the shock of the February 2023 earthquakes, the industry is reshaping itself around reconstruction, infrastructure, and more selective housing demand rather than pure volume growth.

A Sector Still Growing, But More Slowly

Recent forecasts suggest that Türkiye’s construction output will continue to grow in real terms through the mid-2020s. One major industry report projects real growth of around 4.2% in 2025 and an average of 3.7% annually between 2026 and 2029, supported by large public investment programs and housing and industrial projects. Business Wire+1

At the macro level, the government’s medium-term programme aims to bring inflation down from almost 30% in 2025 to around 16% in 2026, with gradual economic growth and fiscal discipline. Reuters If that disinflation path holds, it should lower financing stress over time, even if the early part of 2026 still feels tight for developers and contractors.

Demand Drivers: Reconstruction, Urban Transformation and Infrastructure

The earthquake recovery agenda will remain a central driver. Preliminary assessments put direct and indirect losses from the 2023 quakes at over USD 100 billion, roughly 9% of 2023 GDP, creating a huge multi-year reconstruction pipeline for housing, public buildings and infrastructure in the affected provinces. ReliefWeb+1 World Bank and AIIB financing is already funding roads, bridges, health facilities and rural housing, pushing work volumes in 2025–2027. World Bank+1

Beyond disaster recovery, Ankara’s Public Investment Programme allocates around TRY 1.9 trillion for 2025 alone across 3,700+ projects in transport, health, energy and other sectors, setting the stage for strong infrastructure and public-building workloads that will spill into 2026. Business Wire Industry analyses estimate that while residential construction still accounts for roughly 60–62% of market value, infrastructure already represents over 30% and is expected to be the fastest-growing segment through 2030, driven by highways, rail and energy corridors. Mordor Intelligence

Housing: Cooling in Real Terms, Shifting in Nature

By late 2025, Türkiye’s housing market had already seen 20 consecutive months of real (inflation-adjusted) price declines, as high interest rates, reduced purchasing power and expanded public housing supply cooled the frenzy of previous years. Daily Sabah+1 Central bank data show that nominal residential price growth is increasingly lagging inflation, translating into real losses for some investors. Global Property Guide+1

For 2026 this suggests:

• Fewer speculative, short-term plays; more end-user and necessity-driven demand.

• Focus on affordable housing, student housing and seismic-safe stock, especially in major cities.

• Strong but more regulated activity in urban transformation projects, where municipalities and the central government push to renew risky building stock.

Developers who can structure projects around realistic price points, strong locations and credible earthquake resilience are likely to outperform those chasing pure price appreciation.

Financing, Costs and the New “Tight” Normal

Despite an improved inflation outlook, 2026 will still feel like a tight financing environment for much of the sector. Reports from 2024–2025 highlight rising construction costs, limited access to credit, and a significant drop in new building permits (over 20% year-on-year in some categories), as only the strongest projects proceed. TurkStat Data Portal+1

For contractors and small developers this means:

• More pressure on cash flow management and pre-sales.

• Greater importance of bank relationships and strong balance sheets.

• Preference for public or quasi-public projects with clearer payment guarantees.

At the same time, foreign investors and suppliers who bring long-term capital or technology may find more disciplined counterparties and less froth than in previous boom cycles.

Regulation, Safety and the Push for Resilience

The earthquakes have placed structural safety and compliance at the centre of public debate. Government projects and major private schemes increasingly demand adherence to updated seismic standards and stronger inspection regimes. Parallel to this, Türkiye is promoting BIM (Building Information Modelling) and digital design/construction tools to improve quality, coordination and lifecycle performance, even as many firms still struggle with adoption costs. Web Dosya+1

However, the sector still faces serious labour-safety issues: monitoring reports note high fatality numbers among construction workers during post-quake rebuilding, exposing weaknesses in site management and enforcement. Bianet Firms that invest in safety culture and training will not only reduce human cost but also stand out in tenders that increasingly weight HSE performance.

Outlook for 2026: Who Will Win?

By 2026, Türkiye’s construction business is likely to be:

• Smaller in speculative volume, larger in strategic importance – less about flipping apartments, more about rebuilding regions, modernising infrastructure and renewing risky stock.

• More selective – projects with clear demand, strong sponsors and credible financing will go ahead; weaker, over-leveraged schemes will stall.

• More professionalised – pressure from public clients, financiers and international partners will push contractors toward better planning, digital tools and documented quality and safety systems.

The companies best positioned for 2026 are those that:

• Can operate in both public infrastructure/reconstruction and targeted residential/commercial niches.

• Understand inflation, interest rate and currency risk, and price contracts accordingly.

• Treat earthquake resilience, ESG and digitalisation not as buzzwords but as part of their core value proposition.

For investors, developers and service firms who can navigate this more disciplined environment, 2026 will not be the easiest year—but it is likely to be one of the most strategically important years for shaping the next decade of Türkiye’s built environment.