According to EY-Parthenon’s Turkey Construction Sector Outlook, the sector is expected to exceed €70 billion in 2027 and grow steadily with a compound annual growth rate (CAGR) of approximately 7%. While economic developments, demographic shifts, large-scale public investments and incentives support sector growth, potential challenges include limited financial resources, tight labor supply and rising construction costs.
EY-Parthenon (EYP), which provides corporate finance and strategy consulting services to leading companies worldwide, has published its Turkey Construction Sector Outlook. Examining the volumetric development of Turkey’s construction sector between 2018 and 2024 across residential, commercial, industrial and public segments and sharing growth forecasts for 2027, the study also outlines the opportunities, risks and challenges the sector may face through 2027.
The study indicates that Turkey’s construction sector, which fell sharply during the pandemic and then recovered to peak at €61 billion in 2024, is expected to reach approximately €65 billion in 2025, around €70 billion in 2026, and surpass €70 billion in 2027. Drivers of this growth include GDP expansion, stabilizing inflation, demographic changes, post-disaster reconstruction and ongoing public investments. Recent sector trends are shaped by rising construction and building-materials costs and fluctuations in building permits. While these reflect changes in construction activity driven by economic factors such as domestic credit interest rates and regulatory shifts, the sector is expected to expand in line with overall GDP growth going forward as inflation normalizes and housing demand increases.
Resilient performance despite rising costs
Highlighting that sector growth reached a high level of 36% in 2024 due to factors such as urban transformation, reconstruction, building permits and government incentives, the study also draws attention to rising construction costs. The cost index rose from 100 in 2021 to 505 in 2024, putting pressure on profit margins. After declining from 119 in 2017 to 94 in 2022, the production index increased to 115 in 2024, demonstrating the sector’s resilience despite rising costs. Revenue growth outpaced cost increases, with the revenue index climbing from 100 in 2021 to 706 in 2024, reflecting ongoing efforts to sustain profitability. In recent years, higher hourly minimum wages have also put pressure on production costs.
Opportunities ahead: public investments, urban transformation and reconstruction demand
While rising construction costs remain a key challenge in Turkey’s construction sector, increasing public investments and incentives promise healthy growth. Cost items such as labor and materials are squeezing margins; regulatory uncertainty, production volatility, and labor and capacity constraints are among the sector’s challenges. Conversely, growing public investments, the expansion of urban transformation, reconstruction demand and rising household formation are set to add momentum. In 2025, housing sales continue their strong trend and support credit utilization. However, due to high interest rates, cash purchases and alternative financing methods remain prevalent.
Strong housing demand is steering consumers toward alternative financing rather than traditional credit
Despite tight monetary policy and reduced lending, persistent housing demand has increased the assets of savings-based financing companies and attracted new players to alternative housing finance. As housing demand in Turkey remains strong, consumers have shifted from traditional loans to alternative financing methods, led by savings-based financing models. The total assets of savings-based financing companies rose from €0.8 billion in 2022 to €2.8 billion in 2024. As of June 2025, six licensed savings-based financing companies were operating in Turkey, and the sector’s total assets reached €4.2 billion in June 2025.
Comment from EY-Parthenon Turkey Partner Cem Çamlı
“As EY-Parthenon, we estimate that Turkey’s construction sector will grow steadily toward 2027, driven by economic growth, population increases, state policies such as urban transformation and social housing, large-scale public infrastructure investments and incentives. Rising construction and labor costs, difficulties in accessing credit and the need for new regulations pose challenges for the sector. Nevertheless, increasing housing needs, urban transformation projects, reconstruction efforts and new investments such as data centers and logistics facilities present significant opportunities for growth. According to Q3 2025 growth data, construction was the fastest-growing sector in the period at 13.9%. Therefore, it is critical for all stakeholders to consider both challenges and opportunities and to define strategic roadmaps for the future now. We believe this study will serve as a guiding reference for all stakeholders.”