Also questioned were two Toki board members. They include Ali Agaoglu, the billionaire businessman behind Maslak 1453, who late last year was one of a number of business executives, bankers and politicians questioned by the police as part of a broad corruption investigation.
Sonmez, Toki has been particularly aggressive in backing high-end projects undertaken by developers with ties to Mr. Under his sponsorship, Toki amassed choice properties at little or no cost, auctioned them off to developers and took a cut of the profits.Īccording to Mr. Erdogan less than a year after he was elected. Traditionally a bureaucratic backwater with a mandate to push for more affordable homes, Toki emerged as a housing power center when its bylaws were changed in January 2004 to bring it under the direct control of Mr. The potential for a real estate crash highlights the role of the relatively obscure Housing Development Administration, commonly known as Toki, in fueling the boom. Eren said, the inventory of unsold housing units has risen to 1.5 million, compared to levels close to zero several years ago, a clear sign that the slowing economy and higher interest rates are cutting into demand.
Tara Todras-Whitehill for The New York Times Maslak 1453, named for the year the Ottomans took over Istanbul, is planned as a complex of 24 towers.
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“We have used all this free money to build houses and feed the domestic market.” Sonmez, who calculates that construction spending is now about 9 percent of the overall economy, a level that the International Monetary Fund has found to be associated with problems in other countries. Erdogan has favored the construction and real estate sectors at the expense of important export sectors. “The result could be a bust if this is not well managed.”Īccording to research by Mustafa Sonmez, author of numerous books on the Turkish economy, Mr.
“The official numbers are showing signs of risk,” said Hakan Eren, a real estate investment adviser. One result was a sharp increase in lending by Turkish banks, much of it directed toward property developers.īut as Turkish interest rates spike and the economy slows, local bankers and real estate experts are becoming increasingly worried that Istanbul’s real estate market may be heading for a fall.Īnd they are reminded of similarities between the situation here and what happened in Spain and Ireland, where alliances among banks, developers and politicians contributed to the creation of real estate bubbles that popped once interest rates began to rise, puncturing the overall economies as well. Erdogan’s timing was perfect, coinciding with the global liquidity glut unleashed by the world’s leading central banks to restore growth in the advanced industrial economies after the Great Recession. Upon completion in 2015, it will be the largest real estate development in all of Europe and perhaps the ultimate expression of the pell-mell construction boom that has underpinned Turkey’s decade of rapid growth under Recep Tayyip Erdogan, the nation’s Islamist prime minister. Named for the year this bicontinental city passed from Christian to Muslim hands, Maslak 1453 has been planned as a vast complex of 24 towers, shopping malls galore and, not least, a 1,453-meter-long (4,767-foot) shopping promenade that celebrates the most consequential date in Turkish history. ISTANBUL - “We are invading Istanbul again,” the real estate agent said enthusiastically as she ticked off the selling points of Turkey’s most ambitious development extravaganza to date: Maslak 1453.