Istanbul, July 5 — Orhun Kartal, Chairman of the Board of Koray Group, highlighted the severe impact of high housing costs and limited credit availability on Istanbul’s real estate sector during an interview with Bloomberg HT.
Kartal stated that housing costs are extremely high and profitability in the sector is remarkably low, pointing out that despite continued efforts, sales remain challenging.
“In 2002, our ‘Istanbul Istanbul’ project won Turkey’s first MIPIM award. It’s a residential project in Göktürk, and we started the third phase last year. It will be completed in about eight months,” said Kartal.
“Land prices have always been expensive and problematic, and this has not changed. Labor costs have increased and remain high. When we calculate these into the cost of housing, the final sales price becomes unaffordable. Profit margins in the sector are nearly nonexistent.”
Limited Credit Access Hindering Demand
Kartal stressed that restricted financing conditions are a major barrier, especially in Istanbul, where higher-quality and well-located housing projects often exceed credit eligibility limits.
“Financing is not available. Regardless of the credit amount, there are strict limits. Our buyers cannot obtain home loans due to these limits and high costs. Even if credit is available, it’s extremely expensive. This results in significant demand constraints in the Istanbul market.”
Overseas Expansion and Real Estate Investment
Discussing Koray REIT’s (Real Estate Investment Trust) ambitions, Kartal noted their intention to expand abroad while continuing domestic investments.
“Koray REIT, Turkey’s first real estate investment trust, was established in partnership with Yapı Kredi Bank in 1998 and has been publicly traded since then. In 2021, Yapı Kredi exited the venture and we took full control. The ‘Istanbul Istanbul’ project is a REIT project, and we have other land projects under planning,” he explained.
Kartal announced that the REIT’s first overseas project began in April in Prague, Czech Republic, with the acquisition of a 180,000 m² plot for a development worth approximately €200 million. The project is scheduled to begin within a year. New opportunities in Romania and Poland are also under review.
Renewable Energy Investments
Kartal also outlined the group’s strategic moves in renewable energy, managed under two companies: Kartal Renewable Energy and Huner Renewable Energy, both of which have gone public.
“We sold our stake in Kartal Energy to finance real estate ventures, but we still own Huner. It has solar, hydroelectric, biomass, and hybrid power plants. Our first investment was in Ukraine, but war stalled operations. We later moved into Greece and have a 60 MW project in Romania under construction, to be completed by year-end. We also plan a solar project in Italy,” he said.
The group’s goal is to reach 100 MW of installed capacity by the end of 2025, with ambitions to reach 500 MW and 1,000 MWh of AC storage capacity within two years. Kartal revealed plans to take the company public in the Netherlands in 2027.
Domestically, they aim to add 50 MW through hybrid upgrades to licensed hydro plants. Huner has also acquired battery and production licenses abroad and is finalizing project documentation.
Venture Capital Focus on Defense and Clean Tech
Koray Group also established Koray Venture Capital Investment Trust in February, making four investments so far.
“We invested in companies that produce construction materials, renewable energy components, and related sectors. Our first and largest investment was in Vergo, a steel structure manufacturer for solar energy systems. Other investments include a socket and switch manufacturer, a fintech company, and a defense industry firm. We plan to focus more on defense going forward,” Kartal said.
Celebrating 70 Years of Koray Group
Marking the company’s 70th anniversary, Kartal reflected on its rich history:
“Koray Construction was founded by Aydın Koray in Ankara in 1956. The company built significant public buildings, including the DSİ General Directorate and the TRT headquarters. It also constructed İş Bankası’s iconic headquarters, Turkey’s first skyscraper with a raw concrete façade.”
“In 1971, we began operations in Istanbul and moved our headquarters there in 1976. This year marks our 50th year in Istanbul. We built many landmark buildings on Büyükdere Avenue, including 6 bank HQs, 17 high-profile structures, Sabancı Center, and Kristal Kule.”
Source: Bloomberght/ Prepared by: İlayda Gök