Industry in trouble

Leading figures from major construction and real estate firms gathered at the Hürriyet Medya Towers to assess their industry and the steps to be taken to hedge the affects of the crisis.

The 38 representatives spoke about an array of problems the construction industry had been experiencing such as the lack of public trust, taxes on residential units, value-added tax disparity and banks not living up to financing agreements leaving construction companies in the lurch.

"The markets are stagnating with the concern that prices are or will begin to decrease," said Vuslat Doğan Sabancı, the chief executive officer of Hürriyet Newspaper and Printing Incorporated. Sabancı said there has been a lot of talk about the crisis, but that should all be left behind and instead there should be a focus on alternatives.

"I believe spring winds will begin to blow when the newly elected U.S. president, Barack Obama, takes office in January as long as we take the necessary steps and we proceed with our beliefs," said Yaşar Aş?ıoğlu, the head of the Constructors Association, or İNDER, and president of Aş?ıoğlu Construction.

"Think of a country where 95 percent of buildings need to be torn down and rebuilt. If we want to catch up with the developing world, we must live in modern and quality built residences. Even in this economic crisis we keep making kamikaze dives by continuing construction. In our situation, American constructors would have just closed up shop and solved the problem," Aş?ıoğlu said.

Government help
"We will not get anywhere by lowering prices. Private banks will not open up the faucets just because we tell them to. The prime minister needs to bring the state banks up to task by driving a competitive edge," he said.

Aş?ıoğlu said the margin for profit in the construction industry is not as large as people assume, therefore discounts are not a viable option. "Money has one address and that is real estate. Hedge funds were, as been proven, a dream. Foreign currency is obvious. The government needs to help us especially with taxes and with the way banks are doing business right now. Then in three months or five months we will decide not to work with banks and display this on our Web sites," he said.

The President of the Urban Land Institute in Turkey, Haluk Sur, also attended the seminar. He spoke about the value added tax disparity. "Apartments that are 150 square meters or less are taxed at 1 percent. Once you go above 150 square meters the value added tax increases to 18 percent. So a 151 square meter house is taxed at 18 percent. If this percentage is immediately reduced, that would create a lot of strength," Sur said.

"Another important point for us is to speed up urban renewal projects. When there is no urban restructuring it is difficult to find land plots with building permits. And on the topic of the value added tax it would be best if, as opposed to the 18 percent rule, value added tax for residential units above 120 square meters was taxed on a sliding scale or on a flat rate such as 8 percent," Sur said.

Daily News is a Doğan Media Group publication.