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Turkey 2012 | REAL ESTATE & CONSTRUCTION | INTERVIEW

TBY talks to Ahmet Haluk Karabel, President of TOKİ, on the renovation of Turkish cities, environmentally friendly developments, and the role of foreign investment in the country's construction sector.

Ahmet Haluk Karabel
BIOGRAPHY
For 25 years Ahmet Haluk Karabel worked as an architect, chief supervising engineer, site chief, project manager, and senior executive in the private sector. In 2003 he was appointed Vice-President of TOKİ, and in 2003 he was commissioned as Deputy General Director at Emlak Konut REIT. He held the Vice-President position until he was appointed as President in 2011.

TOKİ plays a major role in the regeneration of Turkish cities. The new finance center in Ataşehir, Istanbul and the micro-cities throughout Turkey are cases in point. What role does TOKİ play in supporting these projects?

The land in Ataşehir, Istanbul, where Turkey's first finance center is to be constructed, originally belonged to Emlakbank. When Emlakbank was liquidated, its assets were passed to TOKİ and its affiliate, Emlak Konut Real Estate Investment Trust. Approximately 800,000 sqm of this land has been planned for the new finance center. The finance center was planned to be somewhat larger than that of New York, designed as a destination that could cater to the world. To date, planning efforts have been executed by the Emlak Konut Real Estate Investment Trust, under the supervision of the Ministry of Environment and Urbanization. The project involves buildings for Ziraat Bank, VakıfBank, Halkbank, the Capital Markets Board of Turkey (CMB), and the Banking Regulation and Supervision Agency (BRSA), as well as a modern shopping center, offices, hotels, and residences.

What role will foreign investment play in the development of the finance center?

This investment was received favorably by foreign investors, but most of the funding will be provided by local investors. Foreign investors have been very active in Turkey since 2005, and foreign banks conducted interviews to lend loans to TOKİ. We are always open to foreign investors in our revenue-generating projects. In this context, we can start companies jointly to launch suitable projects. As a pilot firm, 51% of the shares of potential companies should belong to us.

What is the investment process for TOKİ when it comes to micro-cities?

The tender stage is reached by submitting a planning study to the Ministry of Environment and Urbanization. We make an announcement and call for the investors to bid on prestigious projects where no public funds are spent. After that, we award the contract to the firm with the highest bid to the administration through TOKİ and our affiliates. Our investment process takes about two and a half to three years for joint revenue-generating projects. The process of announcing tenders in line with the Public Tender Law with the equities of TOKİ takes from 1.5 to two years.

Approximately 50% of Turkey's housing stock will need to be rebuilt to meet earthquake-resistance regulations. What role will TOKİ play in this reconstruction process?

TOKİ has been successful in reaching its objective to build 500,000 new housing units and social facilities by 2011. Prime Minister Recep Tayyip Erdoğan asked TOKİ to construct another 500,000 houses by 2023. Over the last nine years, we have begun building 550,293 houses at 2,406 distinct construction sites in 81 provinces and 800 districts in Turkey. This means that we have created 21 micro cities with a population of over 100,000, in addition to sub-structure and social facilities. We also initiated the construction of 839 schools, 285 hospitals and village clinics, 27 retirement homes (245 buildings), 191 homes for handicapped citizens, 103 dormitories and pensions, 464 trade centers, 867 gyms, and 41 libraries, with investments totaling TL46 billion ($31 billion). We continue to work on projects aimed at supplying housing and earthquake-resistant homes for low-income citizens, which is carried out in cooperation with the private sector.

How important is building environmentally friendly buildings?

The concept and technology of “green" housing ranks high on the agenda in several countries, particularly in the US and Europe. We are tasked with managing the appropriate use of water and energy, implementing ecological features, building with eco-friendly materials, utilizing waste, and designing structures in harmony with nature. Turkey has reached a hazard limit in terms of carbon dioxide emissions, and most of the energy consumed is for heating and cooling purposes. Nevertheless, we aim to promote the minimal use of energy in heating and cooling. In terms of energy efficiency and renewable energy in houses, TOKİ pioneers pilot housing projects where solar, wind, geothermal, biogas, fuel cell, and energy-efficient design material implementations are used in the different climatic regions of the country. In fact, 5% of our investment has been focused on green building projects, and we are working to increase this ratio. For example, we are benefiting from solar energy for our homes, elevators, and water supply. The organization has been careful to follow the TS 825 Heat Insulation Rules Standard, as well as save fuel during the construction process. At our Istanbul Kayaşehir Project site, 20,000 of the 65,000 units are using green technology. We are constantly working on new projects and technology, recognizing the importance of R&D. There are several new projects in the field, which we continue to develop with local universities and research institutions. In 2008, we conducted a study in collaboration with the Middle East Technical University (METU) called the “Development of a Compilation Method on Human-Environment Relations Necessary to Form Urban Environment Standards in Housing Development Areas." We have already started to implement the results of the program in our projects. With a new project we initiated regarding the sustainable building standards in terms of environment and economy, we will further diversify and develop our environmentally friendly implementations.

How does TOKİ intend to meet the housing shortage?

There are 19 million housing units in our country, and there is a housing deficit of 2.5 million units. This means that approximately 600,000 houses should be constructed each year. TOKİ has met 5%-10% of the deficit in the last nine years. We offer houses with all necessary social facilities to our citizens, such as health centers, schools, parks, shopping centers, sports complexes, dormitories, libraries, and anything else necessary for modern life. We also regulate the existing real estate sales mechanism in the market through our implementations of this scale.

What developments does TOKİ foresee in terms of access to mortgages and financing to increase home ownership rates?

In developed and emerging countries, low-income groups can acquire houses through public subsidies to a great extent. TOKİ attempts to fulfill this duty for the benefit of the public by allocating the highest amount of funding to housing production and financing. We construct housing units on land owned by TOKİ and then provide loans to support the sale of these homes. We target low- and middle-income families that cannot afford to purchase a house under current market conditions, but still have a certain level of savings to buy houses through suitable payment terms. For this purpose, we have launched the “Revenue Sharing Model" on land with high revenue in metropolitan areas in order to fund our programs. This model constitutes an example of practice in the field of housing finance, a new financial fund-raising model, and effective cooperation with the private sector for a state with limited resources.

What projects are you most proud of at TOKİ?

The volume of housing produced by TOKİ across the country over the last nine years is equal to the establishment of 21 cities, each with a population of 100,000. With a production quantity of over 550,293 houses, we have provided employment to approximately 800,000 people directly and indirectly since 2003. These data are a source of pride for our administration. In line with the instructions of Prime Minister Erdoğan, the fact that TOKİ will take an active part during the planning and implementation stages of the 2020 Summer Olympics bid constitutes a comprehensive project that makes us proud. TOKİ will maintain this successful performance with a new vision aimed at building another 500,000 houses by the end of 2023.