ISTANBUL, Jan 11 (Reuters) - Turkey’s construction sector will grow about 4 or 5 percent this year, slightly less than originally forecast due to new rules on value-added taxes (VAT), the chairman of an industry group said.
The construction industry grew about 1.5 percent last year, Isik Gokkaya, chairman of the Association of Real Estate Investment Companies, also told Reuters late on Thursday.
“We had a growth forecast of 5 to 6 percent in 2013, due to some positive factors such as urban transformation projects and lower mortgage rates, but we will revise down our forecast by 1 to 2 percentage points after the new VAT regulation,” he said.
Turkey introduced this year a regulation under which the VAT on real estate will be determined according to its location and valuation, making real estate ownership more costly.
“The number of new construction projects will fall in 2013 in line with the expectations that housing demand will decline further in 2014 after the regulation,” said Gokkaya.
New home sales in Turkey are around 400,000 to 450,000 units per year in average, Gokkaya said.
Construction and related businesses add about 300 billion lira ($170 billion) to the Turkish economy annually.
$1 = 1.77 lira Reporting by Ceyda Caglayan, Writing by Ece Toksabay; Editing by Ayla Jean Yackley and Mark Potter