Turkiye’s tight credit and stalled megaprojects resulted in a slowdown in real estate and investment, but residential demand, M&A, and tech activity keep the market afloat ahead of a hoped-for 2026 rebound, according to Balcioglu Selcuk Eymirlioglu Ardiyok Keki Attorney Partnership Partner Ali Can Goren.
“The Turkish Central Bank has been working to strengthen the lira, mainly to prevent it from losing further value against the US dollar,” Goren explains. “While this has helped stabilize the lira against the US dollar, it has also made goods and services more expensive, which in turn has hurt the competitiveness of Turkish exports. At the same time, the Turkish Central Bank has been pursuing a form of quantitative tightening, limiting liquidity in the market. This has made credit harder to access and loans more expensive, leading to a noticeable slowdown in real estate and infrastructure projects. However, despite the measures employed by the Turkish Central Bank, fiscal policy and government spending remain lax, which leads to sticky inflation, driving the price of goods and services even higher.”
“Government contracts are still moving forward, but we haven’t seen the kind of massive undertakings that characterized the past, such as new airports or mega bridges,” Goren adds. “The much-publicized Canal Istanbul project, which was expected by some to spark a wave of construction, remains on hold. Investment has also slowed, weighed down by the political conjuncture and reduced capital inflows.”
That said, Goren stresses that construction never really stops in Istanbul. “Residential real estate remains in constant demand, so strong local contractors continue to build, though the activity is mostly driven by private players rather than government-backed or foreign-funded projects,” he notes. “Still, 2025 looks like a relatively quiet year, with many hoping momentum to return in 2026. On the commercial side, there’s little appetite for new malls or large office towers, as Istanbul is already fairly saturated and demand simply doesn’t justify new large-scale projects.”
According to Goren, “the slowdown has been felt across key sectors such as manufacturing, tourism, and textiles, but it’s also reshaping deal activity. Many companies are looking to exit, while others see this as an opportunity to enter or expand – so M&A remains relatively active, especially in private share deals. That said, the wave of big-ticket IPOs, which played an important role in the previous year’s market, seems to have receded. Venture capital and private equity continue to play a strong role, with Turkish startups attracting international interest, often through ‘flip-ups’ into Western markets.”
“Banking and finance, however, remain under pressure,” Goren adds. “With fewer foreign loans flowing into the country and domestic banks tightening their lending, financing is constrained. As a result, there’s been a noticeable increase in restructurings and refinancings – a natural consequence of the broader slowdown.”
One area that remains lively, according to Goren, is technology. “International tech companies with a strong presence in Turkiye continue to generate activity, and homegrown players in tech are increasingly gaining traction. Conversations around AI regulation are also picking up, as stakeholders prepare for the growing role of AI in the economy,” he emphasizes.
“The market may be slow, but it isn’t stagnant – and many are already looking ahead to 2026 in the hopes of an upswing,” Goren says in conclusion.
