June Construction Output Slumps, Service Sector Surprises with Growth

Turkey's June data revealed a 6.0% year‑on‑year and 0.5% month‑on‑month decline in construction output, while the services index rose 1.3% YoY and 0.6% MoM.

Construction Sector Downturn

The building construction index fell 7.5% compared with the same month last year, and private construction activities dropped 7.6%. In contrast, non‑building structures posted a 4.5% annual increase.

Service Sector Growth Engine

Information and communication services led the sector with a 9.4% yearly surge. Transportation‑storage (1.3%), accommodation‑food (1.5%) and professional‑scientific‑technical services (1.7%) also posted positive gains.

Index Movements: Year‑on‑Year vs. Month‑on‑Month

■Building Construction: -7.5% YoY, -0.4% MoM

■Non‑Building Structures: +4.5% YoY, +0.1% MoM

■Private Construction Activities: -7.6% YoY, -1.0% MoM

■Real Estate Services: -8.8% YoY, +1.9% MoM

Market Commentary and Outlook

While the construction sector continues to contract under the pressure of higher interest rates and softening housing demand, the services sector maintains modest growth, buoyed by strong performance in information‑communication. Analysts expect ongoing project delays and cost pressures in construction, whereas the digital transformation in services is likely to sustain investor interest.

Murat Yıldız – Real Estate Development and Valuation Specialist

The decline in construction output is directly tied to insufficient housing supply meeting demand and tighter credit conditions. This scenario raises the risk of price volatility in the medium‑to‑long term. Conversely, the services sector's expansion—particularly in information‑communication and logistics—signals continued investor appetite. Portfolio diversification, with a tilt toward service‑heavy assets, can help mitigate construction‑centric risk and deliver strategic upside.