Turkey: Financial Center Next Stage in Istanbul’s Overdevelopment

A gecekondu (shanty) stands incomplete on a plot of land near Istanbul’s financial district site, where residents are negotiating with developers for the best possible deal. (Photo: Justin Vela)

In the run-up to Turkey’s June 12 parliamentary elections, Turkish newspapers have been full of Prime Minister Recep Tayyip Erdoğan’s “crazy” plans for massive infrastructure projects. Concrete will change everything. Or so the message goes. But for many Turks, plans for a financial district that would put Istanbul on a par with London, Dubai and Shanghai raise the question of how much “craziness” this overdeveloped city of 12.6 million people can actually bear.

Dating back to 2006, the plans for a financial district in the Istanbul suburb of Ataşehir were originally postponed due to the global financial crisis. Now, with a national election afoot and Turkey boasting Europe’s fastest rate of economic growth (8.9 percent in 2010), the idea has been revived.

Big ideas from Prime Minister Erdoğan -- creating two cities out of Istanbul and building a new shipping canal -- have become standard fare this campaign season. But news of the financial hub is not being met with the wink and nudge with which many Turks tend to view politicians’ promises. Some Turks even stand to cash in on the financial center’s establishment.

That sense of optimism runs strong among the ramshackle gecekondular (shanty houses) built by migrants over the past decades near the designated site for the district. The value of the migrants’ land is soaring. Turkish property developer Sinpas has offered to buy the land, but resident families, busy watching the development of the land around them, are holding out for more. “For 800,000 lira I would put my jacket on and leave,” says Osman who, more than 30 years ago, moved his family from the Black Sea region of Karabuk to the site, then an empty field outside Istanbul. He adds that Sinpas’ current offer per property was too little.

“Workers from [one of the nearby developments] came to wash. They asked for soap,” recounted Fatma, his neighbor, also from Karabuk. “They said ‘Your situation is perfect for another developer. You are going to be wealthy.’”

For the past five years, local officials have blocked residents who live near the financial district site from making additions to their homes, she claimed. The same, however, does not hold true for property developers, the largest of which is the Housing Development Administration (TOKI), which is directly connected to the prime minister’s office.

“In Ataşehir, there is some unused public land, and the state, through TOKI, can transfer this land to private construction companies; hence, privatizing public land easily and opening the land to profit-oriented development,” elaborated Bilkent University urban development expert Tahire Erman. “In this process, both TOKI and private developers will make much profit.”

A restaurant owner who is also facing pressure from developers to sell puts it in simpler terms: "The AKP sells land,” he said in reference to Turkey’s ruling Justice and Development Party. “That's the story of Turkey at the moment.”

Throughout Ataşehir, skyscrapers and apartment buildings are steadily rising, turning a district that had been slowly developing since the 1990’s into a real-estate hot spot.

Ataşehir restaurateur Gokhan Abana predicts that the construction will put Ataşehir “at full capacity” within one to two years, and that the district will become a commercial hub similar to Istanbul’s Taksim Square.

“Ataşehir will be central after a few years as the population increases. People choose living here for the standards of the area, and the location,” he said.

Already top banks have bought land in Ataşehir. The Banking Regulation and Supervision Agency, Capital Markets board, and the Turkish Banks Association are also expected to move to Ataşehir, along with the Istanbul Stock Exchange and, possibly, the central bank, currently located in Ankara.

Opposition supporters, however, claim that the relocation of institutions such as the central bank could open the door for a change in personnel that could give the government greater influence over fiscal policies, which are already a target of criticism by international and domestic economists.

With inflation rising and a widening current account deficit, Turkey’s economic instability has proven a key factor to date in preventing Istanbul from becoming an international financial capital.

The overburdening of the city is another. “Istanbul has reached its urban capacity as it is. [The new financial district] will affect Istanbul negatively as a whole,” no matter how many green spaces and pedestrian paths are included in the district’s plans, commented Eyup Muhcu, Istanbul head of Turkey’s Chamber of Architects.

Muhcu charges that the plan “lacks research, analysis.” “The project is just another check on the government’s to do list. Nothing more,” he complained. “These projects [are] brought into the agenda by some political circles, and investors.”

However, the criticism is met only with announcements for new projects, with Erdogan insisting the city must be expanded in order to meet higher living standards.

As construction of the financial district speeds up, Fatma and her neighbors are expecting Sinpas to offer them apartments of equivalent value to their land; flats which they can decide to live in or sell. In many ways, it’s a migrant’s dream. Yet many wonder which of Turkey’s dreams will be the first to burst.