Recent Developments in Construction Law

Overview

Turkey’s construction sector has seen an unusually large wave of legislation, case law and administrative guidance since late 2023. The reason for this is twofold: (i) post-earthquake safety and urban renewal priorities, and (ii) the need to cushion contractors against a volatile cost environment. In the following, the authors provide a practical tour of the headline developments, grouped according to the issues board members, lenders and project owners most often ask about.

Stronger risk management rules for new builds and urban renewal

Urban Transformation Law (Law 6306) – November 2023 amendments

The changes were as follows:

• demolition/renewal decisions can now pass with a simple majority of owners instead of the two-thirds threshold;
• civil court appeals no longer suspend urgent demolition orders; and
• public agencies may step in and carry out risk surveys ex officio

These changes make it markedly easier (and faster) to unlock redevelopment projects, particularly strata title apartment blocks in Istanbul’s earthquake risk zones – investors should revisit feasibility models that had assumed long owner-consent timelines.

Building Inspection Law (Law 4708) – concrete sampling communiqué (22 February 2024)

This law tightens on-site presence rules for site engineers during concrete pours, standardises the chain of custody for test samples and mandates digital reporting of results to the relevant Ministry’s portal. This matters for business because developers risk automatic suspension of works if sampling uploads are missing. Contractual time bars should therefore build in inspection buffers.

Site Chiefs Regulation – 6 April 2024

This regulation caps the number of floors and the total floor area a single site chief (şantiye şefi) may supervise, but sets looser caps for disaster reconstruction projects until 31 December 2025. This matters for business because staffing plans must ensure each project retains a dedicated, qualified site chief, and sharing staff across multiple small sites will be harder.

Remote land-registry transactions – 3 December 2024

Parties can now sign title deed transfers from different land-registry offices via the Land Registry and Cadaster Information System (Teokratik Adres Kontrol Bilgi İşleme Sistemi; TAKBİS) after paying fees online, enabling the closure of asset deals without flying all signatories to the same city; this is particularly useful for large portfolio sales.

Public works contracts and inflation relief

Presidential Decree No 8089/8090 (16 January 2024) – the “Enhanced Price Adjustment Decree”

The Enhanced Price Adjustment Decree covers Turkish lira (TL)-denominated construction contracts tendered before 1 March 2023 and still open on 28 December 2023.

For contracts with a price-adjustment clause, the B-coefficient rises from 0.90 to 1.00, and to 1.15 for TOKİ (Turkey’s government-backed housing agency) housing. For contracts without any clause, the employer must pay 15% of the domestic producer price index (D-PPI) change. Contractors may also claim an extension of up to six months if they applied by 15 February 2024.

As a practical tip, the higher coefficient should be factored into cash flow forecasts, and loan covenants tied to project margins should be updated.

Council of State decision (28 February 2024) on Article 46/6 of the Construction Works Tender Regulation

This decision struck down the “60% formula”, which had artificially lowered the value of work experience certificates in land-for-flat deals, calling it non-transparent and anti-competitive. Bidders may now restore certificates to their full value, improving their ability to pre-qualify for high-budget public tenders.

Regulation amendment of 10 December 2024

The relevant Ministry responded to the aforementioned ruling by introducing a clearer 85% benchmark (building permit area × unit cost × 0.85), which applies prospectively and allows the reissuance of past certificates.

As a practical tip, whether previous certificates can be upgraded within the 30-day window should be checked, and the higher amounts in 2025 tenders should be used.

Public Procurement Authority circular and decisions, May–June 2024

Tender documents can no longer force contractors to supply unrelated items (cars, laptops, etc) for the administration’s own use, and several tenders where bid rejection steps skipped document request procedures were annulled. These decisions serve to cut hidden project costs and strengthen challenges against arbitrary exclusions.

Courts sharpen contract discipline and property-rights balance

Key Court of Cassation rulings (2024)

Oral construction contracts – burden of proof

The 6th Civil Chamber overturned lower courts that had demanded the contractor prove works done under an oral deal; the rule is that the landowner must disprove completion once the contractor alleges performance. One should make sure contracts are in writing, but if not, the ruling offers a litigation lifeline.

Architectural drawings – IP rights

Reusing designs prepared for one public project in another without the architect’s consent infringes economic rights under the Copyright Law and triggers damages. Public sector employers can no longer assume automatic, unlimited assignment.

Title-deed transfer suits

Where a flat-for-land contract promises turnkey delivery, the unit buyer cannot force deed transfer until the builder resolves all zoning and occupancy permit defects; courts must quantify cure costs and allocate them under the contract. Pre-sale purchasers should therefore insist on escrowed hold-backs.

Constitutional Court – property rights versus safety

Article 18 of the Squatter Housing Law (Law 775), which allowed municipalities to demolish illegal structures without any written decision or judicial review, was annulled in February 2024. The Court held that even unpermitted buildings may embody constitutionally protected property, and owners must have access to a judge before the bulldozer arrives. Municipalities must now issue a reasoned order open to administrative appeal.

Safety and staffing compliance checklist for 2025 tenders

The checklist items are as follows.

• Concrete quality – new sampling rules: Ensure the site chief and inspection lab are visible in every pour log.
• Site chief limits: Reassess human-resource allocation, where exceeding the square metres cap can void the building permit.
• E-permit integration: Many municipalities have shifted to e-Ruhsat uploads – time should be allocated for digital scrutiny.
• Earthquake resilience: While the 2019 Turkish Earthquake Code is unchanged, recent (January 2025) zoning code tweaks clarify that the code in force at the original permit date applies in court – due diligence teams should secure the old permit set for each legacy asset.

Strategic takeaways for boards and lenders

The main takeaways are as follows.

• Budget certainty: The January 2024 Decree largely de-risks input-cost spikes for legacy public contracts, but new contracts must still contain bespoke escalation clauses; banks should make them a condition precedent.
• Urban renewal pipeline: The switch to simple-majority consent unlocks many ageing residential sites. Investors should engage early with holdout owners to avoid expropriation delays.
• Tender competitiveness: Reissued work experience certificates and the removal of “gift equipment” levies will lower entry barriers; expect more bidders and slimmer margins.
• Litigation exposure: Courts have moved property owner, architect and contractor rights closer to EU standards; due diligence must review IP assignments, zoning compliance and evidence of written contracts.
• Digital and remote workflows: Remote title deed execution and mandatory digital reporting lead to efficiency gains but create cybersecurity duties; internal controls should be updated accordingly.

Conclusion

The post-earthquake reforms have tightened technical compliance while softening the economic blow of high inflation on ongoing projects. Early adopters – developers who digitalise permit files, renegotiate escalation clauses and refine staffing plans – will enter 2025 tenders with a clear edge. By contrast, overlooking seemingly “minor” rule changes (concrete sampling, site-chief limits, demolition due process) can still halt works or void certificates.

Recent Trends in Construction Law

The post-earthquake rebound is still the main growth engine

This rebound is characterised by:

• double-digit real output growth – TÜİK’s Construction Production Index shows activity rising by 10.5% year on year in March 2025 after a 12.7% jump in February, keeping the sector well above its pre-shock trajectory;
• reconstruction pipeline – two years after the February 2023 quakes, only about 201,000 of the 650,000 promised homes have been delivered, but the government and TOKİ still control the country’s largest single capital expenditure programme, worth an estimated TRY3 trillion (approximately USD100 billion) through 2028;
• urban transformation accelerators – amendments to Law 6306 (the “Risky Building Law”) lowered the consent threshold for demolition/renewal to a simple majority of owners, unblocking thousands of stalled projects in Istanbul and Izmir; and
• prefabrication and modular surge – prefab market leaders such as Karmod reported six-month order books for temporary camps and permanent housing in the disaster zone, and container homes are also gaining popularity among households squeezed by prices in major cities.

As a business takeaway, more than half of medium-sized contractors’ 2025 revenues are tied – directly or via subcontract chains – to quake-related housing and infrastructure. Bid capacity and working capital lines should be prioritised for these tenders.

Costs are stabilising but remain far above 2022 levels

Construction Cost Index (CCI) – March 2025

The latest reading for the CCI is +18.8% (materials), declining from +40% in mid-2024. Steel and cement prices cooled on softer export demand.

Housing Price Index – April 2025

The latest reading for the Housing Price Index is +32.9% (nominal; –3.6% real). Real prices are now falling against the Consumer Price Index (CPI) for the first time since 2019.

Inflation buffers

The Enhanced Price Adjustment Decree lets contractors on older public contracts recover up to 100% of input price changes; for new contracts, firms still create bespoke escalation clauses pegged to D-PPI.

Although material inflation is no longer an existential threat, margin planning should still stress test 15–20% annual swings in steel and cement prices.

Sustainability moves from “niche” to procurement baseline

Green cement is now mandatory in public works in Turkey. A communiqué from 16 March 2024 caps clinker ratios at 0.80 in public tenders from 1 January 2025, tightening to 0.75 in 2030.

There has also been momentum in respect of Leadership in Energy and Environmental Design (LEED) and the Building Research Establishment Environmental Assessment Method (BREEAM). Turkey now ranks ninth globally for LEED projects, with 1,800+ registered or certified buildings; private developers use certification to attract green finance.

Turkey is the EU’s largest cement supplier; 42% of Turkish exports to the EU will be carbon border adjustment mechanism (CBAM)-covered, accelerating domestic carbon pricing reforms and with a pilot emission trading system (ETS) set for early 2025.

From 2025 onwards, project models that ignore clinker limits, environmental product declaration (EPD) requests or CBAM-driven cost uplifts risk being flagged as “non-compliant” in both public and bank due diligence screens.

Finance and PPP activity broaden beyond classic highways

As green funding channels, the International Finance Corporation (IFC) and local banks have launched green mortgage pools and covered bonds totalling more than USD150 million to spur energy-efficient housing.

The PPP pipeline now tops USD215 billion. Since 1986, Turkey has signed 272 PPP deals; more than half closed in the past decade, and transport still accounts for the lion’s share, but new hospital, port and data centre PPPs are now on the market.

Regarding international contracting strength, eight Turkish firms feature in the “2024 Top 250 International Contractors” of the Engineering News-Record (ENR), and deals such as Yapı Merkezi’s USD3 billion Uganda railway highlight overseas diversification despite a domestic focus.

Equity investors will increasingly ask for ESG screens and CBAM readiness; meanwhile, Turkish contractors’ overseas earnings provide an FX hedge against TL-denominated domestic margins.

Technology adoption accelerates slowly but decisively

Building information modelling (BIM)

A government pilot requires BIM files for public buildings over 20,000 m² in size in 2024–25, and BIM is already mandatory for private megaprojects. Obstacles reported include fragmented standards and skill shortages.

AI and data analytics

AI has seen early use in safety risk prediction and cost optimisation, and professional bodies have promoted continuing professional development (CPD) courses in 2024–25. However, obstacles include cultural resistance and limited local case studies.

e-Ruhsat/Building Control System (Yapı Denetim Sistemi’ne; YDS) digital inspection

Ministry portals now handle concrete sampling, site chief registration and permit tracking nationwide. However, SMEs struggle with hardware and connectivity in rural sites.

Business takeaway

Digital compliance (e-concrete logs, QR-coded site chief IDs) is increasingly becoming a legal requirement; chief investment officer (CIO) budgets that focus only on BIM may miss “small” but critical inspection systems.

Labour force and governance adjustments

Concerning site chief limits, April 2024 regulation caps the floor area that a single site chief can oversee, forcing firms to budget for more certified staff or face permit suspension.

Oversight of concrete pours has also been strengthened. A communiqué from 22 February 2024 demands real-time digital upload of sampling data; missing entries trigger automatic work stoppages.

Finally, the Court of Cassation shifted the burden of proof to landowners where oral construction contracts exist, underlining the importance of written agreements for dispute management.

Housing affordability shifts demand patterns

Real housing prices are cooling but remain high. Nominal home prices rose 33% year on year in April 2025, but they fell 3.6% after adjusting for the CPI. New-build delivery still lags urban demand, especially in Istanbul.

An increase in small-footprint and modular homes has also been seen. Container and prefab units cost roughly half the price of a conventional flat and can be installed on peri-urban land, and demand is rising among young families and retirees. Developers exploring smaller unit sizes, build-to-rent housing and prefab townships may be able to capture unmet price-point segments while also reducing cycle time.

Strategic implications for boards

Based on the foregoing, the recommendations for boards are as follows:

• quake-driven demand – allocate management attention and working capital to the south-east reconstruction pipeline, and pre-qualify with TOKİ at an early stage;
• green compliance – audit clinker ratios and CO₂ footprints, and begin CBAM data gathering now to avoid export bottlenecks in 2026 when full pricing starts;
• digital mandatory systems – ensure concrete testing labs and site chiefs are integrated with YDS, and include them within the scope of engineering, procurement and construction (EPC) contracts;
• cost volatility – retain separate escalation mechanisms for materials and labour, and monitor the CCI on a monthly instead of quarterly basis; and
• financing mix – blend green mortgage and PPP structures to lower the weighted average cost of capital (WACC), and explore multilateral climate-guarantee platforms for large projects.

Conclusion

Turkey’s construction market is entering a “high-discipline, high-demand” phase. Earthquake rebuilding and urban transformation underpin volume, and sustainability rules – along with decrees on digital inspection and cost control – raise the compliance bar. Companies that industrialise (potentially involving the prefab marketing and BIM), decarbonise (potentially involving green cement or EPDs) and professionalise (eg, through robust contracts or digital records) are best placed to turn the post-2023 rebuilding wave into stable, export-ready growth over the next five years.