Dec 14 2018

Istanbul neighbourhood turns from urban renewal into degeneration

Fikirtepe, a central Istanbul neighbourhood once promoted by the government as a flagship of urban regeneration in Turkey, is on the agenda once again, but this time as a symbol of the country’s recent economic decline. 

Fikirtepe is located on hills above the Bosporus near the districts of Kadikoy and Üsküdar, and close to the D-120, a major road artery running through Istanbul’s Asian side. It was once known for its strong neighbourhood culture and for its large population of students, who rented dwellings close to nearby universities. Still, when the government notified its 100,000 residents that an urban transformation project was in the pipeline, most people welcomed it knowing that money and new infrastructure would pour into the lower middle-class area.

The project kicked off in 2010. Contractors started to acquire houses and land in exchange for promises of new apartments and shops. Until building was complete, people would receive rental income from the firms. While constructors pedalled their financial offers to local residents on Fikirtepe’s streets, other opportunists operating in the grey economy, known as “sandbaggers”, moved in, seeking to make money by buying property and then selling it on to construction firms at a higher price. The area became a hive of Turkish real estate activity.

Fikirtepe was divided into 61 so-called “islands” or sections of land comprising between four and 35 acres. A commission was created for each area that would be responsible for interviewing and dealing with contractors assigned to knock buildings down and build new ones in their place.

However, not all of Fikirtepe’s occupants agreed to take part in the government’s plans. This apparently created a problem that swiftly needed resolving, said Ercüment Oruç, head of the Fikirtepe Education and Merdivenköy Neighborhoods Association (FİDEM).

The government decided to apply law No. 6306, which would allow it to knock down and reconstruct buildings considered at risk of collapse or vulnerable to natural disasters. Fikirtepe’s buildings became just such edifices. Consequently, those who had not agreed to the government’s plans were now required to do so by law.

Once the massive construction projects began and new buildings started to rise throughout the area, bigger problems started to surface. Construction firms couldn’t sell enough of the apartments they had built or had agreed to build. The wider economy was suffering, inflation was accelerating and so were interest rates on mortgage loans.

The downturn in the construction industry, spurred by higher loan costs and an oversupply of buildings, began to accelerate this year as interest rates surged to new heights and building costs rose at a rate of more than 40 percent. 

Construction at many building sites in Fikirtepe stopped. Some companies operating in the area then began to resort to legal protection from creditors, while others were failing to pay compensation, in the form of rent, to residents who vacated their homes to allow building to begin.

Eyüp Bülbül, a resident, says Fikirtepe is like a construction cemetery.
Eyüp Bülbül, a resident, says Fikirtepe is like a construction cemetery.

“When the crisis erupted they couldn’t sell, costs shot up,” Oruç said. “Now firms who built here are regretting it. They’re not even asking for profit anymore -- they just want people to come and buy the apartments. That’s enough.”

Oruç said several top national firms active in Fikirtepe were among those who had applied for bankruptcy protection. They included Emay Construction, Nuhoglu Construction and Ceylan Construction. The businesses of many other firms are grinding to a halt, he said. 

Foreign investors who were once involved have pulled out too, Oruç said. Among them was a member of the family of the Emir of Qatar, a close political ally of President Recep Tayyip Erdoğan who became a partner in one of the projects, he said.

Around 30,000 of Fikirtepe’s residents are now victims to what can only be described as the financial collapse of the government’s project. Ankara should now accept the situation and step in to help ordinary people as construction companies rescind on their deals, Oruç said. 

Firms had promised property of a certain size to those who agreed to vacate their homes. A typical offer would be an exchange of a 100 square-meter property for one 250 square meters in size. But now builders who are still active in the area are offering much less than they initially promised, telling residents that they must share the financial burden if projects are to be completed. 

“The state must take measures against the threat of fraud,” Oruç said. “The state must enact laws that govern urban transformation to protect ordinary people.”  

Fikirtepe’s demographic structure is also changing as construction projects there fail. Some buildings that lay empty have been occupied by immigrants from Afghanistan and Uzbekistan. Drugs are also becoming a problem, as well as prostitution, according to local residents. 

“We complained to the police and the district authorities, but there’s been no resolution of these problems,” Oruç said. 

Much of Fikirtepe remains a half-finished construction site with half demolished streets and vacant buildings. A tent city was established as a way for residents to protest lack of government action, said Yasin Bektash, president of the Fikirtepe Urban Transformation Association. Tens of thousands of people are adversely affected, including 20,000 who own houses that are damaged or that were to be demolished and are now at risk of collapse, he said. 

Local resident Eyüp Gübül, who vacated one home, said his finances have taken a nosedive due to the broken promises of construction firms and lack of government help.

“I had a house and a car three years ago. Now I have no home and no car,” he said. “I'm paying rent for an apartment, but the contractor hasn't paid the rent on my own property for two years.”

“There are no firms that can sell these apartments,” one real estate agent said. “Interest rates have almost doubled. Fikirtepe is like a construction cemetery.”