“We plan to receive a large share in highway and bridge construction” 

 Alarko accelerates growth with its projects ranging from a city hotel in Istanbul, from Alkent 2000 to tenders for nuclear power plant, highways and bridges.

Alarko accelerates growth with its projects ranging from a city hotel in Istanbul, from Alkent 2000 to tenders for nuclear power plant, highways and bridges.  How do you see the investment climate in Turkey for the coming period with respect to real estate investments? Could you talk about your ongoing real estate projects?  

The Lake Mansions project, the third phase of our Alkent Istanbul 2000 project has been nearly completed. There are only some minor works to be completed and a large part of it was sold. I think the remaining ones will be sold within this year. Real estate sector has been very buoyant since the end of 2003. It entered stagnation in 2007. The fluctuation that happened in mid-2006 and the raising of interests by 4 points has led to a fall in the demand for real estate. But despite that fall, there occurred an incredible growth on the supply side of this business. Since the sector was in a rapid growth phase, there happened many entries from other sectors into construction business. However, stagnation already started by then. Many people and enterprises, although not doing it out of profession, have begun to be active in various fields particularly in housing. A considerable excess supply was created in real estate. If the current conjuncture takes a more negative turn, this excess supply will put further burden on enterprises in the sector. Even if the sector is in a good condition, I do not expect new projects to be initiated in 2008. Moreover, it is possible to predict the same for 2009. For it is necessary to get rid of the current stock. I do not expect a revival in real estate sector before the elimination of excess supply.  

Could we learn about the plans of the Alarko Tourism Group for 2008? 

We have a plan for a city hotel in Istanbul and we are carrying out a search for location. We are carrying on our search for location meticulously, analyzing every detail. We attach great importance to the concept of a city hotel. It is because Istanbul is reaching higher planes with its potential and is rapidly becoming a commercial and cultural center. There is a need for high-quality hotels. So, when we find a suitable land we will start the city hotel project.  Secondly, we think of starting a large-scale project in North Cyprus. It will be a very large complex containing accommodation, housing and social facilities. We are a good brand in tourism both within and outside Turkey and will go on doing works which are compatible with our position. 

When we evaluate the recent years, it will not be wrong to say; “Energy sector is the center of attention for almost all giant companies.” Your involvement in this field has been going on for many years… Do you think of further developing Altek expanding it considerably? 

We have built Turkey’s first BOT-based hydroelectric power plant in Bolu-Hasanlar. This model was not known in Turkey at that time. Energy is also among sectors into which we have introduced some novelties. There are sectors in Turkey which come into “fashion” during some periods. In these periods, there occurs a rush into these fields and it results in excess supply in the end. Following this period, we hear about closing down and transfer of companies one after the other. I hope the same will not happen this time again. Personally, I believe it is wastage of resources from macroeconomic viewpoint. It is just that production should match demand. You can use that resource in a more productive field and prevent it from vanishing away. At the same time, you can contribute to national economy and create large employment. 

Energy is one of Alarko’s main fields of activity. We envisage a significant growth in energy. We have bought a land in Karabiga in accordance with our growth strategy; we will build a 1260-MW coal-fired power plant there. Our experts have started to work on it. In addition to this, we have applied for land in Samsun for a 500-MW natural gas-fired power plant and following the appropriation of land we will begin ground survey. We will enlarge the capacity of our natural gas-fired power plant in Kırklareli by 100%. Another energy project is the Karakuz Hydroelectric Power Plant on Körkün River in the province of Adana. Planned to have around 100-MW installed capacity, the investment total of the plant will be nearly 100-130 million dollars. Other firms have filed a lawsuit related with Karakuz bid and we are waiting for the suit to result. If the result is favorable to us, we will immediately begin this investment; we have already completed preliminary works. The law relating to nuclear power plants was passed and we are waiting for the regulations. Our talks with American, European and Korean companies which are specialized in nuclear power plants are still going on. We will participate in the bid after coming to an agreement with one of these companies. 

A memorandum of understanding was signed between Alarko and Standard Ünlü Menkul Değerler in order to set up a fund for investing in infrastructure projects. At which stage are your works in this field? What are your expectations for this fund? 

Highway privatization tenders are to begin toward the middle of this year. Boğaziçi and Fatih Sultan Mehmet bridges were also included in the privatization efforts. We think of participating primarily in highway tenders. We will participate in tenders through the fund we set up and we plan to get a large share. We aim to participate in tenders for Bosphorus Bridge, İzmit Bridge and its ring roads together with Bursa and İzmir highways. In addition to these, we think of participating in the energy projects I mentioned again through this fund. Our work on the fund is still going on. Towards the middle of this year details will become clearer. 

How do you evaluate the stock market performances of the companies that are members of Alarko Group of Companies?

 We have three companies that are quoted on the stock exchange: Alarko Holding, Alarko GYO and Alarko Carrier. I do not find our stock exchange performance satisfactory; I think we have to improve it. For our projects at hand have the potential to secure this improvement. 

Alarko is one of the leading companies in Turkey. Do your corporate governance efforts also contribute to this leading position? 

Corporate governance is among the grounds of a company’s operational policy. Now a company’s large shareholders also see themselves at the same level with other shareholders. That is to say, they separate company’s assets and managerial decisions from theirs. Company’s management is designed according to objective criteria and everyone complies with these rules. Professionals appear to be more dominant in company’s decision making mechanisms. Transparency is brought into the company. Responsibility and accountability become established in the company’s operations. Everyone feels forced to render account. To whom does the owner of a company in which corporate governance principles are not applied render account? To nobody, of course… He cannot be expected to feel responsible toward anyone. A person cannot be both a judge and a plaintiff at the same time. However, corporate governance carries the philosophy of business to a different platform completely changing the way of doing business. Consequently, companies have a longer life span due to being more professionally managed. Life of companies is not limited by that of their owners.