Why this ‘Disney city’ went bust

To most people, this city would look like a mirage — hundreds of luxury houses built in neat rows, their pointed towers somewhere between the iconic Disney castle and a classic French chateau.

The Sleeping Beauty castle at Disneyland is the centrepiece of the Fantasyland, and one of the most recognisable structures in the world.

However these villas, located deep in a provincial region of northwestern Turkey, are standing empty in what is anything but a fairytale for their investors.

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Meant to provide luxurious accommodations for foreign buyers, the ambitious development has been hit by regional turmoil, as well as the slump in the Turkish construction industry.

There are over 700 villas in the development. Picture: Adem ALTAN / AFP)

After a long period of solid growth, Turkey’s economy contracted 1.% in the third quarter, and many economists expect it will enter into recession this year.

The country has been hit by high inflation and a currency crisis in August. The lira lost 28% of its value against the dollar in 2018 and markets are still unconvinced by the readiness of the government under President Recep Tayyip Erdogan to tackle underlying economic issues.

The villas are close to the town centre of Mudurnu in the Bolu region, and are intended to resemble European architecture, as part of the Sarot Group’s Burj Al Babas project.

A number of the homes are virtually completed. Picture: Adem ALTAN / AFP

But the development of 732 villas and a shopping centre — which began in 2014 — is now in limbo as Sarot Group has sought bankruptcy protection.

It is one of hundreds of Turkish companies that have done so as they seek cover from creditors and to restructure their debts.

The Sleeping Beauty Castle is the centrepiece of Disneyland theme parks all over the world. Picture: Supplied/Disneyland

Sarot Group filed for bankruptcy protection after some of their Gulf customers could not pay for the villas they had bought as part of the $200 million (175 million euros) project, Sarot’s deputy chairman, Mezher Yerdelen, says.

The original dream of the project was for owners and investors to own a villa surrounded by beautiful flowers, much like the dozens of Disneyland landmarks around the world, giving people to feel like they’re living in “The Happiest Place on Earth.”

So far, $100 million has been spent on the project.

“Some of the sales had to be cancelled,” Yerdelen told AFP, after the company sold 351 villas to Arab investors.

The villas are worth between $400,000 and $500,000 each.

They were designed with the Gulf buyers in mind, architect Yalcin Kocacalikoglu says.

Yet the Al Babas project is hardly alone. Unfinished and empty housing projects are strewn across the country, testimony to the troubled construction sector, and the wider economy it now finds itself in.

A fairytale fanatic’s dream location to live. Picture: Adem ALTAN / AFP

“Whether we call it a construction bubble or a housing bubble, there is a bubble in Turkey,” Alper Duman, associate professor at Izmir University of Economics says.

He points to unsold housing stock as the main indicator of this, with data showing in that over the past 16 years 10.5 million apartments have been built but only eight million have been approved for use.

“There is a high risk this bubble will burst,” he says.

Trade Minister Ruhsar Pekcan said in mid-December that 846 companies had applied for bankruptcy protection since March 2018 but opposition daily Sozcu claimed in October the figure was more than 3000.

Turkish Chamber of Civil Engineers head Cemal Gokce expressed pessimism, predicting “more bankruptcy protection applications, bankruptcies” among construction companies.

He says too many homes have been built in Turkey.

The Disney castle villas are worth between $400,000 to 500,000 each. Picture: Adem ALTAN / AFP

And most are not luxury villas like Burj Al Babas with its style reminiscent of the Sleeping Beauty Castle at Disney theme parks, but simple apartments and homes for ordinary Turks.

The construction confidence index of the Turkish Statistical Institute (TurkStat) fell 2.1% in December to 55.4, after 56.6 in the previous month. Anything below 100 indicates a pessimistic outlook.

However, Kerim Alain Bertrand, who previously headed up a firm that provided and analysed data on Turkey’s real estate market, said recently he was more optimistic, partly due to the country’s growing population.

There is still a lot of work to be done in parts of the development. Picture: Adem ALTAN / AFP

“The construction sector is this country’s locomotive sector,” he said.

While there will be a consolidation in the sector, it will “continue to be kept alive” by the young population, he adds.

With reporting from AFP.

This article from the Herald Sun originally appeared as “Disney castle city sits deserted due to Turkey building bust”.