CONSTRUCTION

Russian developers and joint ventures with Turkish construction firms: what makes these partnerships work

Turkish contractors have delivered major projects across Russia for decades. That relationship increasingly runs in both directions, with Russian developers partnering with Turkish firms on projects inside Türkiye itself.

Jul 2024·5 min read
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Turkish contractors have built an extensive track record delivering major infrastructure, commercial, and residential projects across Russia over several decades, giving many Russian developers direct, first-hand familiarity with Turkish construction capability before they ever consider a project inside Türkiye itself. This existing relationship is a genuine advantage for Russian developers now looking to invest or develop directly in the Turkish market, though the dynamic of being a client inside Türkiye differs from having engaged a Turkish contractor on a Russian project.

What Russian developers already know

Having worked with Turkish contractors on Russian projects, Russian developers typically arrive with an accurate sense of Turkish contractor technical capability, work quality at the top tier is genuinely strong, and project management culture, including the communication and documentation patterns typical of experienced Turkish contracting organisations. This familiarity shortens the learning curve considerably compared with a developer entering the Turkish market with no prior exposure to Turkish construction practice.

What changes when the project is inside Türkiye

The dynamic of being a client in Türkiye, subject to Turkish permitting, zoning, and municipal processes, differs from engaging a Turkish contractor as an export service on a project governed by Russian regulatory frameworks. Russian developers need to build fluency with Türkiye's municipal-level permitting system, which varies meaningfully between Istanbul and secondary cities, in a way that simply hiring a Turkish contractor for a Russian project never required.

Structuring a joint venture effectively

The most successful Russian-Turkish development partnerships tend to divide responsibility clearly: the Turkish partner typically leads regulatory navigation, contractor and subcontractor relationships, and day-to-day site management, while the Russian partner focuses on capital structuring, market positioning, and overall project strategy. Partnerships that blur this division, with the Russian partner attempting to directly manage Turkish regulatory processes without sufficient local expertise, tend to encounter more friction than those that lean into each partner's comparative strength.

Contractor selection within a joint venture

Even with an experienced Turkish development partner, contractor pre-qualification should remain a formal, joint exercise rather than being delegated entirely to the Turkish partner's existing relationships. Verifying technical capability, financial standing, and documented management systems independently protects both partners and ensures the contractor selected genuinely fits the specific project rather than an existing relationship of convenience.

Cost and currency considerations

Turkish construction costs for institutional-grade projects are typically dollar-denominated for materials with lira-denominated labour, a structure familiar to Russian developers accustomed to their own market's currency dynamics, though the lira's specific depreciation pattern over the past decade should be modelled explicitly rather than assumed to behave like other currencies Russian developers may have prior experience with.

A practical approach to a first project

For Russian developers entering the Turkish market directly for the first time, starting with a single, well-scoped project in a familiar city, most often Istanbul given its market depth, before considering a multi-project or multi-city expansion, allows the partnership structure and contractor relationships to be tested and refined before scaling further.

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