Turkey’s Syria gambit pays off with potential windfall for construction companies
The post-Assad equities rally among Turkish builders may have overlooked a key player, ignoring its past success in a similar geopolitical scenario
The stunning images of rebel forces storming Damascus almost unopposed in early December left many pondering Syria’s future. Given our background in emerging market investing, as well as Middle Eastern geopolitics, we too got thinking about what this meant for markets.
We believe potential reconstruction efforts (with an estimated price tag of USD 400 billion) present significant opportunities for Turkish companies – especially in sectors such as construction, cement, steel, and logistics. We outline how one company may have been overlooked in the post-Assad Turkish construction equities rally, with a brief look at its performance in a market with similar geopolitical considerations, as well as the how-to and pitfalls of investing in this market.
Before we dive into that, we emphasize that this article is based on best case scenario thinking, based on hopes that the shaky coalition of rebel forces can cooperate in governing Syria, whatever form that may take.
We would need to see a sustained reconciliation among major factions, stabilization of economic indicators, as well as full international recognition of a new government and buy-in to reconstruction efforts before acting on the idea outlined below. Such progress is by no means a given after a decade plus of traumatic conflict, nor are they impossible. The Syrian people’s hard-earned victory deserves, at the very least, some level-headed optimism.
How is Turkey uniquely positioned in Syria’s new landscape?
Turkey has been a key power broker among Syrian opposition groups during the 13-year civil war and has now openly vowed to help rebuild the country. Ankara was one of the first countries to reopen its embassy in December, and its foreign minister and intelligence chief were the first foreign dignitaries to meet with Syria's de facto leader Ahmed al-Sharaa.
However, there’s no denying that the group which spearheaded Assad’s ouster, Hay’at Tahrir ash-Shaam (“HTS”) wasn’t exactly Ankara’s winning horse in this race. Prior to the regime change, the relationship between Turkey and HTS was marked by pragmatic coexistence despite ideological differences.
Turkey’s support for HTS rivals (other rebel groups more willing to do Ankara’s bidding, i.e. fight the Kurds and stop refugee flows) created a frosty relationship without direct confrontation. While Turkey designates HTS as a terrorist group, it tolerated its governance in rebel-held areas to maintain stability and deter Syrian government advances. Turkish diplomats cozying up to HTS now suggests much of this is in the past anyway.
Turkey is now cozying up to the HTS-led government in Damascus. HTS will undoubtedly need to bring Turkish-backed rebel factions into the government if they want a smooth relationship with their most politically and economically influential neighbor.
Turkish construction companies look set to outpace local and international rivals in Syria
So, what is the return on Turkey’s longstanding investment in Syrian opposition factions if they can all get along and start the hard work of rebuilding Syria?
With a direct line to much of the newly appointed political leadership and broad public support, Turkish companies are likely to get preferential treatment when it comes to the tender process or licensing for private ventures. They are also no strangers to the Syrian market, and had an extensive presence before the war, so it will be a homecoming of sorts. Reports from contacts on the ground in Damascus say Turkish goods are already flooding the market and there is concern that local industries can’t compete.
Syria’s limited manufacturing and construction capacity was essentially decimated by the war (save for Assad’s narco-state amphetamine empire) – it’s unlikely that major domestic players will step in anytime soon. We believe Turkish construction and materials companies would be the logical go to for large scale infrastructure work, particularly for ramping up Syria’s severely diminished oil production capacity, badly needed to shore up the new government’s finances.
Turkey's construction companies have long established themselves as dominant players in the Middle East. Their ability to deliver complex projects, such as airports, bridges, refineries, and hospitals, has earned them a reputation for reliability and cost-effectiveness.
The Gulf states (particularly Qatar, Saudi, and the UAE) were also key backers of the Syrian rebels, but had fewer boots on the ground, were less consistent, and failed to win hearts and minds—a topic worthy of its own analysis. Despite their financial resources, which may bankroll much of Syria's postwar reconstruction, their companies are poorly positioned for direct involvement.
Without shared borders, Gulf states must rely on Jordan or lengthy sea routes for trade and logistics, while Iraq remains an unreliable transit option due to security concerns and strained relations. Moreover, their limited domestic capacity in construction, oil services, and manufacturing often leaves them dependent on Turkish companies and materials for infrastructure projects.
Investors piled into Turkish construction on Assad’s downfall, but may have overlooked some gems
The day after the regime fell on 8 December, shares in Turkey's largest construction, cement and steel companies rose by 5-10%. Since then, we have largely seen sustained positive momentum across these companies, although we note Syria is not the only factor at play here.