President Recep Tayyip Erdogan on Tuesday opened the first ever road tunnel underneath the Bosphorus Strait in Istanbul from Europe to Asia, the latest project in his plan of transforming Turkey's infrastructure.

The opening ceremony -- which brought together Turkey's entire ruling elite -- went ahead as planned despite the shock assassination of the Russian ambassador to Ankara by a Turkish policeman a day earlier.

Turkey in October 2013 opened the Marmaray rail tunnel underneath the iconic waterway, the first link beneath the waters that divide Europe and Asia.

But the new Avrasya (Eurasia) Tunnel is the first tunnel for cars underneath the Bosphorus and aims to relieve congestion in the traffic-clogged Turkish megacity.

Erdogan, after cutting the ceremonial ribbon, joined a vast cortege of vehicles making the first undersea car journey between the two continents.

'Won't divide this nation'

The assassination of Russian ambassador Andrei Karlov Monday was just the latest in a string of shocking acts of violence in Turkey this year.

But Erdogan vowed that his ambitions will not be derailed by the failed July 15 coup and the swathe of terror attacks Turkey has suffered in 2016.

"Subject us to as much terror as you want, bring in as many villains but you will never be able to divide this nation," he told thousands at the opening ceremony.

The tunnel required an investment of $1.2 billion (1.15 billion euros), including loans of $960 million, and will reduce driving time for the route from up to 2 hours to just 15 minutes.

It was built by a consortium consisting of private Turkish construction company Yapi Merkezi and South Korea's SK Group.

The project comprises a 5.4 kilometre (3.5 mile) tunnel, with the portion beneath the Bosphorus 3.4 kilometres long.

The two-storey tunnel was built with a special tunnel boring machine which had a daily progress speed of 8-10 metres (26-32 feet) on average.

With Istanbul lying on an active seismic zone, the tunnel has been designed to withstand a 7.5 magnitude earthquake.

"Praise be that we part of a country and a city that connects two continents," said Erdogan.

Erdogan said a trip through the tunnel would cost 15 lira ($4.25) until the end of the year, with all the revenues until then going to families of victims of the coup and those who helped defeat it.

'Won't stop there'

Turkish Transport Minister Ahmet Arslan told AFP ahead of the opening that it had been a "huge challenge" to build the tunnel at a depth of 106 metres under the seabed.

He revealed the authorities now planned to build a third tunnel under the Bosphorus that would have three storeys and carry both cars and trains.

"I think the Avrasya tunnel will hugely ease the lives of the residents of Istanbul," Arslan told AFP. "But we are not just going to stop there."

Erdogan has said he is aiming to build a "new Turkey" with transformed infrastructure in time for the 100th anniversary in 2023 of the foundation of the modern state by Mustafa Kemal Ataturk.

Other schemes, which Erdogan boasts are his "crazy projects", include a gigantic third airport for Istanbul, the first ever bridge across the Dardanelles straits and even a Suez-style shipping canal for Istanbul.

Prime Minister Binali Yildirim announced at the tunnel's inauguration ceremony that the new airport would open on February 26, 2018.

Just one month after the attempted coup, Erdogan opened the third bridge across the Bosphorus named after the mediaeval sultan Selim the Grim.

Suggestions for the naming of the new tunnel included Ataturk and the late-period Ottoman Sultan Abdulhamid II, an arch-conservative whose reputation has undergone a major revival in Turkey in recent years.

But the authorities have settled on the far less politically loaded Avrasya Tunnel, despite a high-profile campaign by officials for the public to submit names.