Turkey is close to completing a framework of a new regulation that is envisaged to serve as an instrument to increase urban transformation financing and housing supply, according to Treasury and Finance Minister Mehmet Simsek.
The regulation is sought to enable real estate investment funds to invest directly in property development projects, Simsek said.
"These funds' portfolios will be adjusted and restructured accordingly. With the increase in housing supply, upward market pressure on housing prices will alleviate and make housing more accessible to all segments of society.”
Led by the Capital Markets Board (SPK), the relevant studies on the establishment of the Project Real Estate Investment Funds (Project REIF) have reached the final stage, the minister told Anadolu Agency (AA).
High prices and rising interest rates propelled house sales in Turkey to their lowest level in nine years in 2023. Market activity is not expected to rise until at least the last quarter of the year when inflation is anticipated to fall sharply amid a tight monetary stance.
Simsek pointed out that previously, real estate investment funds could not invest in such projects or undertake construction work themselves.
"With the SPK's regulation, these restrictions will be lifted. The project real estate investment funds will be able to include land and real estate projects in their portfolios. These funds will be distinct from existing real estate investment funds as they will carry the 'project' designation in their titles," he explained.
The new regulation also envisages a collateral mechanism to mitigate project-related risks for investors. This measure will secure the fund's rights arising from revenue-sharing agreements, said Simsek.
"Additionally, investors will have the right to exit the fund in case of changes that could impact their investment decisions, preventing potential investor grievances," he added.
Investors will have multiple exit strategies, including selling or renting the completed real estate or taking possession of the property itself.
Tuekey has 184 real estate investment funds with approved issuance certificates by the SPK. Some 149 funds have established portfolios, totalling approximately TL 82.7 billion ($2.57 billion).
