Finance Minister Mehmet Simsek detailed new efforts to transform cities and increase housing supply.
“This will reduce house price and rental price inflation,” Simsek said, expressing confidence the initiative would help increase financing and housing supply.
Simsek announced that the Capital Markets Commission (SPK) is in the final stages of preparing regulations for the establishment of the Project Real Estate Investment Fund (Project REIF).
“The Commission’s regulation will pave the way for real estate investment funds (REIFs) to invest in real estate projects. It will adjust the portfolio of these funds and change their type. As housing supply increases, upward market pressure on housing prices will decrease and housing will become more accessible to all,” he added.
Simsek stressed that before the new regulations came into force, real estate investment funds were not able to invest in these projects or carry out construction activities, and that SPK’s regulations remove these constraints.
Simsek suggested that real estate investment funds can now invest in projects developed by themselves or others.
“As a result, project real estate investment funds will be able to include land on which projects will be developed and real estate projects in their portfolios. These investment funds that meet the detailed conditions of the regulations will include the word ‘project’ in their name and will be called ‘project real estate investment funds’,” Simsek added.
“In this respect, project-based real estate investment funds will be different from existing real estate investment funds, which cannot include projects in their portfolios,” he argued.
From investor to homeowner
Simsek said the project implemented by SPK will put in place a collateral mechanism to mitigate investors’ project-related risks, thereby guaranteeing the rights arising from the fund’s revenue sharing agreement.
“The regulation also gives investors the right to withdraw from a fund if there are changes related to the fund’s activities that may affect their investment decisions, preventing investor dissatisfaction,” Simsek said.
Simsek explained that investors can earn income from selling or renting the properties at the end of the project, or they can opt for a sale in kind and become homeowners.
“Currently, there are 184 real estate investment funds whose prospectuses have been approved by SPK. Currently, there are 149 funds which have formed portfolios while the combined portfolio size of these funds is around Rs 827 crore. With the new regulations, we are also expecting an increase in these funds. With a strong collateral-based structure of the funds, production of real estate projects can be safely realised. In this environment of confidence, investors will be able to utilise their small savings with a cooperative logic to become homeowners,” the minister added.
Price Trend Downward
Simsek also noted that the regulation is expected to increase savings trends within the community.
“This regulation will be an important tool to finance urban transformation and increased housing supply. These investment funds will increase the supply capacity of the housing market, both through the projects they develop and the housing units they acquire from other projects, which could lead to a downward trend in prices. This revitalization will spread to the entire housing market,” Simsek said.
“The regulation also creates a valuable option for home builders to access much needed financing from the capital markets. As a result, savers will be able to mobilise small amounts of savings into real estate projects,” the minister added.
Housing and rental price increases “decreasing”
“We are introducing regulations to set up a project real estate investment fund, which will contribute to financing urban transformation and increase housing supply. As a result, house and rental price increases will be reduced and housing will become available to everyone,” Simsek concluded.
Source: Newsroom
