Türkiye reveals major plan against housing crisis

Minister of Treasury and Finance Mehmet Simsek announces regulations for Project Real Estate Investment Funds, aiming to curb housing price hikes and enhance accessibility

 

Minister of Treasury and Finance Mehmet Simsek provided details regarding a new initiative to increase urban transformation and housing supply.

“This will lead to a decrease in housing and rental price hikes,” Simsek said, expressing confidence that the initiative will contribute to financing and boosting housing supply.

Simsek announced that the Capital Markets Board (SPK) is in the final stages of preparing regulations for establishing Project Real Estate Investment Funds (Project REIF).

“The regulation by the Board will pave the way for real estate investment funds (REIF) to invest in real estate projects. With this regulation, the portfolios of these funds will be adjusted, and changes in type will be made. As housing supply increases, upward market pressure on housing prices will decrease, making housing more accessible to all,” he added.

Highlighting that before the new regulations, real estate investment funds could not invest in these projects or undertake construction activities, Simsek emphasized that the SPK’s regulations would remove these constraints.

Simsek indicated 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 and real estate projects where projects will be developed in their portfolios. These investment funds meeting the detailed conditions in the regulation will include the term ‘project’ in their titles and be referred to as ‘project real estate investment funds,” Simsek added.

“In these respects, project real estate investment funds will have a different content from existing real estate investment funds that cannot include projects in their portfolios,” he maintained.

Simsek stated that the project, to be implemented by the SPK, introduces a collateral mechanism to reduce investors’ project-related risks, thereby ensuring the rights arising from the fund’s revenue-sharing contracts.

“This regulation will also provide investors with the right to exit the fund in case of changes that may affect investment decisions related to fund activities, thus preventing investor grievances,” Simsek said.

Simsek explained investors could generate income from the sale or rent of real estate at the end of the project or could opt for an in-kind exit to become homeowners.

“Currently, there are 184 real estate investment funds with prospectuses approved by the SPK. While there are currently 149 funds with formed portfolios, the total portfolio size of these funds is approximately ₺82.7 billion. With the new regulation, an increase in these funds is also expected. With a solid structure based on the funds’ collateral, real estate project production can be safely realized. In this confidence environment, investors will be able to become homeowners by utilizing their small savings with a cooperative logic,” the minister added.

Prices fall

Simsek also pointed out an expected increase in savings tendency within the community because of the regulation.

“The regulation will be a significant instrument in financing urban transformation and increasing housing supply. These investment funds will boost supply dynamics in the housing market, both through the projects they develop and through residential units they can obtain from other projects, potentially leading to a downward price trend. This revitalization will spread across the housing market,” Simsek said.

“The regulation will also create a valuable alternative for housing producers to access the financing they need from capital markets. Consequently, savers can utilize their small savings in real estate projects,” the minister added.

“We are introducing regulations for establishing Project Real Estate Investment Funds. This will contribute to the financing of urban transformation and increase the housing supply. As a result, housing and rental price increases will decrease, making housing accessible to all,” Simsek concluded.

 

 

 

 

türkiyenewspaper.com