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First real estate security issuance today

First real estate security issuance today

As well as easing the burden of loan interest for construction companies, real estate securities will enter the market as lucrative investment tools for both Turkish and foreign investors. Turkey starts first real estate security issuance today

The first issuance of real estate security starts today, with trading to commence at Borsa Istanbul on April 5 after three days of demand collection. The project subject to the first sale will be Park Mavera 3, carried out by TOKİ and Makro İnşaat in Başakşehir, İstanbul, with an income-sharing partnership model. Housing in the Park Mavera 3 project will be sold share by share under TOKI’s guarantee. Citizens have shown great interest in the project, with 1,200 people seeking information about the new model every day. Twenty-seven intermediary institutions have also expressed interest in the sale of shares.

The process of demand collection for the real estate security, a new investment tool in the sector, starts today. It will allow individuals who do not have enough savings to buy a house to buy shares in housing projects. While some will collect their shares and become homeowners, others will sell their shares and benefit from the increase in value. With this model, small investors will be able to take part in big projects. Foreign investors can also buy shares in this system and no upper limits are in place.

The first step in providing financial support to companies that develop real estate was taken in Başakşehir, Istanbul. In the Park Mavera 3 project to be realized by the TOKİ-Makro İnşaat venture, the real estate security model will be applied for the first time, with demands to be collected March 29-31. Citizens who want to buy one share will pay TL 42.50 ($11.75), with 100 shares equivalent to 1-square-meter. To become a homeowner within the scope of the project, at least 11,058 shares are needed.

The system basically helps the construction company to provide interest-free finance instead of taking a loan on interest from a bank, thereby escaping interest costs. The company would also reduce advertisement costs, since the sales office will not need to promote the project during the construction period; it will be sold from the outset.

1,200 people request information per day

Makro İnşaat chairman Ercan Uyan stated that people have shown great interest in the security model, with 1,200 requesting information on the subject everyday. With 500,000 individual users so far having visited the website through which the security model was announced, Uyan said that 27 intermediary institutions have also made requests on the project. Within the framework of the Park Mavera 3 project, the total amount in the security issuance has reached TL 143.24 million. Uyan indicated that an additional issuance of TL 95.6 million is also on the cards in case of further demand.

Real estate security in megaprojects

TOKİ head Ergün Turan said they are also working on the use of securities in megaprojects. Noting that TOKİ is the guarantor in the first application of the model, Turan said, “Real estate security [issuance] is an important event in terms of both financial markets and the real estate market. We are taking a leading role in this. Will there be something like this again during the year? Of course. Otherwise, if we issue a single security, this will not provide any depth. We have projects that we will look into immediately after this.”

The opening ceremony of the real estate security model is scheduled to be held on April 4 or 5, with President Recep Tayyip Erdoğan in attendance.

‘Housing sector to be affected positively’

Speaking previously on the possible impact of the real estate security system on the sector, Hamit Demir, chairman of Demir İnşaat, said: “Real estate, one of Turkey’s thriving sectors, has been rated as ‘the safest investment haven’ in recent years.” Pointing out that with this law, the real estate sector will be able to reach the masses and that TOKİ’s move in this direction was a very exciting one, Demir added, “I think that the housing sector will be affected positively if real estate securities become more effective.” Demir highlighted that practices like these, which can propel the real estate sector in a positive direction, will make real estate a leading investment tool. In his opinion, the housing sector will be much more stable and secure than other investments, such as stocks, foreign currency and gold.

Supervised by Capital Markets Board

Makro İnşaat Chairman Uyan said the real estate security enters the market as a transparent, efficient and reliable tool that will enable people to make investments even with small budgets. Noting that they do not sell apartments, but take on partners in new real estate projects under the guarantee of TOKİ, the CMB’s supervision and with the transparency of the stock market, Uyan said the purpose of the security is to protect the rights of all income groups in a reliable environment, make them partners in investment, and make use of increases in value.

How does the system work?

* The company that has obtained the license for the project will apply to the Capital Market Board (CMB) and receive the issuance permit. A specified portion of the project will be sold as securities.

* Before the sale of securities starts, the company will determine the the number of securities required to buy an apartment. For example, if 11,000 securities are needed for apartment number 10 on block A, those who want to buy the said house will collect the requested number of securities.

* If the same apartment is wanted by different people, the application order will determine priority.

* If there is a sufficient number of securities when the project is completed, the title deed and value-added tax (VAT) will be paid and the house will be delivered.

* Those who do not have enough securities to buy a house will get the value of the securities. For this, the apartments included in the certified sales quota of the project will be sold at auction. The security holders will be paid with the income obtained from the auction

March 28, 2017

Source: Daily Sabah

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  • Fatih Akman