What is a Turkish Real Estate Investment Fund?
A Real Estate Investment Fund in Turkey (REIF) is a collective investment scheme that pools capital from various investors to invest in a diversified portfolio of real estate assets. These funds are managed by professional fund managers who make decisions on behalf of the investors. Licensed by the Turkish government and monitored by the Capital Markets Board, these funds offer security and transparency, ensuring investor rights and monitored transactions for a secure investment environment.
REIFs can take various forms, such as mutual funds, exchange-traded funds, or private equity funds. The primary goal of a REIF is to generate returns for investors through rental income, capital appreciation, or a combination of both. Investors in a REIF typically own shares or units of the fund rather than owning the underlying real estate directly.
By pooling resources together, investors can access a more diversified and professionally managed real estate portfolio, reducing individual risk and gaining exposure to different types of properties and markets. It's a way for people to invest in real estate without the need for large amounts of capital or the hands-on management responsibilities associated with owning individual properties.
What are the advantages of Turkish REIFs?
Investing in a Turkish Real Estate Investment Fund (REIF) can offer several advantages:
1. Diversification: REIFs typically invest in a diversified portfolio of real estate assets. This diversification helps spread risk across different types of properties, such as residential, commercial, or industrial, reducing the impact of poor performance in any single property.
2. Professional Asset Management: REIFs are managed by professional teams with expertise in real estate investment and management. These teams conduct thorough research and analysis to identify viable investment opportunities and maximise returns for investors. Their knowledge and experience help in making informed decisions regarding property acquisition, development, leasing, and sales, ultimately optimising the performance of the REIF's portfolio.
3. Accessible Investment for Small Investors: REIFs provide an opportunity for small investors to participate in the real estate market. Through the purchase of REIF shares, individual investors can gain exposure to a diversified portfolio of properties that may otherwise be inaccessible due to high costs or limited capital. It allows them to indirectly invest in high-quality real estate assets without the need for direct property ownership.
4. Liquidity: Unlike owning physical real estate, which may take time to sell, REIF shares can be bought and sold on the open market, providing liquidity to investors. This flexibility allows investors to quickly enter or exit their investment.
5. Income Generation: REIFs often generate income through rental payments from the properties in their portfolio. Investors may receive regular dividends or distributions, providing a steady income stream.
6. Potential for Capital Appreciation: As property values increase over time, the net asset value of the REIF can also grow, leading to capital appreciation for investors.
7. Real Estate Sector Transparency: REIFs are subject to regulatory oversight and reporting requirements, which enhance transparency in the real estate sector. The disclosure of financial statements, asset valuations, and other pertinent information ensures that investors have access to reliable data for making informed investment decisions. This transparency helps build trust and confidence in the real estate market, attracting both domestic and international investors.
8. Economic Growth and Job Creation: The real estate sector plays a vital role in the overall economic growth of a country. REIFs contribute to this growth by financing and driving real estate development projects. These projects stimulate economic activity, create employment opportunities, and generate tax revenues for the government. The expansion of the real estate market, facilitated by REIFs, has a multiplier effect on various sectors of the economy.
9. Urban Renewal and Infrastructure Development: REIFs often participate in urban renewal and infrastructure development projects, revitalising neighbourhoods and contributing to urban regeneration in Turkey. By investing in underutilised or distressed properties, REIFs can transform them into vibrant, income-generating assets, thereby improving the overall quality of urban life.
10. Capital Market Development: The presence of REIFs contributes to the development and growth of the capital market in Turkey. By offering an alternative investment vehicle, REIFs diversify the investment options available to investors, leading to increased market liquidity and depth. This promotes a more efficient allocation of capital and fosters the overall development of the financial market infrastructure.
11. Potential for Tax-free income: Provided you keep your investment in the fund for two years, there is 0% tax to pay. This is a saving of up to 35% when you look at corporation tax and income tax on dividends.
12. Obtain Turkish Citizenship: If you invest $500,000 into a Turkish REIF or Venture Capital Fund in Turkey, you can obtain Turkish Citizenship. Citizenship will be granted in approximately 150 days from the submission of the application. Turkish Citizenship by Investment allows visa-free or visa-on-arrival access to over 110 countries.
Overall, the presence of Real Estate Investment Funds in Turkey provides numerous benefits, including professional asset management, accessibility for small investors, income generation, capital market development, transparency, economic growth, and urban renewal. These factors collectively contribute to the vitality and dynamism of the real estate sector while offering investors a compelling investment opportunity.
Funding Turkey and minimum amount needed to invest
Part of Property Turkey Group, Funding Turkey has positioned itself at the forefront of the Turkish marketplace. One of the greatest competitive advantages Funding Turkey has in this space is experience and expertise based off of 20+ years of real estate market participation at the highest levels. Until now, only banks and large institutions had the ability to benefit from the operation of substantial REIFs in Turkey. Funding Turkey simplifies entry to Turkish REIFs, allowing you to invest smarter and build wealth.
$100,000 USD entry level – With entry to REIFs in Turkey starting from $100,000 USD, your pathway to investing in Turkish real estate has never been easier or more affordable. Shares of the Fund will be distributed in ratio to the amounts that each person has invested.
Private and dedicated REIFS – Investors can also open a dedicated and private REIF for an individual if wanted, allowing far greater control over investments. This one has a minimum entrance level of $3,500,000 USD.
Fully Licensed and Managed – Funding Turkey establishes and manages investments via Real Estate Funds, as well as Venture Capital Funds – all within the framework of the Turkish Capital Markets (SPK) Law and relevant legislative provisions. Funding Turkey is licensed, managed, and regulated, providing safety and reassurance to investors.
Venture Capital Funds (VC) – Funding Turkey has license to operate both REIF and VC Funds. VC Funds are geared towards financing start-up businesses, urban regeneration projects, technology sectors, and energy sectors – three of the most important sectors emerging in Turkey.
Why Property Turkey and Funding Turkey?
“Real Estate Investment Funds are an important addition to Property Turkey’s ecosystem. Our aim is to inspire global investors to choose Turkey by providing maximum bargaining power and yielding exceptional returns. We believe that this will help develop Turkey and promote economic prosperity to emerging and established sectors.”
FAQs about Real Estate Investment Funds in Turkey
What is the difference between a REIF and REIT?
A Real Estate Investment Trusts (REIT) is a company that owns, operates, or finances income-generating real estate. It pools the capital of many investors to purchase a diversified portfolio of properties. REITs are traded on major stock exchanges, making them more accessible to small investors due to their liquidity. REIFs can take different forms, such as mutual funds, exchange-traded funds, or private equity funds, and they may have different structures and investment strategies compared to REITs. REIFs offer more direct control over the selection and management of real estate assets. In summary, a REIT is a specific type of real estate investment vehicle that operates as a trust, while REIF is a more general term that includes various types of investment funds focused on real estate.
How does a REIF differ from direct property investment in Turkey?
A REIF allows multiple investors to pool their money together to invest in a diversified portfolio of properties. It's a more indirect way of investing in real estate, offering diversification and professional management, freeing up time for investors that prefer a hands-off approach. With a direct investment in property, you as the owner, are responsible for managing your property, dealing with all landlord responsibilities, making decisions, enjoying the risks, and returns on your own.
What is the minimum investment required for a Turkish REIF?
The minimum entry level into a Turkish property fund is $100,000 USD. Shares of the fund will be distributed according to the amount that each person has invested.
Can foreigners invest in Turkish Property Funds?
Yes. Foreigners can invest in Turkish Real Estate Investment Funds provided they are counted as a qualified investor. A qualified investor is someone who has an asset of more than one million Turkish Lira.
Can you obtain Turkish Citizenship by investing in REIFs?
Yes. If you invest $500,000 USD in a Turkish REIF, you can obtain Turkish Citizenship. This is currently one of the quickest ways to obtain Citizenship by Investment.
Is it safe to invest my money in Turkish real estate funds?
Turkish REIFs are subject to robust regulation and stringent reporting requirements, ensuring transparency and protection for investors. The Capital Markets Board of Turkey ensures compliance with continuous monitoring of funds in accordance with the Bylaw and Issuance Certificate. Funds are also subject to independent auditing.
How do funds inform and update investors?
It is obligatory for funds to provide investors with regular updates and changes related to funds via the Public Disclosure Platform website. All transactions within the fund are subject to government oversight, allowing investors to verify the status of the fund in which they have shares.
What type of properties can REIFs invest in?
Stated in the issuance documents, REIFs can invest in housing properties, offices, hotels, land, shopping malls, logistics centres, and many other similar types of real estate.
What are the taxes involved in Turkish REIFs?
Turkey offers favourable tax treatment for investors in Turkish REIFs. Funds are exempt from corporate taxation, meaning they are not subject to paying taxes on their trading or rental profits.
How do you exit from a property fund?
Owning physical real estate can take months to market, negotiate, and sell. REIF shares can be bought and sold on the open market, providing a high degree of liquidity to investors and flexibility to quickly enter or exit.
For more information about investing in a Real Estate Investment Fund in Turkey, please CONTACT US to speak with our advisors and dedicated team of investment experts.