What are real estate investment trusts REITs?

The concept of ​​investment funds can be simplified in that they are participatory financial vessels between a group of investors, who put their contributions into these funds by purchasing their units divided into parts, which is a form of collective investment, where each investor is a partner in the fund to the extent of his capital in it. The fund is managed by a work team specialized in the fund's type of investment.

As for real estate investment funds, they are a branch of investment funds, because real estate is their subject and specialty, as these funds own, manage, and invest in income-generating real estate, of all types and uses.

Characteristics of Real Estate Investment Funds

Characteristics of real estate investment funds:

• Real estate investment funds have higher relative investment safety, due to their association with a valued asset with a clear market value and a reasonable price fluctuation, unlike investing in bonds or stocks, for example.
• Real estate investment often grows, as real estate prices and their indicators often trend upward, albeit in the long term.
• The possibility of diversifying assets to protect against risks in the available types of real estate.
• The density of opportunities and ever-increasing demand for real estate and renewable products.

In Turkey, real estate funds are also characterized by being suitable for investors who want to avoid risks that may befall their capital, as these funds are less exposed to risk than others, thanks to strict regulation and auditing by the Capital Markets Council in Turkey, and the limited licenses granted to these funds, in addition to That's tax exemptions or deductions for real estate investment trusts.

Advantages of real estate investment funds in Türkiye

The discussion about the features of real estate investment funds in Türkiye can be summarized by mentioning some important characteristics, including:

With broad growth prospects

The Turkish real estate market is characterized by its vitality and activity, as well as the constant need for residential and commercial real estate, in addition to a tireless government effort to direct the popular conviction of the necessity of urban transformation projects, and the desire to move to modern, safer real estate, in addition to the high percentage of young people, which drives the continuous demand for real estate.

It gives opportunities to small investors

Real estate investment opportunities are usually not available to investors with small capital, as individual real estate investment is a high-cost investment, but through real estate investment funds, small investors will find the opportunity to participate in this sector and benefit from its financial returns to the extent of their capital in those funds.

Reducing risks

The Turkish real estate market is known for its diversity and many opportunities that can be benefited from. If they are chosen and captured well, this will allow fund managers to diversify their funds’ investments into a range of real estate commodities, which will contribute to reducing risks to a high degree, in addition to the fund management team may play additional roles depending on their experience in their field of work.

Hedging against inflation

The successive waves of inflation that global markets have suffered in recent years, following the COVID-19 epidemic and the accompanying closures, have proven that real estate was one of the safest financial types, as it maintained its prices and growth even amid these crises, with the increasing prices of costs and raw materials.

Real estate is a real asset that maintains its value better than paper currencies, even during periods of inflation, and over time the value of real estate tends to rise, which compensates for the decrease in purchasing power that may occur.

Risks associated with real estate investment trusts in Türkiye

When talking about investing in the real estate sector, dealing with investment risks is not as risky and adventurous as compared to other types of forms. Perhaps real estate investment may be one of the safest, with the future of investment in the foreseeable future often easy to predict by real estate experts.

However, the nature of real estate investment imposes special procedural conditions on this type of investment, related to the duration of the investment and the method of liquidating the amounts deposited in real estate funds, as this is linked to the real estate trading movement. Market fluctuations and increased interest rates may have some immediate and temporary effects on real estate trading and prices in Turkey, but the vitality of the market and the urgent need for these products will often support price growth in the long term.

How to choose the best REITs?

First and foremost, before investing in a real estate investment fund, it is very important to have a general understanding of the working mechanisms of these funds, and to consult experts in this field, in addition to determining your goals for this investment, understanding its risks, and the length of patience until you reap the fruits of profit.

It is possible to understand some important things about how funds work and to compare them to choose the best one. By reviewing the prospectuses of available and published investment funds, learning about the activity record of each team’s work, reviewing their CVs, and their capabilities in dealing with risks and managing the fund, in addition to reviewing the performance of previous investments.

We cannot fail to mention the expenses of managing funds and their financial fees, which may differ from one fund to another, and may also affect your decision to compare between them.

Do real estate investment funds qualify for Turkish citizenship?

The Turkish Citizenship Law specifies many types of investments based on which foreign investors can apply for Turkish citizenship, the most important and common of which is real estate ownership according to a specific financial value, or a bank deposit of $500,000 for 3 years, and other investment methods.

In addition to this, there is also investment in one of the investment funds (sermayesi yatırım fonu), which includes real estate investment funds (gayrimenkul yatırım fonu).

Foreign investors have the opportunity to exceptionally apply for Turkish citizenship by investing in one of the real estate investment funds or one of the other licensed investment funds, on the condition that:

• The investment capital must not be less than $500,000 or its equivalent in local or foreign currency.
• Maintaining the participating interest in the real estate investment fund for at least three years.

Establishment and management of real estate investment funds in Türkiye by Oragon Company

Oragon Company has been able to shine in its sector of work in the field of mutual funds thanks to its team, which includes an elite group of senior experts in various financial sectors, and real estate in particular.

Oragon also plays a pioneering role in the field of establishing and managing investment funds, with other additional services surrounding this specialization, in addition to our interest in investment compatible with Islamic Sharia, according to disciplined and conscious business principles, and with elaborate work mechanisms, as Oragon provides a wide range of fund services. Investment, which includes:

• Free consultations: To help those interested in investment funds understand the market better and answer all their inquiries.
• Establishing real estate investment funds: preparing legal documents and obtaining official approvals.
• Real estate fund management: Through an expert team that is proficient in selecting appropriate assets for investment, managing risks, and dealing with the real estate market with high professionalism.

Edited by Oragon Company ©