What are the challenges of real estate investment funds in Türkiye?

Despite the many investment advantages that real estate investment funds in Turkey offer to investors and the encouraging tax deductions, it is natural that some challenges remain before them, like any other investment.

In this article, we learn about the most important challenges of investing in real estate investment funds in Turkey, along with ways to avoid them with Oragon Company’s services.

1. Economic fluctuations

The investor and real estate expert can notice the impact of economic fluctuations on the real estate sector, whether through high inflation rates, currency devaluation, and increased interest rates which cast a shadow on the returns of real estate funds in one way or another.

For example, high inflation rates can lead to increased costs and decreased purchasing power, and increased interest rates can make many new buyers reluctant to purchase new properties.

2. Legal and regulatory framework

The real estate investment sector in Turkey is subject to numerous laws and regulations, which may change over time, resulting in legal and regulatory risks for investors in real estate funds.

Any amendment to tax laws or the imposition of certain restrictions on real estate investment will naturally affect the progress of investments and their growth rate in this sector, but the Turkish government is aware of this fear that may harm the demand for its real estate sector, and therefore we find real estate laws often associated with facilities that support the growth of this sector. The sector in general, especially about real estate investment funds and their tax exemptions according to certain specifications and conditions.

3. Geopolitical risks

Real estate investors usually aspire to grow their capital away from turbulent areas, where the future of the property cannot be predicted. Therefore, the ideal real estate investment is usually within safe markets far from conflicts, turmoil, and geographical or political risks.

Today, Turkey is considered an important axis within its region, and we see it carrying the baton of politics from the center, maintaining its balance between global and regional tensions, with its good immunity against political dangers that may harm its security, which has made it an important real estate investment destination in recent years, in addition to About its unique and diverse geographical features.

4. Market risks

Regardless of the various forms of market risks, whether related to the economy or the disturbance in demand for real estate, and other fluctuations that may lead to a decrease in the value of investments in real estate funds, such as the occurrence of what is known as a real estate bubble that leads to a significant decrease in real estate prices when it explodes.

5. Intense competition

It is known that Turkey has experienced a competitive and strong urban renaissance in the last two decades, due to the increase in internal and external demand for its real estate, and the constant need for real estate parts. Therefore, the real estate investment sector in Turkey faces intense competition from major real estate development companies and real estate funds with active capital, which may make it difficult for real estate funds to obtain the best investment opportunities and achieve high returns. Unless the real estate fund has a great ability to ride the wave of competition.

Among the forms of damage that strong competition in the real estate market may cause:

• Increased supply in some areas, until supply exceeds demand and need, which leads to lower rental and sales prices and reduces the attractiveness of investing in that location, in the case of strong competition and oversupply, competition between real estate producers will also intensify, by providing long installment offers, or price speculation.
• As well as the competition of large projects financed by large real estate developers, which affects in one way or another the ability of small and medium real estate investment funds to compete.

How does Oragon help overcome the challenges of real estate funds in Türkiye?

One of the most important components of success in the Turkish real estate market is having extensive real estate experience and the art of seizing opportunities, with the ability to finance when needed.

By possessing real estate experience, we mean the ability to determine investment objectives, study the economic, political, and social factors that affect the market, the ability to make the appropriate decision at the appropriate time and place, with the ability to select or create appropriate properties, and then manage those properties efficiently to generate more capital profit.

Perhaps one of the most important features of Oragon's activity in the field of real estate funds is its ability to keep pace with the real estate market in Turkey with high efficiency, thanks to its management team consisting of the most skilled experts and specialists in the field of real estate and economics with huge and influential names, who have left an exceptional footprint in this field, which supports the growth of Oragon's real estate funds while overcoming the challenges that surround this investment field with great competence.

Edited by Oragon Company ©