Turkey plans to launch an international property stock exchange, allowing properties within the country to be marketed globally. In 2017, Deputy Prime Minister Nurettin Canikli announced that banks were facing difficulties financing the construction sector. In search of alternatives, the government devised a solution to sustain the growth of the revitalized industry.
The solution arrived at was the creation of the International Turkey Real Estate Stock Exchange. This system utilizes certificates to finance the real estate sector. It also allows investors from numerous countries to invest in Turkish property.
With support from the Standing Committee for Economic and Commercial Cooperation of the Organization of the Islamic Cooperation (COMCEC), the exchange became fully operational in July 2017. Stockbrokers can now trade shares in any real estate project that has received trading authorization, including land purchases, shopping centres, and residential communities.
This innovative system operates like a traditional stock exchange. The governing body guarantees that it is risk-free and accessible to the 57 countries within the COMCEC.
Real Estate Certificates
The Capital Markets Board (CMB) is responsible for issuing the real estate certificates known as Gayrimenkul Sertifikası in Turkish. This system divides real estate projects into smaller shares and provides alternative financing options for developers.
To receive this form of financing, applicants must apply to the Capital Markets Board and Borsa Istanbul (BIST) is the central trading hub for Turkey. Only projects in the design or construction phase are approved by the board. The BIST, as the focus of the system, is financing rather than acquisition.
Both residential and commercial projects can trade certificates via Borsa Istanbul. This system offers many benefits for those with limited savings, including the ability to later sell certificates for title deeds or benefit from potential appreciation as real estate values increase once construction is completed.
When units are sold at auction, the proceeds are divided among all certificate holders. Investors also have the option to sell their certificates to other investors on the stock exchange.
Certificates are issued based on project size and financing needs and can represent square meters or monetary values. Residential projects issue certificates with monetary values ranging from 1 to 200 Turkish liras, providing potential buyers with an accessible way to invest and purchase more certificates in the future.
The Standing Committee for Economic and Commercial Cooperation of the Organization of the Islamic Cooperation played a role in establishing the Turkish real estate stock exchange market. As certificate holders do not receive interest revenue, aligning with Islamic finance principles. As with any investment, there is no guaranteed income as the certificate is traded on the Borsa stock exchange.