Investors show considerable demand in real estate securities

Published 31.03.2017 21:50
Investors show considerable demand in real estate securities

Real estate securities, a first-of-its-kind initiative in Turkey, which is is expected to boost the Turkish real estate sector, has seen some serious demands since its introduction on Wednesday

Borsa Istanbul Chairman Himmet Karadağ stated that real estate securities are in "serious" demand from both individual and corporate investors: "I do not think they can meet the demand in the first security. The first comers will get it."

Karadağ talked to journalists at Borsa Istanbul about the demand collection process of the real estate securities set to start trading on the stock exchange the first week of April.

Noting that demands began to be collected on March 29 and will end on March 31, Karadağ said that individual investors showed great interest in the long-awaited model.

Pointing out that the long-awaited momentum in the capital markets will be provided by real estate securities, Karadağ said that if the investment you make in real estate is converted into securities in the form of a real estate security as an investment tool, you will become a homeowner by completing the number of securities, and you can sell it second hand whenever you want and return it to cash. Suggesting that returning to cash in an investment tool positively affects the investor's investment, Karadağ stated that the security value should be evaluated from the perspective of the investor or the contractor firm.

"This will be our first security. Considering the Park Mavera 3 project built in collaboration between TOKI and Makro İnşaat from the prospectus, they will collect the demand for one security at a fixed price of TL 42.5 ($11.5)," Karadağ said, highlighting that investors can get one security at this price, but there is no limit. "They can purchase as many securities as they wish through Vakıf Bank. If your aim is to be a homeowner, then you can purchase a house for 11,000, 12,000 and 13,000 securities."

Karadağ also described the strongest feature of real estate security as "the convenience of informing the public."

‘A suitable model for Turkey'

Referring to some problems experienced due to the fact that financial literacy is not at the desired level, Karadağ said that it is easier with the real estate security method, and that anyone who wants to invest has enough knowledge in the real estate field.

Discussing the advantages of investing in securities, Karadağ stressed that it is an Islamic financial instrument, and in accordance with the number of apartments, which apartments are subject to certification can be transparently seen. "We used credit limits in banking as much as we could. We are having difficulty generating additional financing. We need to shift to the capital market and securities market just like in Europe and the world," Karadağ said, pointing out that they are currently providing real estate security and a fund of TL 239 million to the relevant contractor firm. Saying that a security will trade at TL 42.5, Karadağ noted that it can move in a downward direction, but their expectation was trending upwards as of the first day, highlighting that this is a suitable model for Turkey.

Karadağ also said that according to the information provided by Vakıf Yatırım, there is serious demand from corporate investors, recalling that while they used to have 70-80 people in their panels related to capital markets, there were no empty seats in the recent panel held on securities.

"There is very serious demand from both individual and corporate investors. I do not think they can meet the demand on the first security. First comers will get it," Karadağ said, underlining that these are long-awaited developments expected in capital markets with longing. "I am sure that demand will exceed TL 239 million," Karadağ added.

The system of real estate securitization basically helps the construction company to provide interest-free finance instead of taking a loan on interest from a bank. The company can therefore escape the interest costs. Moreover, 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 already sold at the beginning.

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