Real Estate Certificate: The Investment Tool Bridging Real Estate and Financial Markets
For centuries, real estate has been one of the most prominent forms of investment. However, rising costs, limited access to credit, and restricted personal savings have made real estate investments out of reach for many individuals. This is where financial markets step in, making real estate more accessible to everyone through hybrid investment models such as Real Estate Certificates.
A Real Estate Certificate is a new-generation financial investment instrument, traded on Borsa Istanbul and regulated by the Capital Markets Board of Turkey (CMB), offering investors the opportunity to co-own residential or commercial real estate projects. It provides savers with a new source of income while offering developers an alternative financing model.
What is a Real Estate Certificate?
A Real Estate Certificate involves the securitization of residential or commercial units within a specific real estate project. These certificates are traded on Borsa Istanbul and can be bought and sold by investors through banks or brokerage firms. As the number of certificates owned increases, so does the investor's share in the real estate, potentially leading to full ownership upon reaching a certain threshold.
Benefits of Real Estate Certificates
Big Investment with Small Savings: No need for a down payment or loan; allows for gradual savings based on one's budget.
Liquidity: Since certificates are traded on Borsa Istanbul, they can be converted to cash at any time.
Three Sources of Profit: Achieve homeownership by accumulating certificates (primary performance), receive a share of sales income if not reaching ownership threshold (secondary performance), and benefit from value appreciation.
Oversight and Security: Regulated by CMB, Borsa Istanbul, and Emlak Konut. Governed by Capital Markets Law (6362) and related Communiqué (VII-128.2).
Risks of Real Estate Certificates
Project Delay/Non-Completion Risk: If the project is not completed, investors are reimbursed with penalties as per regulation (Article 9).
Price Volatility Risk: Certificate prices can fluctuate depending on project progress and market expectations.
Homeownership Shortfall Risk: If the number of certificates owned is insufficient for homeownership, secondary performance applies and investors receive cash payouts proportionate to their holdings.
How to Buy Real Estate Certificates
Open an investment account at a bank or brokerage firm.
Purchase certificates through Borsa Istanbul.
Choose reliable projects, such as those by Emlak Konut or TOKI.
How to Buy a Home by Collecting Certificates
The required number of certificates for a particular unit is specified in the prospectus.
Upon reaching this number, primary performance applies, and title transfer occurs.
Alternatively, a "promise to sell" agreement with a title deed annotation can be made (Article 7).
What Happens if Certificates Fall Short of Buying a Home?
Secondary performance applies.
Corresponding homes are sold, and your share of the proceeds is paid.
Sales proceeds are evaluated through Borsa investments via MKK and transferred to you (Article 8).
Relevant Regulations
Capital Markets Law (6362): Provides the legal framework for real estate certificates.
CMB Communiqué on Real Estate Certificates (VII-128.2): Details issuance, performances, and investor rights.
Condominium Law (634): Regulates ownership of independently sold units via certificates.
Will Real Estate Certificates Become a Tradable Instrument?
Yes. Real Estate Certificates are traded in secondary markets and can be bought or sold daily, offering liquidity and portfolio diversification for investors. These certificates are available to large funds, institutional investors, and individual investors on Borsa Istanbul. This shifts real estate investing from traditional deed-based models to a more accessible asset class.
Tax Implications: Real Estate Certificates
Profits from real estate certificates are subject to capital gains tax. Gains from selling certificates above a certain threshold are taxable for individuals. For institutions, earnings are declared as corporate income. Withholding tax rates are determined by current CMB and Revenue Administration regulations.
International Examples
Real Estate Investment Trusts (REITs) in the USA, Immobilienfonds in Germany, and Real Estate Tokens in Singapore all securitize real estate for investors. In Turkey, Real Estate Certificates aim to democratize this asset class similarly. Blockchain-based tokenization may further enhance transparency and accessibility of such certificates in the future.
Conclusion
Real Estate Certificates combine the principles of financial markets with the returns of real estate investment in an innovative structure. They offer new investment strategies for corporate finance and accounting teams, while their transparent, CMB-regulated structure makes them a significant alternative. With proper planning and risk analysis in line with regulations, this model can serve as an effective tool for project financing.
