As known, the Communiqué on Principles Regarding Real Estate Investment Funds No. III-52.3 ("Communiqué") only allowed real estate investment funds ("REIFs") to include buildings and similar constructions in their portfolios if those properties have a valid occupancy permit and condominium ownership has been established. This requirement prevented REIFs from including properties undergoing urban transformation in their portfolios.
Recently, the Capital Markets Board of Türkiye ("CMB") adopted a significant decision that enables REIFs to diversify their portfolios. With the principle decision No. i-SPK.52.5, dated July 17 2025 and numbered 40/1271 ("Principle Decision"), the CMB expanded the scope of real estate that REIFs may include in their portfolios.
It is also worth noting that previously, with the Communiqué No. III-52.3.f Amending the Communiqué on the Principles Regarding Real Estate Investment Funds No. III-52.3, which was published in the Official Gazette dated July 17, 2024 and numbered 32604, the establishment of "project real estate investment funds" ("Project REIFs") for the purpose of investing in real estate projects was permitted, allowing Project REIFs to engage in real estate development activities. You can access our earlier announcement providing detailed information on this amendment to the Communiqué on Project REIFs here.
What Has Changed in the Principle Decision?
According to the Principle Decision, REIF portfolios may now include: a) real estate that contains structures that were abandoned, have reached the end of their economic life, do not generate any income, or are registered as "risky" in the declarations section of the land registry; and b) real estate with buildings that are still recorded in the land registry but have been demolished.
REIFs will no longer need to obtain an occupancy permit or establish condominium ownership in order to include such real estate in their portfolios.
Conditions of the Principle Decision
REIFs must meet the following conditions to include such real estate in their portfolios:
- They must confirm the condition of the building through a real estate valuation report; and
- REIFs must submit a declaration to the CMB stating that the relevant buildings, if any, will be demolished, and if necessary, amend the type classification of the real estate in the land registry.
Implications of the Principle Decision
This Principle Decision now allows REIFs to include real estate with "risky structures" in their portfolios. We expect this development to enhance the diversification of REIFs' portfolios.
As REIFs are now also permitted to expand their fund portfolios, the Principle Decision is expected to bring new momentum to urban transformation efforts. This development reflects a growing alignment between REIFs - including Project REIFs - and the widely ongoing urban regeneration efforts.
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