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December 21, 2023

Real Estate Investment Funds In the Republic of Turkey


Real estate investment funds (“Funds”), are subject to regulations of Capital Markets Board (“Board”) in the Republic of Turkey and generally regulated on the provisions of;

  • Portfolio Management Companies of the Board and communique on Principles Regarding the Activities of These Companies (III-55.1) (“PMC Communique”)
  • Communique on Principles Regarding Real Estate Investment Funds (III-52.3) (“Fund Communique”).

The Fund consists of a portfolio composed of the following the assets and transactions collected from qualified investors in return for participation shares:

  • Money
  • Real Estate
  • The real estates and the rights-based on them, within the scope of projects having the construction licenses that are carried out by the Prime Ministry Housing Development Administration, İller Bankası A.Ş., municipalities, and their affiliates.

Funds can only be established by

  • Portfolio Management Companies
  • Real estate portfolio management companies or
  • Real estate and venture capital portfolio management companies

which can be established subject to the permission of the Board, temporarily or indefinitely with fund rules.

Funds can be established to invest in a certain real estate or to operate in a specific sector, or they can be established without any restrictions on purpose.

         II.                ESTABLISHMENT OF FUND

Funds can be established by any of the companies mentioned above. Therefore, to establish a Fund in the Republic of Turkey, a Portfolio Management Company (“PMC”) must first be established.

A.    Establishment Conditions of PMC’s

Under the PMC Communique, the PMCs can be established with permission from the Board on the condition that;

  • Its main activity should be the establishment and management of funds,
  • It should be a joint-stock company subject to the registered capital system,
  • All of its shares should be registered and issued in cash,
  • Issuing all of its shares registered and in cash,
  • The initial capital should be at least TL 2,000,000.
  • Founding partners should not be from persons prohibited by law (not declaring bankruptcy and concordat, not being convicted of other crimes defined in the legislation, etc.)
  • The partnership structure should be transparent and open.

On the other hand, the size of the portfolio is;

  1. up to TL 100,000,000, the equity capital must be at least TL 2,000,000;
  2. from TL 100,000,001 to TL 500,000,000, the equity capital must be at least TL 3,000,000;
  • from TL 500,000,001 to TL 5,000,000,000, the equity capital must be at least TL 5,000,000
  1. more than TL 5,000,000,001, the equity capital must be at least TL 10,000,000.

If the shareholders of the company are located abroad, the legal documents required for the establishment of the PMC are required to be equivalent according to the laws of the place of residence abroad.

If the founding shareholder or the shareholder having the significant influence is a bank, it is mandatory to obtain the approval of the Banking Regulation and Supervision Agency by the Board.

It is mandatory to use the phrase “portfolio management” in the PMC trade name. If the company to be established is established exclusively to establish and manage venture capital investment funds or real estate investment funds, it is obligatory to use the phrase “venture capital portfolio management company” or “real estate portfolio management company” in the trade name.

Company establishment is decided by the Board within six months following the application of the establishment a PMC to the Board, and if the application is deemed appropriate as a result of the assessment to be made by the Board, the permission of the T.C. Ministry of Customs and Trade is obtained.

B.    Conditions Required for PMC’s Activity Permit

Subsequently, for PMC to start its portfolio management activities; it is obligatory to apply to the Board with the request of obtaining the necessary activity permit and authorization certificate within three months at the latest from the date the Board gives permission. In this context, for the PMC to be operational;

  • If there is a requirement for collateral stipulated in the legislation, it should have deposited blocked collateral with Takasbank on behalf of the Board,
  • An agreement should have been made with the portfolio custodian to receive service from one of the portfolio depository companies listed in ANNEX-1,
  • A sufficient number of portfolio managers and general managers, not less than two, who meet the qualifications stipulated in the relevant regulations of the Board should have been assigned,
  • The technical equipment infrastructure system of PMC including the information technology infrastructure should have been created,
  • Internal control and risk management system, inspection unit, and fund service unit should have been established, and
  • In short, managers to be appointed within the scope of PMC’s management structure and fund management must have established the organizational structure in a way to meet the additional requirements in the form of a Board license requirement stipulated by the Board regulations and a certain year of experience in the field of financial markets.

C.    Establishment of Fund

As stated above, funds can only be established by PMCs. In this context, a Fund is established by the PMC under the following procedures, with the preparation of;

  • Fund rules,
  • Fund issuance document,
  • Fund investor information forms.

For the fund establishment, PMC applies to the Board with the draft fund rules and other information and documents requested by the Board. In order for the Fund to obtain an establishment permit, the PMC must have signed a custody agreement with one of the portfolio custodians listed in ANNEX-1 and the fund rules must be approved by the Board. Fund establishment applications are finalized by the Board within two months after all the required documents are fully submitted to the Board.

  • Fund rules; The content of it is determined by the Board and after the Board approves the fund rules, it is registered in the relevant Trade Registry Office and announced in the Turkish Trade Registry Gazette.


  • Fund issuance document; is the document containing information about the nature of the fund and the terms of sale. The content of the document is also determined by the Board and approved by the Board.


  • Fund Investor information form; is a summary form showing the fund’s structure, investment strategy, and risks. PMC is responsible for all damages arising from the consistency of this form with the fund rules and the issuance document, the accuracy of its content, its up-to-dateness, and any incorrect, misleading or incomplete information contained in this form. The content of the investor information form is also determined by the Board and approved by the Board.

PMCs are responsible for the representation, management, and supervision of its management of the fund by protecting the rights of the fund unit owner, and the execution of the fund activities in compliance with the provisions of the fund rules and issuance documents. PMC takes actions on assets of the fund in its own name and the account of the fund and is authorized to use the rights arising from this.

The Fund is represented by the board of directors of the PMC in the execution of all its activities.

At least one of the board members of the fund founders must have at least five years of experience in real estate investments other than real estate trading; besides, per the regulations of the Board regarding licensing before the founders, it is obligatory to establish an investment committee which contains at least three people consisting of an appraiser with a real estate appraisal license and a general manager and a board member.

Fund participation shares can only be sold to qualified investors and it is obligatory that the fund portfolio value must be reached at least TL 10,000,000 within one year at the latest after the sale of the participation shares to qualified investors and the funds collected from the participation shares owners must be directed to investment.

Qualified Investors; Per Article 4 of the Communiqué on Sale of Capital Market Instruments No. II-5.2 (“Communiqué No. II-5.2”) it is defined as “professional customers defined in the regulations of the Capital Markets Board on investment institutions, including those who are deemed professional based on demand and “. According to Article 31 of the Communiqué on Principles of Establishment and Operation of Investment Firms (III.-39.1), a professional customer is defined as a customer with experience, knowledge, and expertise that can make their own investment decisions and evaluate the risks undertaken. For a customer to be considered as a professional customer, it must be one of the following institutions or have the following qualifications:

  1. Brokerage houses, banks, portfolio management companies, collective investment institutions, pension investment funds, insurance companies, mortgage financing institutions, asset management companies, and their equivalents resident abroad.
  2. Pension and aid funds.
  3. Public institutions and organizations, the Central Bank of the Republic of Turkey, international bodies such as the World Bank and the International Monetary Fund.
  4. Other organizations that can be accepted by the Board to be similar to these institutions in terms of their qualifications.
  5. Institutions having at least two of the following criteria: total assets of TL 50,000,000 and annual net revenue of TL 90,000,000 and equity capital exceeding TL 5,000,000.
  6. Customers who meet the financial and qualitative conditions defined in Article 32 of the Communiqué on the Establishment and Operation Principles of Investment Institutions (III.-39.1) and who are accepted as the professional on-demand basis.

In this context, Funds will only be able to sell participation shares to shareholders who have the above-mentioned qualified investor status.


The fund founder and portfolio manager may perform the following transactions on behalf of the Fund, without prejudice to the limitations of the Board regulations:

  • To obtain a trading profit or rental income; it can buy, sell, rent, lease, and promise to buy or sell all kinds of real estate such as land, land, residence, office, shopping center, hotel, logistics center, warehouse, park, hospital and so on.
  • It may establish the right of construction and timeshare servitude on real estates owned by other persons in favor of the Fund, and transfer these rights to third parties on behalf of the Fund provided that it is registered with the title deed.


It is obligatory to obtain a residential usage license and establish the condominiums for all kinds of buildings and similar structures to be included in the fund portfolio. Besides, real estate investments shall account for at least 80% (eighty percent) of the Fund’s total value.

The fund founder and portfolio manager cannot perform the following transactions regarding the management of the fund portfolio:

  • Cannot invest in real estate projects, cannot undertake construction works of real estate, cannot recruit personnel and equipment for this purpose.
  • Cannot provide project development, project control, financial feasibility, follow-up of legal permits, and similar services.
  • Cannot operate hotels, hospitals, shopping malls, business centers, commercial parks, commercial warehouses, residential sites, supermarkets, and similar real estates for commercial purposes.
  • Cannot continuously trade short-term real estate.
  • Cannot invest in gold, precious metals, and other commodities and futures contracts based on them.
  • Cannot perform margin trading and cannot borrow capital market instruments.
  • Cannot purchase, sell, or lease real estate abroad.


In accordance with the principles of public disclosure of the Board’s regulations for real estate investment funds, it is mandatory to create a Public Disclosure Platform (“PDP”) page, fill out the summary and general information to be included on this page, and announce, the fund rules, issuance documents, amendments of the fund rules/ issuance documents and financial reports on PDP concealing the information that qualifies as trade secrets.

          V.                ABOUT TAX REGULATIONS

Fund earnings are not subject to corporate tax. Therefore, the tax exemption for not paying corporate tax from its annual earnings is an advantage for the Funds. Moreover, dividends distributed to the owner of the investment fund unit are also not subject to tax. Hence Funds are value-added taxpayers.

       VI.                CONCLUSION

Per the laws of the Republic of Turkey to establish a Fund, must first establish the PMC following the conditions stated above. Subsequently, the Funds are established by the PMC with an application to be made to the Board by the preparation of the above-mentioned documents.

Per the Republic of Turkey laws, as Funds can engage in real estate-related activities mentioned above; Funds are also considered beneficial for making real estate investments due to the fact that:

  • Liquidation of Funds is carried out with an easier compared to other structures.
  • Investment fund units are sold to qualified investors.
  • Some tax advantages are offered per the legislation.


ANNEX-1 The Republic of Turkey Storage Organizations List

ANNEX -2 Republic of Turkey Property Investment Funds List


This Memorandum has been prepared for information and benefits in line with the current regulations and you can contact us at any time from the contact information in the heading for further information.


Best Regards,

Kılınç Law & Consulting




Kılınç Hukuk ve Danışmanlık

Kılınç Hukuk ve Danışmanlık