Real Estate Investment Trusts (REITs) in Türkiye: Opportunities, Legal Framework, and Tax Benefits

1. Introduction: Why Consider REITs in Türkiye?

Türkiye’s dynamic property market has attracted global attention for decades. Real Estate Investment Trusts (REITs), known locally as “Gayrimenkul Yatırım Ortaklığı” (GYO), offer both institutional and individual investors a transparent, regulated, and tax-efficient way to participate in the booming Turkish real estate sector.
With rapid urbanization, a young population, and growing demand for commercial and residential property, Türkiye’s REIT market presents unique opportunities for foreign investors seeking growth and portfolio diversification.

2. What Is a REIT (GYO) in Türkiye?

• Definition: A REIT (GYO) is a publicly traded company that invests primarily in real estate assets—commercial, residential, hospitality, retail, and infrastructure.
• Structure: REITs must be joint stock companies (A.Ş.), publicly listed on Borsa İstanbul, and managed according to strict regulations set by the Capital Markets Board (CMB/“SPK”).
• Key Features:
  • Minimum 49% of total assets must be real estate-related investments.
  • Broad range of eligible assets: land, offices, shopping centers, hotels, logistics, etc.

3. Legal Framework: Formation and Regulation

a) Establishment Requirements

• Only joint stock companies (A.Ş.) can qualify.
• Must obtain an incorporation permit and REIT status from the Capital Markets Board (SPK).
• Minimum initial paid-in capital: TRY 72 million (2025).
• Articles of association must comply with REIT regulations.
• Must go public (IPO) within three years of establishment.

b) Ongoing Obligations

• Regular financial disclosure and independent auditing.
• Asset and investment limits: Cannot engage in speculative or construction activity outside core real estate investment.
• Board of Directors must include at least one independent member.

c) Supervision

• Subject to continuous oversight by SPK and Borsa İstanbul.
• Mandatory compliance with CMB’s Corporate Governance Principles.

4. Opportunities for Foreign Investors

• Easy Market Entry:
  • Buying REIT shares on Borsa İstanbul is open to all foreign investors—no residency required.
• Liquidity:
  • Publicly traded shares allow for rapid entry and exit, unlike direct property investment.
• Portfolio Diversification:
  • Access to a wide range of asset classes and regions in Türkiye.
• Professional Management:
  • Assets managed by experienced real estate and finance professionals.
• Foreign Ownership:
  • No sector-specific foreign ownership restrictions for REIT shares.

5. Tax Benefits and Incentives

• Corporate Tax Exemption:
  • REITs are exempt from Turkish corporate income tax on income derived from real estate investments.
• Withholding Tax on Dividends:
  • 10% standard rate for foreign shareholders (subject to double tax treaties).
• VAT & Transfer Tax Savings:
  • REITs enjoy certain VAT exemptions and reduced title transfer taxes compared to direct property holders.
• No Capital Gains Tax for foreign investors on REIT shares (if held via stock exchange and subject to relevant treaty).

6. Legal and Practical Considerations

• Due Diligence:
  • Review REIT’s published financials, portfolio details, and compliance history.
• Market Volatility:
  • REIT share prices are subject to stock market fluctuations and real estate cycles.
• Corporate Governance:
  • Turkish REITs must follow strict governance and transparency rules.
• Dispute Resolution:
  • Most disputes handled via Turkish courts; international arbitration may be possible for cross-border shareholders.

7. How to Invest: Step-by-Step

1. Open an investment account with a Turkish or international brokerage licensed on Borsa İstanbul.
2. Transfer funds and select REITs based on your investment goals.
3. Execute trades directly on BIST (Istanbul Stock Exchange).
4. Monitor portfolio and receive dividend payments periodically.
5. Consult legal and tax advisors for optimal structure and treaty benefits.

8. Why Legal Advice Is Essential

• Regulatory Guidance:
  • Ensure compliance with SPK rules and avoid pitfalls during account opening and transactions.
• Tax Optimization:
  • Benefit from double tax treaties and structure investments for maximum efficiency.
• Dispute Support:
  • Protect your rights as a shareholder in case of disputes or regulatory action.
• Due Diligence:
  • Independent review of REIT performance, portfolio, and legal compliance.

Stj.Öğr.Esmanur AKTAŞ