Developing a real estate-pension fund investment ecosystem: Turkey real estate fund

Abstract

Real estate industry needs new and alternative financing tools for the sustainabil ity of investments, and pension fund investors seek long-term investment instruments to invest in. Therefore, structuring a model that combines both may bring a mo mentum for co-development of both investment areas. This study aims to develop an investment ecosystem under the regulatory of newly introduced Turkey Real Estate Fund by integrating the real estate investment instruments with pension funds in or der to finance investment projects and create a new investment area for investors by also including the interest-free investment options. Real estate based pension system and rental income based financing is also recommended. In that context, VAR analysis was employed among the returns of real estate and capital market investment tools, pension funds and selected macroeconomic variables. ARIMA method was conducted for forecast analysis of the returns of the studied parameters for 2017 in order to vali date the model proposed. Based on the results of the VAR analysis, inflation is found the only but an important common variable that affect the returns. Hence, pension funds and real estate investments are considered as two important options that may provide hedge against inflation. According to the results of ARIMA forecasts, the returns of REIT and the housing sales indices overperform the average pension fund returns which means the pension funds may consider investing in real estate investment instruments which support the model empirically. This research is expected to bring an innovation in terms of creating alternative investment tools for investors, provide project financing and make a considerable contribution to Turkish real estate industry and capital markets through the help of newly developed model.