Highlighting the supply-demand imbalance in the housing market, Algün Chairman of the Board Cihat Algün said that in order to increase housing supply, producers must be able to access financing. Algün said, “There is a need for financing to close the housing gap in the sector and to build new housing. To solve this problem permanently, as a company we decided to establish a Real Estate Investment Fund. This way we can complete our projects quickly without depending on bank loans, while investors can enter the real estate market with low risk and obtain regular returns.”
Stating that the supply-demand imbalance in Türkiye’s housing market has turned the dream of homeownership for low and middle income citizens into a luxury, Algün Chairman of the Board Cihat Algün noted that producers are acting cautiously due to unpredictable economic conditions. Emphasizing that the supply shortage persists on the production side because of high input costs, Cihat Algün said that one way to permanently solve the financing problem is to establish a Real Estate Investment Fund (GYF), and announced that as a company they have decided to take this route.
Saying that cost increases are a major problem for the sector, Cihat Algün stated that prices in some items have risen by as much as 20 times. At this point, he noted that the inability to access financing further exacerbates the problems, and made the following remarks.
Housing supply accelerates, the sector gains confidence
Cihat Algün said, “The annual need for new housing in our country is around 1 million, yet this figure rose much higher after the earthquake disasters. In addition, there are approximately 6 million risky homes that need to be transformed. In the face of this need and demand we cannot speak of an adequate housing supply. High costs are the leading reason for this.
“For branded housing supply to increase and investments to reach desired levels, housing producers must be able to access financing. To eliminate this problem, we decided to establish a Real Estate Investment Fund. After all, REIFs are systems that finance large scale projects by pooling the capital of individual and institutional investors. Thanks to these funds we can complete our projects quickly without depending on bank loans. At the same time investors can enter the real estate market with low risk and obtain regular returns. This model, which increases transparency and liquidity in the real estate sector, both accelerates housing supply and instills confidence in the industry. We believe that encouraging and expanding REIFs will be one of the most effective ways to create a sustainable source of financing in the housing market.”
There are many reasons behind elevated pricing
Cihat Algün reminded that the segment able to buy with cash or channel existing investments into housing keeps the market dynamic, yet a large part of society cannot access housing because of high prices. Offering a brief market assessment, Algün said, “New projects are planned mostly with a cost focus and are priced high. On the supply side, increases in construction costs are the biggest reason for elevated pricing, yet exchange rate volatility, labor costs, as well as land and energy prices are also among the main drivers of this increase. In addition, the fact that urban land is a scarce resource and is held vacant for investment purposes deepens the land constraint.”