How to invest in housing through the stock market?

According to Tejaratnews, real estate funds in the stock market can be considered as real estate financiers. On the other hand, by investing in these funds, albeit small ones, we can protect our capital against inflation to some extent.

“There are two tools in the field of construction in the capital market so far,” said Mona Haji Ali Asghar, a capital market expert, in an interview with Tejarat News. One is the Real Estate Fund, which covers the demand side of housing (the possibility of investing in housing with different financial wealth). This tool has not been implemented yet and only an agreement in principle has been received. The other is the Land and Building Fund, which is the housing supply side (financing for the construction project) and limited examples of which have been implemented.

He continues: The subject of activity in Real Estate Fund It is divided into two groups of main and secondary activities. The main activities are buying property, renting property, selling property, investing in real estate fund units and land and building funds, and investing in construction companies’ securities on the stock exchange (maximum 5%). In practice, except for the first 6 months of establishment and 6 months left until the end of the fund, it is necessary to allocate at least 60% of the fund’s assets to this sector.

The CEO of Parto Aftab Kian Investment Advisor states: The subject of sub-activity is investing in mortgage securities, investing in units of fixed income investment funds, fixed income securities, deposits and bank deposit certificates and receiving facilities. In practice, up to 35% of the fund’s assets can be allocated to this sector. Reviewing this activity, it is clear that some options, such as investing in land and prefabricated property, are empty.

How to establish a fund in the stock market?

Haji Ali Asghar explains: The subject of activity in the land and building fund, collecting funds from applicants for investment in the fund and building a construction project mentioned in the fund’s letter of intent is mentioned from the funds. After that, the sale of the construction units of the mentioned project and finally the distribution of the proceeds from this activity among the fund investors. This activity demonstrates well that this tool is a financing tool. In fact, it is practically one of the few financing instruments in the country so far that there is no limit to the financing of a real person.

He adds: in order to establish a real estate fund, at least three people as founders, one of whom is the proposed director of the fund, must deposit 100% of the nominal amount of all preferred investment units in cash to the fund’s bank account, which is in the land fund. And the building is not raised.

The capital market expert says: “Both funds are designed with the ability to be listed on the stock exchange (ETF) and have practically separate marketers, managers, trustees and auditors.” In both boxes, the underwriting pillar is provided for periods.

He adds: in addition to the mentioned elements, the construction manager, supervisor and board of directors are also present in the land and building fund. In a real estate fund, the fund manager is a legal entity from among the financing companies, portfolio manager, investment consultant, parent (holding), investor, stockbroker or OTC publisher active in the mass real estate industry.

“In the Land and Building Fund, the manager is a legal entity from among financial institutions,” says Ali Asghar. The minimum capital for a fund manager in a real estate fund is 500 billion rials. This is not the case with the Land and Building Fund.

What is the pillar of the boxes?

He continues: In the land and building fund, the pillar of the construction manager is a legal entity. This manager has at least 5 years of useful and effective work experience in the field of construction of large construction projects and specific permits. The pillar of the land fund and the building oversee the fund. A legal entity that has a basic supervision license in accordance with the law of the building engineering and control system and the relevant bylaws and regulations. The supervisor and construction manager should practically not be affiliated with each other.

Haji Ali Asghar states: The pillar of the real estate fund is the operation manager. Operating manager, a person or legal entity that has the ability to provide specialized services in two areas of the fund’s real estate management (including operational management, maintenance management, revenue and expense management) and marketing and sales management (including legal affairs and contracting, Advertising, etc.).

The capital market expert adds: If the fund’s real estate has more than one use, the fund’s operations manager needs to introduce a contractor with exploitation expertise from each of the fund’s properties with a specific use.

Finally, he says: the board of directors is in the land and building fund and consists of five people. These people are the director, the trustee and three people elected by the assembly, all of whom must be approved by the stock exchange and securities organization. The meetings of the board of directors are chaired by the representative of the trustee and in his absence by a member appointed by the board of directors.

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