Financing of construction of real estat projects through lease certificates

Although the real estate projects of high amount are generally financed through bank loans and project financing, such projects can also be partially of completely financed with the funds raised through capital markets. Lease certificates are one of the capital markets instruments which can be used for that purpose and which is the application of the Islamic finance instrument sukuk in Turkey. The lease certificates are important as a sharia compliant investment instrument and a risk sharing alternative for investors to use their money. In addition, lease certificates are low cost financing methods in contrast to bank loans due to loans' interest rates. This study is important to analyse the legal characteristics and aspects of the lease certificates and to compare them with the similar capital markets instruments which can also be used for the financing of the real estate projects. Particularly, the issuance lease certificates and the characteristic of the agreements which constitutes the basis of their issuance are discussed in detail in our study. Key Words: Sukuk, Lease Certificates, Interest Free Finance, Islamic Finance, Real Estate Investment Companies, Real Estate Investment Funds, Asset Backed Securities, Real Estate Certificates, Real Estate Projects.