Financial Tribune - The inauguration of Nasim Tower, the first housing project in Iran to be financed by a real estate investment trust (REIT), on Saturday was attended by the minister of roads and urban development, Bank Maskan�s CEO and other board members of the housing sector's agent lender.

The project, which has been three years in the making, marks the first housing initiative to tap the capital market as its main source of funding and sparks new hope for the key sector's redemption in the face of a long-running slump.

During the ceremony, Roads Minister Abbas Akhoundi underlined the necessity of financing macro projects through the capital market, as the banking system is currently facing a severe credit crunch, IBENA reported.

�REITs in some countries account for 25% of the market�s share in financing projects, but in Iran it is a new financing method,� he said.

The minister noted that in order to participate in a privately-run project, people would need a significant amount of capital but investment funds can be divided into thousands of smaller units so people can invest in those projects even with considerably smaller amounts.

�Tools and systems of building residential units in distressed urban areas are different from those in unofficial settlements, as in distressed areas we have to deal with average owners, which is a different matter altogether,� he added.

Akhoundi emphasized that projects using the resources of REITs will face stricter supervision since the Securities and Exchange Organization will keep a close eye on them.

As the ministry had noted before, 15 REITs are to be created as finance tools for the housing sector.

They will be listed respectively as non-commercial institutions and financial institutions with the State Organization for Registration of Deeds and Properties and the SEO that, along with the ministry, will also supervise their operations and progress.

During Nasim Tower�s inauguration ceremony, Bank Maskan�s CEO noted that if someone invests in REITs and needs their money before the investment�s maturity arrives, the shares can be sold in Fara Bourse�Iran�s over-the-counter exchange.

�Another risk of investment in construction projects was the matter of pricing that REITs have totally resolved,� Mohammad Hashem Botshekan was also quoted as saying by IBENA.

Bank Maskan�s CEO noted that since President Hassan Rouhani and the roads minister have both emphasized on renovating distressed urban areas, aside from investment funds, two other development-based organizations must be established as financing arm for the renovation of these areas.

�Banks can use the resources of the National Development Fund�the country�s sovereign wealth fund�to allocate cheap and long-term loans to home applicants in distressed areas at a single-digit interest rate,� he said.