NEW PROSPECTS IN HOUSING DEVELOPMENT THROUGH TOKİ's INNOVATIVE FINANCIAL AND TECHNICAL MECHANISMS

REVENUE SHARING MODEL :

TOKİ generates innovative models in order to meet the governmental objectives through the existing housing and settlement policies. One of these models is the Revenue-Sharing Model, targeting mostly the high-income families under the frame of profit making characteristic, providing short-term financial funds. TOKİ uses this method to generate funds for the low and middle-income housing projects.

• This model is based on production of housing units on TOKİ owned lands in-cooperation with the private sector (developers and contractors) and sharing the sales revenue of the project with the shareholder firm.

• The project is implemented (engineering, services, construction, marketing, sales, etc.) by a private developer or contractor selected through an open tender within the framework of national tender law.

• The subject of the tender in this model is the land provided by TOKİ and the total probable revenue is going to be offered by the participants.

• TOKİ evaluates the tender on the basis of revenue ratio offered and the highest revenue offered wins the tender.

• The shareholder meets all the investment cost, except land cost, as land is provided by TOKİ at the beginning of the investment period. For that reason, being the investor, the shareholder firm has the advantage of providing the land procurement procedure in the shortest term with the possible least cost.

• As the project is realized on a public owned land, the legal permission procedure is realized not having any delay.

• As these projects are realized and promoted under TOKİ's public guarantee, they have high marketing and sales capabilities.

• Through this method, the selling of the housing units take place at the beginning of the construction period so the sales revenue begins to be provided at early beginning of the total investment process.

In this model, one of the essential inputs is the state-owned or TOKİ-owned land. TOKİ uses valuable lands in the model TOKİ opens an open tender for all the contractors, having urban-residential reference, seeking for the best outcome of the development. The developer is selected due to the estimated total revenue and the percentage of revenue-share with TOKİ. The revenue is collected in TOKİ's account. The revenue exceeding the estimation is shared between TOKİ and the contractor as well due to the percentage contracted with the contractor, although developer is obliged to give the estimated total revenue if the sales realizes less than the contractual offer.

Revenue Sharing Model is a build-and-sell concept, but is based on the revenue instead of housing units.

In this kind of projects, the land is generally evaluated by TOKİ less than its actual market value. So, as a result of this hidden subvention, the selling prices of the houses are in general lower than the houses sold by other developers creating a somewhat unfair competition. But, the fact that the project is awarded to developers and contractors by an open tender compensates this disadvantage to a certain extent.

Two of the best practices of the revenue sharing model of TOKİ is Ankara- Eryaman Housing Project 8 th.and 9 th. Phase and Istanbul- Halkalı 4 th.phase, with the following project information.

Ankara Eryaman Revenue Sharing Project:

(On construction stage)

Istanbul Halkalı Revenue Sharing Project:

(On construction stage - by December2004)

REVENUE SHARING MODEL