A finance model for the realization of urban transformation projects: Real estate venture capital crowd fund

Abstract

Purpose-Cost considereations arising from risks specific to urban transformation make them difficult to be financed with conventional methods. Real estate investment funds structured in accordance with Turkish Capital Markets Board legislation cannot invest in private sector urban transformation projects. On the other hand, the Blockchain technology enables efficiently distributed trust systems when compared with the central ledger structures. The purpose of this study is to propose a crowdfunding and Blockchain-based, innovative but applicable real estate venture capital investment fund model through smart contracts, as a solution to conventional financing problems arising from the development risks of urban transformation projects. Methodology-The study employs desktop research, field observations and deductions methodology. Findings-The analysis reveals that there is a need for decentralized finance need for urban transformation projects. Conclusion-In this study, which examines the risks in urban transformation projects, risk management, financial support to be used in urban transformation projects and Blockchain-based tools, it was concluded that there are a lot of uncertainties, therefore there are risks. Accordingly, a financing model is proposed for solving valuation and financing problems faced by entrepreneurs in urban transformation projects.