Time to invest
Serik Tolbassy on the first sale of REIT TSPG preferred shares
The launch of the REIT TSPG real estate investment fund in May 2024 marked a significant milestone for Kazakhstan’s commercial real estate market, opening new opportunities for investors. The fund boasts a high-quality portfolio of properties and offers attractive investment returns. The fund’s anchor investor and entrepreneur, Serik Tolbassy, has put up for sale a portion of his preferred shares in the REIT TSPG Umbrella Fund, with a minimum transaction amount equivalent to $50,000. This significantly lowers the entry threshold for investors, as previously, participation in a real estate market of this class and scale required substantial capital. Now, a broader range of investors can access a new financial instrument — REIT shares, allowing them to diversify their investments without the need to acquire real estate directly.
History of REIT Formation
The REIT model, which emerged in the United States in the 1960s to attract private and institutional investors to real estate, has gained worldwide popularity, including in the U.S., the U.K., and Southeast Asian countries. Today, REITs are widely used in developed markets as an effective capital-raising tool. According to Nareit (National Association of Real Estate Investment Trusts, founded in 1960 and headquartered in Washington, D.C.), the total market capitalization of all REITs in the U.S. in 2024 amounted to $1.542 trillion.
In Kazakhstan, REITs are still in their early stages of development, but their potential is already evident. Several REITs are registered on the Astana International Financial Centre (AIFC) platform, among which TSPG stands out as the largest by capitalization and the only umbrella REIT (Umbrella Partnership Real Estate Investment Trust) specializing in commercial real estate.
Umbrella REITs combine multiple specialized sub-funds, providing investors with access to various types of real estate and investment strategies. This ensures diversification, reduces risks, and improves risk management by integrating different market sectors. Umbrella REITs also offer regular dividends, making them attractive to investors seeking stable income. Thanks to their flexibility in strategy adaptation and the ability to efficiently execute mergers and acquisitions, these REITs can attract institutional investors and accelerate the fund’s capitalization.
«The umbrella REIT structure has long been successfully used in international markets, and in Kazakhstan, we strive to be the first to leverage all the advantages of this model,» noted Mr. Tolbassy.
Global Standards and Healthy Competition
The transfer of assets to REIT TSPG was a logical and strategically important step for entrepreneur Serik Tolbassy. The fund’s assets include his key properties—Class A shopping and entertainment centers, Dostyk Plaza in Almaty and Shymkent Plaza in Shymkent, which have become the foundation for building a high-quality and promising portfolio.
Serik Tolbassy has been in business for over 30 years and has become a successful entrepreneur in Kazakhstan. Since 2002, his TS Development group has built 480,000 sq. m of commercial and residential real estate in the country, with total investments in his projects exceeding $640 million.
«Business development is a key contribution to addressing Kazakhstan’s strategic objectives. Projects like REIT TSPG play a crucial role in the country’s economic growth and enhancing its competitiveness on the international stage,» the entrepreneur believes.
The introduction of new investment instruments into Kazakhstan’s real estate market not only provides effective ways to attract capital but also fosters healthy competition aligned with global standards. The REIT structure allows for equity capital raising, but according to AIFC regulations, the fund cannot take on loans exceeding 60% of the value of its own assets. Additionally, it is required to distribute at least 80% of its annual net profit as dividends, ensuring stable returns for investors.
«I have decided to sell a certain portion of my preferred shares to investors in the coming days. The funds raised will be directed toward the development of new promising projects, including the construction of major shopping and entertainment centers, hotels, and business centers in Astana, Almaty, and Shymkent. Applications for the purchase of preferred shares can be submitted on the Fund’s official website,» the entrepreneur shares his plans.
New Opportunities for Investors
Kazakhstan’s market offers a limited number of local investment instruments for retail investors that provide returns in hard currency with an acceptable investment threshold. Currently, the most common option is bank dollar deposits, but due to regulatory restrictions, interest rates cannot exceed 1%, regardless of the deposit term. The more investment instruments available that allow retail investors to choose dollar-denominated returns based on their risk level, the faster Kazakhstan’s economy will develop. This is because private capital from individuals will be redistributed between banks and businesses rather than remaining heavily concentrated in the financial sector.
New investment instruments, such as REIT TSPG shares, are designed to generate stable income, consisting of monthly dividends (a fixed component) plus annual share price appreciation (a variable component), both indexed to the U.S. dollar exchange rate. This offers a significant advantage in the face of tenge volatility, as the fund’s model positions it as a defensive asset, minimizing risks associated with exchange rate fluctuations. The acquisition of preferred shares offers a unique opportunity for investors to become part of a rapidly growing real estate fund, providing stable rental income from high-quality commercial properties.
«Overall, the AIFC platform has created a business-friendly environment to develop new forms and instruments for capital raising, opening up opportunities for investors to explore additional portfolio diversification,» notes Serik Tolbassy.
