Digital Platforms for Investment in Real Estate Investment Fund Units

According to Article (141) of the Executive Regulations of Law No. 95 of 1992 “the Capital Market Law”, the following definitions are provided:

Real Estate Investment Fund

A closed-end investment fund that issues units in return for the fund’s investment in real estate assets, including land, constructed properties, and other assets that ensure a certain level of liquidity.

Investment Unit

A security representing a fractional share of the net asset value of the fund. The unitholders share in the profits and losses arising from the fund’s activities in proportion to their respective holdings.

Open-End Investment Fund

An investment fund whose size increases with the issuance of new investment units and decreases with the redemption of existing ones, while maintaining the relationship between the fund’s capital and its size as prescribed in Article (142) of the Executive Regulations. The purchase and redemption of its units occur without the need for stock exchange listing, except for index funds.

Closed-End Investment Fund

An investment fund whose units are offered through a private placement restricted to qualified investors, and its units may only be redeemed at the end of its term. However, redemption may take place under conditions approved by the Authority.

Provided that the nominal value of the investment units issued in one or more tranches, in relation to the fund’s capital, shall comply with the ratio stipulated in Article (142) of the Regulations. Such funds may also be offered through public subscription, provided their units are listed and traded on the stock exchange.

Real Estate Developer

A specialized company responsible for the technical aspects of executing the real estate projects of the Real Estate Investment Fund and fulfilling its objectives pursuant to a service agreement concluded with the fund’s investment manager.

Administration Services Company

A specialized company responsible for calculating the net asset value of open and close – ended investment funds, and the processes of recording the issuance and redemption of investment units of open-end funds, as well as the safekeeping of the documents and records of real estate fund assets, in addition to other purposes.

Property Management Company

A specialized company entrusted with managing and maintaining the real estate projects owned by the Real Estate Investment Fund and achieving its objectives, pursuant to a service agreement concluded with the investment manager.

Related Parties and Parties Associated with the Activities of the Investment Fund, including but not limited to:

The investment manager; the custodian; the bank in which the fund’s money are deposited or which finances the fund’s real estate assets; the real estate developer; the administration services company; the brokerage company licensed to sell and redeem investment units; the property management company; the auditors; the legal advisor; members of the board of directors or any of the executive managers, or any person involved in decision-making within any of the aforementioned entities; and any unitholder whose ownership exceeds five percent (5%) of the net asset value of the investment fund.

Pursuant to FRA Board Resolution No. (125) of 2025 regulating the establishment of digital platforms for investment in Real Estate Investment Fund units, the following key definitions apply:

• The Authority: The Financial Regulatory Authority (FRA).
• The Platform: A digital business model based on the use of technology in conducting non-banking financial activities, approved by the Authority, allowing the subscription to or redemption of Real Estate Investment Fund units, and displaying the necessary information and data to complete such transactions.
• Platform Manager: A company licensed to carry out underwriting promotion and subscription reception activities and authorized by the FRA to establish and manage the platform.
• Real Estate Investment Fund: The project originator.
• Parties of the Platform: The platform manager; the Real Estate Investment Fund; the investment manager; the administration services company; the subscriber or redeemer, the central depository and registry company -which may act as custodian throughout the platform if licensed by the FRA-, and other parties approved by the FRA under the relevant business model.
• Summary Information Memorandum: A model containing the minimum data and disclosures designated under the Executive Regulations of the Capital Market Law and approved by the FRA.
• Qualified Investor: Any natural person possessing adequate knowledge about the target investment and its risks, and the ability to use digital platforms for such purposes, verified through a knowledge test prepared by the platform and approved by the FRA, and who meets the required financial solvency criteria.

The Board of Directors of the Financial Regulatory Authority, chaired by Dr. Mohamed Farid, issued Resolution No. (125) of 2025 setting forth the rules for establishing digital platforms for investment in Real Estate Investment Funds units for the first time in Egypt.

1. These rules represent the first ever regulatory framework for investing in Real Estate Investment Fund units through digital platforms within a secure and supervised environment.
2. The new framework facilitates investment in fractional ownership of real estate units through licensed and FRA supervised platforms, providing a simplified and fast process.
3. Three digital real estate platforms have already commenced procedures to comply with the regulatory requirements by establishing Real Estate Investment Funds and obtaining the necessary promotion and underwriting licenses.
4. Platforms are obliged to verify client registration by requiring investors to pass a knowledge test approved by the FRA.
5. Continuous communication channels must be maintained between Real Estate Investment Funds and registered users to address all inquiries.
6. Platforms must provide disclosures to assist potential and registered investors.
7. A digital subscription form must be available on each platform, with all participants bound by specific subscription rules.
8. A transparent and integrated regulatory framework for the redemption of investment units that enhances market trust and protects investors’ interests.

The new regulation issued by the FRA serves as a mechanism enabling individuals to invest in fractional ownership of real estate units through investment units issued by Real Estate Investment Funds via licensed digital platforms authorized to promote, underwrite, and receive subscriptions. This comes as a continuation of the approach adopted by the Financial Regulatory Authority towards developing and providing innovative investment products at reasonable cost, in order to meet the aspirations of all market participants and enhance the levels of financial, investment, and insurance inclusion.

This comes within the framework of the Authority’s objective to establish a comprehensive legal framework governing the operation of all digital platforms dedicated to investment in real estate investment fund units, with the aim of providing a secure, transparent, and efficient investment environment.

Ensuring the provision of all necessary disclosures to investors for monitoring their investments and announcing their periodic pricing in accordance with the valuation determined by entities licensed by the Authority, following the valuation standards approved by the Authority. It is worth noting that all contracts and investment documents are electronically maintained by entities duly licensed by the Authority for such purpose.

The rules obligate platforms to register potential investors only after verifying compliance with the registration requirements. Most importantly, successfully passing the knowledge test prepared by the platform and approved by the FRA, after reviewing educational materials about the investment instrument and associated risks.

The platform shall also be obligated to provide secure digital payment and collection channels that have obtained the necessary approvals, as well as to open the required accounts in accordance with the operational mechanism established by the Central Depository and Registry Company. The real estate investment fund shall be registered on the platform after being licensed by the Authority. Subscription and redemption shall take place in accordance with a summary information memorandum approved by the Authority and published on the platform, which shall include the minimum threshold required for the success of each issuance individually, in addition to disclosing a summary of the feasibility study of the projects submitted by each fund.

The decision obligated the platform to provide permanent communication channels between the real estate investment funds and the registered users on the platform to respond to all their inquiries and follow up with them. The decision also required the platform to disclose to investors the essential information that must be reviewed prior to registration and investment.

The platform shall also be obligated to provide the electronic forms approved by the Authority and required for the process of redeeming the units. Such forms must include the details of the unitholder requesting the redemption, the number of units to be redeemed, the dates and amounts of any due instalments, if any, and the net asset value of the unit in accordance with the latest valuation determined by the administration services company.