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News & Views on Indian Real Estate

Friday, May 02, 2008

Realty space to gain from real estate MFS

The Indian real estate sector is set to get a breather from the market regulator SEBI's move to allow Real Estate Mutual Funds. Real Estate Mutual Fund Scheme means a scheme of a mutual fund which has investment objective to invest directly or indirectly in real estate property and shall be governed by the provisions and guidelines under SEBI (Mutual Funds) regulations. The SEBI added that the schemes will have to be close-ended with its units listed on a recognised stock exchange wherein the net asset value (NAV) will be declared daily. Real Estate Mutual Funds (REMFs) have a useful purpose and a role which until recently was missing in the real estate ecosystem. REMFs should help ease the situation and compensate to some degree the relative absence of public equity and challenging debt markets..At present, not much equity funding is available to projects below 50 thousand square metres of built up area or 25 acres and there is hardly any domestic secondary market for stabilised income yielding assets.Mr. Mayani added, “Besides, with foreign money not permissible in fully built up commercial, residential and retail assets, this is a good vacant space for REMFs.REMFs would buy fully built assets and it should help unlock capital for developers. Also, with 15% allocations, which REMFs would have towards under-construction assets, some additional equity should also be available for non-FDI compliant projects. Introduction of REMFs is certainly timely and well intended REMFs would help in creation of an alternative investment portfolio for small investors or households who do not have the technical ability and the means to directly invest in the sector, catalysing a sophisticated and liquid market for mortgage backed securities and mobilisation of retail funds for assets through a regulated institutional route.

apoorv said...

this site is so much use ful to mee i could get so much of information about the ral estate mutual funds
thanx to who ever has writetn it

Manish said...

Real Estate Mutual Funds (REMFs) have a useful purpose and a role which until recently was missing in the real estate ecosystem. REMFs should help ease the situation and compensate to some degree the relative absence of public equity and challenging debt Markets

Architectse said...

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