SEBI paves way for realty mutual funds

Sat, Apr 26 01:30 AM

Missed out on the recent boom in real estate due to fund shortage? Now, a few thousand rupees will be all that takes to profit from getting a real estate exposure. With stock market regulator Securities and Exchange Board of India putting out the much-awaited regulations for real estate mutual funds (REMFs) on Friday, retail investors can now invest in real estate without buying land and apartment by going in for these funds.

"This opens up a new avenue for the common investor," said AP Kurian, Chairman of the Association of Mutual Funds in India. "He can now access the real estate market with whatever small amount he has by buying units of such funds.

It works just like any other mutual fund, but with real estate and related securities as the underlying assets." REMFs pool investors' money and buy varied real estate assets and related securities.

These funds are required to invest at least 35 per cent of their net assets directly in real estate assets. The balance may be invested in mortgage-backed securities or securities of a company involved in real estate assets or development projects.

Mutual fund industry expects plenty of takers for REMFs among retail investors, who until now, had to invest huge amounts to get the benefits of real estate investments. "REMFs will give the average small investor an access to the real estate sector by investing small amounts," said Sandesh Kirkire, CEO of Kotak Mutual Fund.

Vyas Mohan.

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