HNIs Desert Sinking Stocks, Hitch To Realty PMS

Trashing the age-old belief that a fall in equities would result in flattening real estate prices, high net worth investors (HNI) are pushing wealth advisers for more exposure to realty assets.

According to industry sources, the coming months are expected to witness the launch of real estate portfolio management services (PMS) by wealth managers. Though the product is discreetly marketed as real estate PMS, the fund will invest more like a venture capital fund wherein it will invest in live projects and also gain through rentals and space selling.

ASK Wealth Advisors CEO Rajesh Saluja said, “Though we have not finalised the product format, our real estate PMS fund will invest across the real estate spectrum. It will be a discretionary portfolio, consisting of pooled money from investors, choosing live projects of unlisted companies as well”.

Such investment funds will have a lock-in period of 5-8 years. The minimum ticket size for investment ranges from Rs 25 lakh to Rs 1 crore. Investors have the option to put money in trenches as per the demands of the fund manager.

Mr Saluja added, “We are starting this as an extension of our real estate investment advisory business. With equities losing sheen, our clients are demanding more exposure to real estate projects”.

HDFC Asset Management’s PMS division has a similar fund that invests in securities of asset-level special purpose vehicles, holding structures etc across the real estate sector spectrum. The portfolio seeks to attain returns by investing through structured debt, mezzanine funding and innovative equity-linked products as well. The fund does not invest in live projects, as per the product document.

Real estate PMSs differ from private equity funds in their investment style. While private equity funds invest in the whole company, portfolio real estate investments only invest in large projects of a company. Unlike private equity funds, real estate PMSs only has the mandate to invest in real estate projects. They do not invest in sectors outside the real estate domain.

Emkay Shares & Stock Brokers business head Akhilesh Singh said, “The sluggishness in equities market is one reason why such funds are in vogue. If the funds are on the lines of a PMS, it will not be able to invest in live projects because of Sebi restrictions. Though these are marketed as PMS funds, they will be on the lines of venture capital funds”.

One Comment

  1. Posted June 9, 2008 at 2:10 am | Permalink

    The first golden rule of investing is to diversify your portfolio. Even though high paying categories are always lucrative, the risk factors involved are even higher. Direct commodity investment is advisable only for market savvy investors, who keep a close tab on the market. Stocks, bonds etc should be a part of your saving instruments and all of it. Commodity oriented mutual funds and other such indirect investments though are less risky, they are not exactly what we term as ‘user friendly’.So what else is there?For many, real estate investment is an essential part of a well-rounded portfolio. Buying and selling real property, or even long-term owning, has proven to be one of the most profitable and least risky investments available.When it comes to investing in real estates, you will find a wide array of options like property oriented mutual funds, REIT (Real Estate Investment Trusts), and many other types of mortgage backed securities.However, one should keep in mind that they are not “zero risk” affairs – there’s no such thing in investing! Prices fluctuate, relative to other goods and investment channels. But if you educate yourself with basic market laws and have sufficient cash and other liquid assets to be able to hold until the time to sell is right, you’ll never have any reason to regret in making real estate investments a major portion of your portfolio.For more view-

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