Indian regulator allows fund houses to start real estate mutual funds

MUMBAI – Indian market regulator, the Securities and Exchange Board of India (SEBI), said it has amended the regulations to allow domestic fund houses to start real estate mutual funds (REMF) in the country.
In a release, the regulator said however that existing mutual funds have to fulfill certain conditions, such as having an sufficient number of specialized key personnel on the board of directors and a lock-in period for these funds to stay invested in the real estate fund business.
According to the guidelines issued by SEBI, the funds have to invest a minimum of 35 percent of the net assets of the scheme directly in real estate assets while the balance can be invested in mortgage backed securities, real-estate company issued securities and other securities.
Taken together, investments in real estate assets, real estate related securities — including mortgage backed securities — shall not be less than 75 percent of the net assets of the scheme, the regulator added.
SEBI also said the REMFs would not be allowed to invest into any real estate asset owned by a sponsor or the asset management company or its associate company during the five year lock-in period.
There will also be a limit on the investment in a single city, project or securities issued by the sponsor or associate companies, the regulator added.

5 Comments

  1. Posted April 29, 2008 at 6:26 am | Permalink

    After stocks, gold and bonds, India’s capital markets regulator has now allowed asset management companies to float funds that invest in real estate.The move by Securities and Exchange Board of India, or Sebi, will allow retail investors to take advantage of the boom in property prices by putting in far less amounts than it takes to buy a house or land.The rationale of the product lies in fact that small retail investors will now be able to get exposure to this asset class (real estate) without having to deploy a substantial amount.For realtors caught between a volatile equity market and reduced means of borrowing, Sebi’s decision opens up another source of capital. “It will give them one more source of institutional funding, but will take some time before it becomes a significant source.”Sebi has mandated that at least 75% of a scheme’s total assets should be invested in real estate projects and securities. It has also said the firms cannot invest more than 15% in a single real estate project.For more view- realtydigest.blogspot.com

  2. Posted May 6, 2008 at 3:19 am | Permalink

    The funds have to invest a minimum of 35 percent of the net assets of the scheme directly in real estate assets while the balance can be invested in mortgage backed securities, real-estate company issued securities and other securities.

  3. Posted May 7, 2008 at 12:54 am | Permalink

    its a god decision by SEBI,now it would give a relief to real estate companies

  4. Posted May 8, 2008 at 4:48 am | Permalink

    Yes the SEBI also provide that facility very easily way which all person are easily to get that facility.

  5. Posted May 8, 2008 at 6:07 am | Permalink

    It will help to invest those people who have no proper knowledge about real estate market.

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