Indian regulator allows fund houses to start real estate mutual funds

rajani — Sat, 26 Apr 2008 14:55:22 +0000

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.

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Indian regulator allows fund houses to start real estate mutual funds