The Sebi’s recent decision to allow mutual fund firms to play in realty space has opened up a fresh avenue for individual investors. One month ago, Sebi had approved the inclusion of real estate and issued a set of guidelines. Prior to that, only high networth individuals were allowed to invest in realty directly.
Mr. Jai Mavani, executive director (head real estate), KPMG, said, “Now with realty brought under the MF guidelines, it will be much more transparent and regulated. It will encourage middle category investors to participate in the realty growth story with minimum investment”.
According to KPMG report, the timing is quite opportune as the real estate sector is currently experiencing strong winds from sub-prime bruised western markets, general fund crunch and a pause in the Indian IPO market. Allowing retail participation in real estate mutual funds will enhance liquidity and create a healthy secondary market for realty assets, observe industry analysts.
However, the Sebi guidelines come with certain restrictions. Shailesh Kanani, analyst (infrastructure & real estate), Angel Broking, said, “Since REMFs are allowed to invest only in fully constructed and ready-to-use realty assets, the investors’ ability to participate in significant price appreciation of these assets appears low”.