Realty cos get to float MFs

Jones Lang LaSalle Meghraj country head Anuj Puri said, 8220;The move will provide a proper exit to real estate funds and help developers raise necessary capital. Developers would be able to sell their properties to one MF instead of looking for several buyers. It will result in better management of property.8221;

Existing MFs would also be allowed to launch such funds if they have adequate number of experienced key personnel directors. Till date, only high networth individuals HNIs could afford to invest in real estate venture funds. Presently, HDFC Property Fund, DHFL Venture Capital Fund, Kotak Mahindra Realty Fund, Kshitij Venture Capital Fund a group venture of Pantaloon Retail India Ltd and India Advantage Fund ICICI are some of the prominent real estate venture funds in India.

With the entry of real estate MFs, builders will have little leeway for sub-standard construction. According to the guidelines, assets must be valued by two valuers that are accredited by a credit rating agency every 90 days from the date of purchase. Lower of the two values should be taken for the computation of NAV. Caps will be imposed on investments in a single city, single project, securities issued by sponsor/associate companies etc.

Realty taste for retail investors

8226;Sponsors should have minimum 5 years8217; experience in realty business

8226;Existing MFs can launch REMFs if they have adequate number of experienced directors

8226;REMF scheme should be close-ended and units should be listed on exchanges

8226;Net asset value of the scheme should be declared daily

8226;75 of the net assets of REMF scheme should be invested in realty assets

8226;Assets should be valued by two valuers every 90 days