REMFs in India to be Launched Soon

If you would have invested Rs 40000 in 2004 in UNITECH STOCK, you would have earned by now Rs 2 crore . Well i did not make this analysys but a popular news website did this. I did some historical price check and found that Unitech has touched 10000 in 2006 only to split and move again.Recently it has split again. So whats up with Unitech. You might have seen Unitech in news for their latest project Unitech Grande in NCR. It’s my dream to own a luxury apartment as those.

I am not into stocks much, but if you follow Unitech daily you would be surprised at the kind of price variation it has.Realty stocks in general has been doing very well in recent times and popular realty stocks being DLF,Unitech,Ansal,Sobha,Purvankara. I always fear investing directly in stocks and for people like me there is hope when Real Estate Mutual funds are launched.

So what is REMF’s. Agains same as a the traditional mutual fund with SEBI Guidelines released in June 2006 says, real estate mutual funds would be initially closed-ended with their units listed on the stock exchanges. The funds can directly invest only in real estate properties in India. They will be required to invest a minimum of 35 per cent of their total corpus in real estate properties. The balance can go into mortgage-backed securities, shares, bonds or debentures of companies dealing in properties and property development, and in other securities.

The only confusion with SEBI guidelines being mandated daily declaration of net asset values (NAV).You know REMF’s assets are real estates and there will be little change in the price of assets on a daily basis, and the calculation of NAVs should be done on a longer time interval, perhaps of three months.

ICICI Prudential Asset Management has filed a draft prospectus with SEBI to launch a real estate mutual fund. Since the regulations to invest in real estate are not in place, this fund has decided to invest in equity and debt instruments of companies involved in real estate development, instead of directly investing in real estate. The Securities and Exchange Board of India (SEBI) is yet to give it the final go-ahead as the Institute of Chartered Accountants of India (ICAI) – the body it entrusted with formulating the means of valuation of assets held by such funds, has not been able to arrive at the right method. The ICAI and the AMFI (Association of Mutual Funds of India) are working together to clear operational snags in launching REMFs in the country.

Hope we soon find Mutuals funds on Real estates. For time being dont ignore the above mention stocks.


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