Sebi clears decks for realty MFs

You may not have the money to buy a property but you can still invest in real estate. The Securities and Exchange Board of India, or Sebi, has paved the way for real estate mutual funds. 

Dalal Street will soon also host the realty market. That's because market regulator Sebi has paved the way for listed, close-ended real estate mutual fund schemes. But how will these schemes be valued you would ask?

Sebi has stated that the net asset value, or NAV, of real estate mutual fund schemes will be declared daily. That's not all. Each asset purchased by these schemes will be valued by two accredited valuers every 90 days from the date of purchase. And, the lower of the two values will be taken for the computation of NAV. So, who can launch a real estate mutual fund schemes?

Any existing fund house and a real estate company with five years of experience that meets other Sebi criterion can launch such schemes. But the regulator has stated that no scheme will have at least 35% of its net assets invested directly in real estate. It has also prescribed a minimum 75% cap for these schemes to invest in real estate and realty-related securities.

With the regulator notifying this, the mutual fund industry, which has worked closely with the regulator on this project, is gearing up to launch these schemes.

By Payal Bhattar/CNBC-TV18

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