Minimum investment cap in property funds slashed

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In a bid to attract investors several real estate funds have cut their minimum investment caps . This has not only brought in a new breed of investors but triggered faster fund raising, as well.

 

You no longer have to spare Rs 1 crore to invest in a property fund. In recently floated property funds from ICICI Prudential , Milestone and India REIT have slashed their minimum investment requirements to between Rs 25 and 40 lakh.

 

ICICI Prudential's new Rs 1200 crore realty fund has a minimum investment cap of Rs 40 lakh rupees.

 

Sources say SBI too may soon launch a property fund with a minimum requirement of Rs 30 lakh.

 

Milestone, a Rs 300 crore fund changed its strategy even while its offer was under way. After raising Rs 150 crore, with a minimum investment cap of Rs 1 crore, the mangement realised the interest was far higher among investors in the Rs 25 to 40 lakh range.

 

Ved Prakash Arya , MD, Milestone Capital Advisors said, "After the first close we realized we need to broad base our investors. It was very small initially and at that time, our channel partner ICICI advised us to try this new bracket. We are overwhelmed with the results, it has opened the flood gates in a certain sense."

 

Property funds have also realised that fund raising has become less time consuming.

 

Ramesh Jogani , CEO, India REIT said, "This would obviously give us faster commitments than our previous Rs 430 crore fund of one crore cap that took 6 to 7 months to raise. This would take just 3 months and we will be able to raise Rs 500 to 700 crore in just 3 months."

 

Property fund houses say they might not reduce the minimum investment requirement further as they may not be able to manage investor volumes until SEBI approves real estate mutual funds . Besides, with capital flowing in faster, fund managers say they are striking deals by the dozen.