Real Estate MF to bring transparency in market

Excerpts from Markets Midday on CNBC-TV18 Watch the full show » Nifty BSE | NSE 25/05/12 Are Mutual Funds betting on Nifty?

Market regulator SEBI has paved the way for Real Estate Mutual Funds.

Anshuman Magazine said it would be very difficult to say how long it will take for the foramlities to conclude as this is the first time India would be launching a Real Estate Mutual Fund. He said this move would bring about transperancy in the real estate market. He is positive about the move and said the real estate market requires capital and this mutual fund will help them get it.

 

Excerpts from CNBC-TV18's exclusive interview with Anshuman Magazine.

 

Q: What have you made of this announcement- by when do you expect the formalities to conclude to be able to launch a mutual fund? Do you think that it will be something that will be launched immediately?

 

A: It is very difficult to say  when it the formalities will conclude, since it is the first time a real estate mutual fund is being launched in India. This is a welcome move. If more institutions play in the real estate markets, it will bring about transparency, better systems and better information to the consumer. This will also allow individuals to invest in real estate without investing too much money. So I think this is a fantastic move. I just hope it is implemented soon because it is another way to bring capital into real estate. Lately the debt has been squeezed and external borrowing again has not been allowed. The market needs capital and this will be one way to get that capital in a way where it will be regulated by an agency. Therefore, there will be more transparency and better system in process.       

 

Q: What about the rules that are already known that 35% of the funds only can be invested in direct or real estate assets and the rest in mortgage backed securities. The conditions that have come out are known for now. What would be your reactions to them?

 

A: It's good. In the initial stages it won't be that easy due to a couple of factors. One of the factors is that in the developed countries quite a bit of this money goes into income producing assets, which means that some of them will buy an office building, which is already leased out, and one gets straight income out of it or even residential developments. In India, these opportunities are still very limited and a lot of money right now is going into development projects. Therefore, it will not be easy once you have the money, the market is still constrained in many ways. The market needs to evolve some more and I guess it will, hopefully. But as of today that is a constraint.