Real Estate Mutual Fund Policies in India

SEBI may soon come out with guidelines on real estate mutual funds after it had approved the primary guidelines allowing mutual funds to launch dedicated real estate funds, earlier this year. These RE mutual funds will have to appoint custodians for the safety of property titles, the units of these funds will be listed on Indian stock exchanges and traded on the basis of the net asset value of the scheme. Mutual fund companies are watching the final guidelines on the valuation process of underlying properties to become clear before coming out with real estate funds.

Institute of Chartered Accountants of India is formulating the guiding principles for calculating the value of properties under such a scheme. SEBI is expected to announce the final guidelines for real estate mutual funds soon after reviewing ICAI reports. ICAI and the ministry of company affairs are also proposing to set up a council of valuers who will certify the value of such properties. So, if a real estate company plans to come out with a public offer, these certified valuers will give their inputs with regard to valuations of its properties, as is case in developed markets.