SEBI Unveils Draft Rules for Real Estate Mutual Fund Schemes
After a prolonged wait of over 7 years, the Securities and Exchange Board of India (SEBI) has finally released draft rules governing mutual funds' foray into real estate schemes. This development brings significant relief to the mutual fund (MF) industry, paving the way for diverse investment opportunities.
Authorized Real Estate Funds
SEBI's draft rules sanction two distinct categories of real estate funds:
1. Real Estate Mutual Funds (REMF)
- Investment Scope: REMFs are designed to invest in both real estate projects and mortgage-backed securities.
- Fund Structure: These will operate as closed-ended funds, implying that they will be listed on stock exchanges.
- Liquidity Feature: A key benefit for investors is the daily declaration of net asset values (NAV), allowing for the flexibility to exit the fund on any trading day.
2. Real Estate Investment Trusts (REITS)
- Investment Vehicle: REITS offer a structured approach to investing in real estate, providing an alternative to direct property investment.
- Regulatory Oversight: SEBI's guidelines aim to ensure transparency and investor protection in REITS.
The introduction of these draft rules by SEBI is anticipated to boost the Indian real estate market by channeling more investments into the sector through structured financial products.