The Hindu Business Line : Builders’ association welcomes REIT proposal

Mumbai, Dec. 28 Real estate mutual funds will not only offer small investors space in the realty segment but also help bring down prices, according to the Mumbai Chapter of the Builders Association of India.

Market regular, Securities and Exchange Board of India, has cleared the decks for the launch of real estate investment products such real estate mutual funds/ real estate investment trusts. The Finance Ministry is also considering appropriate tax treatment for the real estate products.

The builder fraternity is upbeat on the prospects of real estate mutual funds/real estate investment trusts setting shop and say it will provide an alternative source of project funding as well.

The Chairman of BAI, Mumbai, Mr Anand J. Gupta, said funds were hard to come by for the small and medium sized builders as only the large ones were privileged for project assistance. The real estate mutual funds could prove to a source of alternative funding for builders who otherwise work with internal accruals and high-cost borrowings.

The REMFs with the small investors participation would prove an asset, as REMFs are also known to get into rental income projects and hence more homes would be available for the needy, he said.

Mr Anuj Puri, Chairman and Country Head, Jones Lang LaSalle Meghraj, a global realty advisory services provider, also felt it would help the private equity funds that had come into the realty segment to exit in due course. “They need an exit, whom do they sell to?”

On project funding, Mr Puri said top builders were turning down financial assistance, more because they sell to the end consumer. And, the tier two builders, aspiring to graduate to the upper circuit now were getting funds.

India has become a top destination for PE investment. The real estate segment has emerged as the favourite among the PE funds, cornering a 26 per cent share with 32 deals receiving over $2.6 billion this year.

The total PE investment for the year is estimated to be around $10 billion, against $2 billion in 2005.

More Stories on : Real Estate & Construction | Mutual Funds | Maharashtra

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page