Zack45
05-11-12, 13:38
With the entry of real estate mutual funds, builders will be hard-pressed to develop quality projects and leeway for sub-standard construction practices will be considerably reduced. Real estate funds are expected to acquire real estate assets with quality blue chip tenants and focus on growing markets witnessing substantial urban development.
Investing in real estate mutual funds could soon become a reality.
The launch of REMFs has been stalled due to the absence of a proper valuation mechanism for investments in unlisted real estate entities and accounting norms to be followed for such funds.
REMFs, or mutual funds that pool public money to invest in real estate assets and companies, are allowed to park their money in mortgage-backed securities, equity, bonds and debentures of listed or unlisted real estate companies. There were also issues over the relevant accounting methods to be followed for such funds and confusion in the industry over the daily calculation of net asset value (NAV) of these funds.
Real estate being a more stable asset compared to equity, the mutual fund industry felt that the daily calculation of NAV was needless. It is understood that funds that invest only in real estate properties would not be required to calculate their NAV on a daily basis. However, funds that invest in shares and securities of real estate companies would need to calculate the NAV on a daily basis.
Investing in real estate mutual funds could soon become a reality.
The launch of REMFs has been stalled due to the absence of a proper valuation mechanism for investments in unlisted real estate entities and accounting norms to be followed for such funds.
REMFs, or mutual funds that pool public money to invest in real estate assets and companies, are allowed to park their money in mortgage-backed securities, equity, bonds and debentures of listed or unlisted real estate companies. There were also issues over the relevant accounting methods to be followed for such funds and confusion in the industry over the daily calculation of net asset value (NAV) of these funds.
Real estate being a more stable asset compared to equity, the mutual fund industry felt that the daily calculation of NAV was needless. It is understood that funds that invest only in real estate properties would not be required to calculate their NAV on a daily basis. However, funds that invest in shares and securities of real estate companies would need to calculate the NAV on a daily basis.