Saturday, November 24, 2007

Realty MF rules soon

The Securities and Exchange Board of India will soon come out with the final guidelines on real estate mutual funds. In June this year, the market regulator had approved the primary guidelines allowing mutual funds to launch dedicated real estate funds. These funds will be close-ended ones.

While all these funds will have to appoint custodians for the safe keep of property titles, the units of these funds will be listed on stock exchanges and traded on the basis of the net asset value of the scheme. No mutual fund house has, so far, come out with real estate funds as there is ambiguity on the valuation process of underlying properties.

Sebi had asked the Institute of Chartered Accountants of India to formulate the guiding principles for calculating the value of properties under such a scheme. “We have submitted our report on November 12 and the market regulator is expected to announce the final guidelines for real estate mutual funds soon,” said Abhijit Bandyopadhyay, a central council member of ICAI and the chairman of the internal audit committee of the institute.

ICAI chairman Sunil Talati said the ministry of company affairs had also proposed to set up a council of valuers who will certify the value of such properties. “For example, 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,” Talati said.


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