Investment options in Indian real estate
A throbbing investment sector
Real Estate has long been witnessed as an asset which has great investment possibilities. The returns expected are high. In India, real estate investment generally means investing in properties. However, there are other avenues within the real estate sector which offers investment options in quality assets at a reasonable price, their realisation within the set time frame and promise good to escalated returns.
REMFs:
Real Estate Mutual Funds (REMFs) in India have emerged as a great tool. REMFs are mutual fund schemes that invest directly or indirectly in real estate. Returns come at the current market rate. Investments in REMFs are easily manageable as you will be able to invest regularly even in small amounts in them.
REITs:
Securities and Exchange Board of India (SEBI) has announced the introduction of Real Estate Mutual Funds (REMFs) as close ended units. These REMFs are globally known as Real Estate Investment Trusts (REITs). REITs, if introduced, in India will improve access to stable, global and competitively priced capital and make it more convenient for public to invest in the realty sector.
The essential difference between a REIT and a mutual fund is that investments made in REIT are traded in real estate stocks and not invested in stocks of companies. On the other hand, Mutual Funds are trusts that mobilize and pool in resources from investors to invest in either equity or fixed income.
Realty investment and opportunities ahead:
REITs can help increase the standards of professional property business in India by bringing in transparency and efficiency to the sector. It will also attract foreign capital seeking commercial property opportunities in India and elsewhere. It will also make builders stick to quality projects and also reduce sub-standard construction practices.
Now that the government has permitted foreign direct investment in Indian real estate, investment horizon widens. Many domestic venture funds have been set up.
Realty funds in India also include those that are devoted to property development, investment in malls etc. Prominent companies promoting realty funds in India are – HDFC Property Fund, DHFL Venture Capital Fund, Kotak Mahindra Realty Fund, ICICI’s real estate fund, and HDFC India Real Estate Fund (HI-REF).
Some of the international companies entering and investing in the sector are – Carlyle, Blackstone, Morgan Stanley and Warbus Pincus.
