Gautam Mehra of PricewaterhouseCoopers evaluates recent moves to introduce collective investment schemes into Indian real estate
Since April 2004, India’s real estate market has been open to investment by institutional investors and high net worth individuals through the venture capital route, which is regulated by the Securities and Exchange Board of India (SEBI).
The use of this route, however, has been curtailed by a reported reluctance on the part of the regulators to grant approvals, coupled with the withdrawal in the 2007 budget of “tax pass through status” to investments made through such vehicles.
SEBI took more solid steps towards encouraging collective investment in real estate in June 2006, when it announced guidelines to set up real estate mutual funds (REMFs). REMFs have yet to be launched but as the guidelines presently stand, they would have the flexibility to invest in a variety of products such as direct real estate investments, mortgage backed securities and securities in listed and unlisted companies that deal in, or develop, real estate.
Gautam Mehra leads the investment management and real estate practice at PricewaterhouseCoopers in India. He can be contacted at gautam.mehra@in.pwc.com. The views expressed in this article are the personal views of the author.
