Realty Space to Gain From Real Estate Mfs: Kpmg

by : Property

NEW DELHI: The Indian real estate sector, currently facing strong headwind due to the credit turmoil as well as high inflation, is set to get a breather from the market regulator SEBI's move to allow Real Estate Mutual Funds, says global consultancy giant KPMG.

'Real Estate Mutual Funds (REMFs) have a useful purpose and a role which until recently was missing in the real estate ecosystem. REMFs should help ease the situation and compensate to some degree the relative absence of public equity and challenging debt markets,' KPMG's Executive Director and real estate head in India Jai Mavani told PTI.

At present, not much equity funding is available to projects below 50 thousand square metres of built up area or 25 acres and there is hardly any domestic secondary market for stabilised income yielding assets.

'Besides, with foreign money not permissible in fully built up commercial, residential and retail assets, this is a good vacant space for REMFs,' Mavani added.

REMFs would buy fully built assets and it should help unlock capital for developers. Also, with 15 per cent allocations, which REMFs would have towards under-construction assets, some additional equity should also be available for non-FDI compliant projects.