1. Prepared By:
Prashant Maharshi

2. The term real estate is defined as land, including the air above it
and the ground below it and any buildings or structures on it
that are intended to be of a permanent nature.
A mutual fund is a type of professionally-managed collective
investment scheme that pools money from many investors to
purchase securities

3. Investors
Receive
dividend/capital
Contribute
appreciation
money
Trust
(pool of money)
Receive
interest, dividend
Invest in or capital growth
markets
Markets
(volatile, has fluctuation)

4. Real estate fund is a fund that buys, develops, manages and
shells real estate assets and allows various participants small
and large to invest in a professionally managed portfolio of real
estate properties.
Like mutual funds, real estate funds are founded by a group of
real estate professionals/experts to ‘manage’ property/real
estate for the investor.

5. Benefits to the individual
Protection from legalities
Affordability
Liquidity
Increase in rental housing generation
Expected to enhance the quality of the housing projects.

6. Benefits to the sector
Flow of funds in the sector
Sector will become more organized
More credibility to the sector
Availability of foreign investments
Economic and social benefits
Growth of real estate sector can boost the GDP
Opportunities of employment

7. Cont…
Growth of ancillary industries
Help in the process of slum development
Help in development of tourism
Funds for the development of B & C grade cities
Availability of funds to the government for infrastructure
development
It can also help in improving the penetration of mutual funds
in India.
REIS will also help to tap the investments from larger section
of Indian Market

8. Affordability
Age Old Acts and Rules
Government Administration
Foreclosure
High cost of funds
Informal Sector
Competition
Legal Hurdles
Construction Finance

9. Liquidity risk
Risk because of high maintenance burden
Risk due to high government controls
Risk due to real estate cycles
Risk due to legal hurdles and complexity
Risk due to lack of information
Risk due to high transaction cost thus forming
barriers to entry and exit

10. Internationally there are two structures, which real estate funds follow
REMF STRUCTURE
REIT Structure PMV Structure
Followed In USA and CANADA Followed In UK
REIT is a corporate In this structure, the funds is in
structure, which collects money the form of a trust and operates
from the investors and invests in just like an open ended mutual
real estate assets to earn money fund
in the form of rentals and lease.

11. REIT Structure PMV Structure
Followed in USA & Canada Followed in UK
Close ended fund Open ended fund
Use leverage Does not use leverage
Are listed on the exchanges Not listed on the exchanges

12. In April 2008, market regulator SEBI announced
guidelines for REMFs
There is a hot discussion floating in India about which
model the Indian market should adopt.
Should it adopt the US structure or the UK structure or
follow an altogether new structure for a fund, which
invest in Real Estate.

13. There is high chances that the real estate mutual fund
introduce in India. In India REMFs will follow UK base
structure with some changes. And the real estate area is
majorly advantages area for the inventors.