Real estate MF can invest in million-plus cities: SEBI

MUMBAI: Market Regulator SEBI today said real estate mutual funds can invest in properties located in million-plus cities and urban agglomerations.

Issuing a clarification, SEBI said the cities for investment by real estate mutual funds would include 35 cities in million-plus urban agglomerates and 27 under million-plus category as per the Census 2001.

Million-plus urban agglomerations and cities include Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Ahmedabad, Pune, Surat, Kanpur, Lucknow, Nagpur, Patna, among various others.

SEBI has defined the real estate asset as an immovable property located in the country in cities specified by the board, the construction on which has completed and is legally transferable.

In addition to the specified cities, such funds can also invest in SEZs as defined in the Special Economic Zones Act, 2005.

The mutual funds, however, cannot invest in properties under construction, vacant land, deserted property, land for agricultural use among other things.

SEBI after a long wait had recently notified that the mutual funds could invest in real estate and had specified that any MF proposing to launch such a scheme should have been in the business of real estate for at least five years.

It had also specified that every real state mutual fund scheme will have to invest at least 35 per cent of the net assets of the scheme directly in real estate assets.

It also said that every such fund will be a close-ended scheme and its units shall be listed on a recognised stock exchange.