REAL ESTATE NEWS
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Realty Funds Make A Beeline For Hnis
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The property boom story is being sold to well heel investors with a new flavour. Local real estate funds such as Indiareit, promoted by Ajay Piramal and ICICI Prudential, are offering a piece of the action to investors who can chip in Rs 25-40 lakh. The funds have slashed the minimum amount to be invested from Rs 1 crore to Rs 25 lakh to attract more investors. With the upside in property price varying among markets, investors may perceive that such investments, just like mutual funds, would help lower risks. Leading banks like HSBC, ABN Amro, ICICI and HDFC have been marketing this concept to real estate funds.
"We have launched our third fund with an increased retail focus. We are tapping high networth individuals (HNIs) who can invest a minimum of Rs 25 lakh. This fund has a minimum lock-in period of six years," said Indiareit CEO Ramesh Jogani. He said the concept is catching on and the fund has been subscribed by almost 70 percent. "We are offering 20 percent return to investors," said Jogani.
Real estate funds are yet to be acknowledged as ‘mutual funds’ with the regulator yet to come out with the guidelines. However, the present development reflects that some domestic real estate funds have started the groundwork to set up property funds with a more retail focus.
“We are tapping lower-end HNIs in the Rs 40 lakh segment,” said an ICICI Prudential official. ICICI Prudential’s newly-floated real estate fund has a minimum investment limit of Rs 40 lakh. Kishore Biyani’s Kshitij Investment Advisory is also considering a property fund aimed at retail investors. Kshitij CEO and managing director Shishir Baijal said the fund is currently focusing on the deployment of its overseas fund Horizon, and Kshitij is exploring the possibility launching a retail-focused fund in the Indian market.
Source: The Economic Times (Mumbai edition), Rajesh Unnikrishnan, Mumbai, July 16, 2007
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