The wait for investors wanting to invest in real estate mutual funds (REMFs) could be long as Indian real estate investment trusts (REITs) are getting lukewarm response from investors. On Friday, Indiabulls Real Estate closed its REIT initial public offer of shares at the lower end of the price band in Singapore after extending the date due to poor retail investor response. Extension was because the retail component, comprising 5 per cent of the total offering, was not fully subscribed.

A DLF spokesperson said that it would be three months from now before they would float an REIT. They would have to file the revised prospectus in a month from now, and then it would take another two months to get approval. Unitech’s plan to float an REIT is also on hold.

Though mutual fund managers are quite upbeat with the idea of REMFs for investors, they are in no hurry to launch a new REMF. The reason being cited is the present volatility in real estate stocks with the majority of them showing steep declines. “The concept of REMFs is definitely a good idea, it is very important for retail investors to invest in different asset classes. However, in the present market conditions we are quite conservative about launching a new REMF, though we are discussing on the merits of such a fund. The real estate funds to be launched by us will be close-ended for a period of 5-10 years,” said Reliance Mutual Fund CEO Vikrant Gugnani.

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