Top 5 Real Estate Mutual Funds in India
Read on know about the top five real estate mutual funds in India and make an informed real estate investment decision.
Although the realty sector is not in the best shape at present, it certainly is gearing up for a revival with a positive investor approach, says an article published in the Economic Times in February 2016. Real estate investment is one of the many channels to park your surplus money. It is considered to be a fairly safe investment, since it is completely unrelated to other market related assets. It can help you diverse your portfolio. Investing in this sector is also a good option if your wish to create wealth without taking the risk of investing in equities.
Where Should You Park Your Money
You can invest in this sector through three different channels: real estate funds, REITs and directly buying property. Property can give you long-term and short-term gains in the form of capital gains and rental income, respectively. However, if you do not wish to invest a huge amount all at once, then you can invest through the other two channels. Real estate investment trusts are much like equity and are traded on the stock market. Real estate mutual funds, on the other hand, are funds setup by different AMCs that invest only in this sector. Given below are 5 such investments you can consider.
1. HDFC Realty — The HDFC Realty set up an affordable real estate fund with a total target size of Rs 5,000 crore. Investors have already committed Rs 2,700 crore. The tenure of the plan will be 12 years and it will invest in long-term equity of mid-income housing, according to the company.
2. Aditya Birla Real Estate — This is a Rs 1,100 crore fund that has deployed its entire corpus across 13 transactions. The investment has been made through equity in the form of non-convertible debentures.
3. Kotak Private Equity — This was established in 2005 and has US$1.2 billion in capital commitments. It has invested in 40 projects and financed over 65 million sq ft of residential development.
4. JM Financial Property — This is a private equity fund that has invested in residential, hospitality and mixed used development assets of individual projects or holding level development companies. It raised capital contributions of Rs 400 crore in 2007–08.
5. Piramal Real Estate — Piramal Fund Management Pvt Ltd has a host of domestic and offshore real estate investments. The domestic ones have invested in Tier 1 cities, with a residential and redevelopment focus.
Real estate mutual funds also invest in REITs. Investing through these funds can help you build a significant corpus in the long-run. It is especially beneficial for a retirement corpus or wealth creation.
