Guidelines of the scheme:

• Real Estate Mutual Fund schemes (REMFs) will be close ended schemes and the units will be listed on stock exchange.
• At least 35 per cent of the net assets of the REMFs would be invested directly in real estate assets. It could be either residential or commercial properties and must be finished and ready to use and not under construction.
• 75% of the corpus of the scheme must be invested in real estate or related securities. These could be debentures or mortgage backed securities or equity shares of listed real estate companies.
• About 15% can be invested in unlisted companies.
• REMF can not buy baron lands and can not under take construction activities.
• Further caps will be imposed on the fund on investments in a single city, project or securities issued by associate companies and sponsors. Funds are not allowed to invest in assets owned by the sponsor or the asset management company or any of its associates during the last five years the aforesaid entities hold tenancy or lease rights.
• REMFs can not undertake lending or housing finance activities as well.
• The cities for investment by real estate mutual funds would include 35 cities in million-plus urban agglomerates and 27 under the million-plus category as per the Census 2001
• All assets will have to be valued by two accredited valuers every three months from the date of purchase, and lower of the two values will be taken into account for computing NAV.

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